The Future of the Gig Economy is in California’s Hands

Assembly Bill 5 could completely redefine California's laws around employment. What does this mean for gig workers?

(Art: Sophia Valdes)

They drive us to and from work, walk our dogs, and deliver our food. They fix our toilets, run our errands, and clean our houses. In San Francisco — where tens of thousands of young, wealthy people work long hours — the ease of interfacing with an app to manage the mundanity of everyday life is pervasive.

And it’s not all one-sided. Thanks to the so-called gig economy, single parents can drop off corporate lunches through Postmates while their children are at school, college kids can walk dogs through Wag when they’re not studying for exams, and people struggling to find work in rural areas can head to the big city for a weekend of Uber driving to pay the bills. From seniors supplementing fixed incomes to new immigrants trying to make ends meet, the gig economy has opened doors and allowed people to earn money with a flexibility that didn’t used to exist.

The gig economy emerged after the recession, when companies were cutting jobs to make ends meet. While people laid off from their old positions struggled to find new work, sites like TaskRabbit, Lyft, Uber, Care2, and DogVacay stepped in to fill the gap. It was excellent timing; there was a plethora of people desperate to earn money, and a sudden market that would pay them for skills they already possessed.

But as with almost every convenience we adopt, this one comes with consequences. While Uber drivers make an average of $10.87 an hour, the company that controls their market brought in $11.27 billion in revenue in 2018 (and still lost $1.8 billion for the year). And in the wake of both Uber and Lyft going public, drivers are starting to raise their voices about the lack of control they have over their contracts and their declining wages. A new advocacy organization founded by drivers called Gig Workers Rising has begun mobilizing its members to speak up at San Francisco’s City Hall, in Sacramento, and to the press.

There is a big reason the conversation has picked up recently. This month, California legislators will review a bill that could turn the gig economy as we know it on its head. Assembly Bill 5 would create a new set of rules to determine whether or not someone is an employee of a company. As written, it’s pretty clear: Contract workers must be “free from the control and direction of the hiring entity,” must perform work that is not key to the company’s core business, and have to have provable experience in a trade — for example, to have a registered business as an accountant.

For example, a professional graphic designer hired as a contractor to design a flyer for a jazz festival would be easily identified as a non-employee. But what about the tens of thousands of San Francisco drivers who make up Uber and Lyft’s main business model? Under AB 5, they’d definitely be classified as employees.

If passed, this bill could undo the entire basis of the gig economy as we know it.

As can be expected, Lyft and Uber are scrambling to simultaneously shut AB 5 down and come up with some compromises. If they’re not forced to hire their drivers, they say they’d establish a minimum pay rate, and even establish a fund for paid time off and sick leave.

“The goal is to preserve drivers’ independence while guaranteeing a minimum-earnings floor, establishing worker-directed portable benefits, and creating a new association in partnership with labor groups to administer the benefits that best meet driver’s individual needs,” Lyft said in a statement.

It’s an improvement, but still nowhere near the benefits drivers would receive if they were brought on as employees. San Francisco’s minimum wage is $15 an hour, and state law requires that full-time employees receive health insurance, unemployment, and Social Security benefits.

And AB 5 could have massive ripple effects. It looks to codify a 2018 California Supreme Court ruling, referred to as Dynamex, that has already re-classified other workers like local strippers — negatively, they say.

The law’s passing could also have implications nationwide. California has the largest economy in the country and is headquarters to the vast majority of gig economy companies. If we passed such a law, what would stop other states from following suit?

San Francisco supervisors will soon vote on whether or not to endorse AB 5 — a largely symbolic move, as it’s currently wending its way through Sacramento. But with Lyft and Uber based here, that vote still carries a lot of weight.

And barring any dramatic changes at the state level, it seems likely it will pass.

“Fundamentally, this issue is about inequality, about unequal protections for workers in emerging industries, and unequal pay and treatment for a growing and increasingly vulnerable workforce,” Supervisor Gordon Mar said at a recent hearing on the issue. “Technology and innovation should act in service to society, but instead we see our economy, our streets, our working class, and our regulations wholly disrupted by the gig economy, often in benefit to few and harm to many.”

Supervisor Rafael Mandelman is also on board.

“Our city has fostered the growth of numerous gig industry giants, and is home to more than 100 gig companies,” he said. “The prospect of AB 5’s passage poses significant implications for the thousands of residents and visitors those companies employ, and San Francisco should be fully engaged in protecting the rights of gig workers.”

While politicians are finally catching up, gig workers themselves are also no longer sitting on the sidelines. They’re organizing, speaking up, and making waves. This week, we handed the mic over to several people who pay their bills through gig work, to better learn exactly what they’d like to see change in the economy they helped build.

Lyft driver Al Aloudi speaks outside the Omni Hotel, on Monday, March 25, 2019. Photo by Kevin N. Hume 

Al Aloudi, Uber and Lyft driver
If not for a devastating war that has killed more than 17,000 civilians, Al Aloudi would still be a librarian in Yemen. That changed in 2009, when he became one of tens of thousands who fled the country’s military offensive against rebels.

Aloudi arrived in the Bay Area with two kids, thinking it would be a temporary home — but soon realized he would need more than small gigs. Though he had a Bachelors degree from a university in Yemen, it was not of use in the U.S., and he felt his time to obtain another one here had passed.

“When anyone comes to this country, you don’t have a lot of options,” says Aloudi, who now has four children under the age of 12. “You don’t know the language. You don’t know people.”

He began his driving career as a cabbie in Daly City and along the Peninsula in 2010. But the timing of his 12-hour shifts beginning at 4 a.m. was far from convenient, especially with children to pick up from school. The work flexibility he craved still eluded him — until he heard about a new driving opportunity with a company called Uber in 2013.

With Uber and later Lyft came easy money and little stress. But in 2016, cuts to drivers wages began, and have continued since.

“With no permission from us, they changed the rules,” says Aloudi, who is now 34 years old. “I’m just not feeling with these guys we are partners. All the decisions come from them all the time and we have to follow the rules. We have no benefits, no voice.”

Aloudi says he went from making $6,000 or $7,000 a month to less than $3,000, even while going from a five-day work week to seven, missing out on weekends with his children. The ever-changing policies and new wage formulas have forced Aloudi to work inconvenient hours that begin around 4 a.m. He only stops driving when the app cuts him off after 12 hours.

“When I get home, they’re sleeping,” Aloudi says of his four kids. “They ask, ‘Give me a hug, give me a hug,’ because all the time I’m out. It’s a big challenge for me every time.”

Today, Aloudi struggles to pay for two car payments and insurance needed in order to be a driver — including the luxury SUV he bought in 2017 specifically for Uber Select — on top of supporting four young children, his wife, and his mother in Hunters Point.

“If you count your time and how much you’re spending every month, you see how you’re barely living,” Aloudi says. “Every month, I’m thinking to leave and do something else but now driving is my thing. I have no option.”

 

Steve Gregg, Lyft and Uber driver
Antioch resident Steve Gregg has put in his time as a driver. With more than 14,000 rides under his belt, he’s seen the industry change dramatically, with serious consequences. 

“Drivers are struggling. We have no health benefits and are grossly, illegally, underpaid,” Gregg says. “Despite working between 60 and 80 hours per week I currently cannot afford to see a doctor to get a prescription for basic blood pressure meds without jeopardizing my ability to keep a roof over my kids’ heads. Just imagine for a moment how that feels.”

Thus far, Gregg has felt alone in his plight — until he teamed up with Gig Workers Rising. Now, drivers are calling on politicians to demand Uber and Lyft treat its drivers as employees. 

“From what I’ve seen, government at all levels — city, state, and federal — have allowed and even supported the exploitation that Lyft and Uber have perpetrated on the workers of this country through tax breaks and incentives,” Gregg says. “San Francisco has a long history of protecting its workers and community members. Now is our chance to continue that legacy and hold these companies accountable.

“We need to shine a light on the problem and bring greed and corporate oligarchy out of the shadows,” he adds.

 

Goodwil, Lyft and Uber driver
“I used to be able to work a 40-hour work week,” begins a man who goes by Goodwil. “I used to be able to go home, feel good, feel happy, hang out with my friends, go out to dinner, and work out. Now I have no time to do any of that. By the time I get home I’m exhausted, because I’ve been putting in 60 to 80 hours a week making the same money I made two years ago.”

The fifth-generation Bay Area native says he used to enjoy the gig, but now he feels “like a slave,” with no power over his work. 

“Imagine just a second you wake up one morning and prepare to go to work, and you can’t open your app until you agree to something, some changes,” he says. “They tell you what you can and can’t do. You have no say in it. There’s no notice — it’s that morning. And if you don’t accept it you can’t drive.”

The fear of deactivation is constant, and Goodwil worries he’s going to lose his livelihood. It’s starting to have an impact on his health. “ I’m losing weight, I have no energy, I’m exhausted,” he says. “Uber and Lyft are deceptive. They use bait-and-switch tactics. There’s price-fixing. There’s collusion between the companies. We need to stand up for ourselves.”

A Lyft receipt for drivers is broken down to show the company’s cut for a ride. Photo by Kevin N. Hume 

Jimmy, Pared and Instawork restaurant worker
For the past two years Jimmy, a kitchen worker at a local brewery, has been supplementing his income with shifts he picks up through Pared and Instawork — two apps that connect service industry workers with restaurants in need of short-term help. If someone calls in sick, quits on short notice, or if there’s a particularly large reservation that night, managers can post a listing on the app with the pay and hours needed, and workers can sign up for the job.

Jimmy tends to take advantage of the extra shifts toward the end of the month.

“It’s really difficult living in San Francisco and being able to afford stuff,” he says. “Anytime I get the opportunity to make some side money it’s really enticing, especially because I don’t get paid that well working my other jobs.”

Unlike Uber and Lyft, the amount a gig worker makes through the apps is predetermined, with no surprises. On holidays in particular, it can be incredibly lucrative.

“On Valentine’s Day last year, I picked up a shift for $31 an hour,” Jimmy says. “But as the platform gets saturated the amount of money you get is less, and I feel like it’s harder to get gigs. They post them up, and within three or four seconds they’re gone.”

The gigs can be far more lucrative than, say, driving — but they come with a lot of stress, too.

“It’s pretty tough going into a restaurant that you don’t know,” Jimmy says. “You get put into an environment and you have to learn really quick — in 15, 20 minutes — how to do everything.

“But it’s cool to see how other restaurants work,” he adds. “Sometimes it’s catering, sometimes its festivals, sometimes it’s prep work in warehouses for food trucks. So that’s exciting, but it does take a lot out of me. More than my normal job.”

San Francisco’s been struggling to keep its service industry staff in place. Those who work low -paying jobs are being priced out of the city, and the kitchens suffer. Pared and Instawork help fill some of that gap, but the need is obvious.

“For the most part, most places will try to hire me after a shift,” Jimmy says. “The city is short with line cook people and every restaurant is struggling to retain people working in this industry. Almost every single place I go more than once will offer me a job. But I like the flexibility of going in there and being able to check out and not having to go back.”

For Jimmy, AB 5 could destroy his much-needed side work. He says he doesn’t want to be an employee of Pared or Instawork, but instead relies on the apps to fill in gaps in employment or pay periods.

“I was working in one place that I left, and it gave me the freedom to quit and work flexible hours until I find somewhere that I feel more comfortable with,” he says, adding that “I definitely wouldn’t want to be employed for them. I definitely like the freedom to do what I do.”

That said, both apps appear to be changing, and the model is becoming more stressful.

“They’re getting really strict on the apps now. They got really brutal recently. If you’re a no-call no-show or you’re late there’s a point system and you could get deactivated. Everyone’s getting rated. The employers hiring us have more power than we do,” he says.

But “I definitely think Pared and Instawork work,” Jimmy adds. “I feel like these two companies make sense. You don’t have to do 30 drives in one day. You do these small gigs and you make a good amount of money. You can set your limits on these apps. It’s enticing.”

A Lyft driver holds a sign as he drives past a group of drivers protesting for better wages ahead of the company’s initial public offering. Photo by Kevin N. Hume
 

Ann Glatt, Lyft driver
Glatt makes sure to mention that she has a bachelor’s degree. The 62-year-old drove for Lyft for years, before the company changes cut her pay and she began having health issues.

“Two months ago, Lyft took from me surge pricing and incentives, and my earnings plummeted well below minimum wage,” she says. The unexpected changes have left her feeling powerless and without an income; it’s simply not worth it to drive for the company anymore. Despite the contribution she’s made to their success, she says it’s nearly impossible to get hold of anyone who works at the company, or to provide feedback as a driver.

“What a driver must have is a way to voice our grievances, and Lyft and Uber have deliberately isolated drivers, pitting us against each other,” she says. “We must have the ability to stand together as drivers and not be afraid of deactivation or retaliation. We must have a seat at the table when it comes to decisions that affect drivers the most.”

But the biggest drawback Gett experienced driving for Lyft was health-related.

“After two years of driving I started experiencing horrible headaches that would keep me in bed for days. I was diagnosed with osteoarthritis, spinal stenosis, and osteoporosis, all of which I was told was due in part to sitting for long periods of time,” she says. “I paid out-of-pocket for physical therapy and acupuncture, but could only go when I made enough that week to cover the expense.”

Gett’s not the only one to experience physical and mental health issues while doing gig work — something she’s learned through organizing with Gig Workers Rising.

“Anxiety and stress and isolation are a common problem that many drivers, including myself, experience,” she says. “My anxiety stemmed from a fear of being deactivated, getting random parking fines, moving violations, debt, and of course making enough money to live each day.”

 

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