Ride-hailing drivers in California are taking home about $6.20 an hour under a law that was approved by the state’s voters a couple of years ago, according to a report published Wednesday.
Proposition 22, which is in legal limbo after a court deemed it unconstitutional last year, among other things promised 120% of the state’s minimum wage to gig workers. But according to the report developed by the National Equity Atlas and Rideshare Drivers United, which the groups say is the first driver-led study using directly collected earnings data and working conditions to assess the impact of Prop. 22, the reality falls far short of that promise.
“The ride-hailing companies and DoorDash were throwing millions of dollars at it, but not at me,” said Dominique Smith, a driver for Uber and Lyft in the Bay Area, during a news conference Tuesday. “I definitely wasn’t a fan of Prop. 22 to begin with, and I’m definitely not a fan afterward.”
The effects of the California law backed by Uber Technologies Inc. UBER, -3.24%, Lyft Inc. LYFT, -5.51% and other gig companies like DoorDash Inc. DASH, -0.85% are important and potentially far-reaching as the companies try to expand Prop. 22 or something similar — what Uber has dubbed the “independent contractor-plus” model — to other states and countries. In addition, the report cites Bureau of Labor Statistics data that showed that in 2019, the number of U.S. adults who worked as taxi drivers or chauffeurs for their primary job had tripled over the past decade, coinciding with the rise of Uber and Lyft.
The report is based on data from nearly 12,500 rides by 55 drivers for Uber and Lyft, the two leading ride-hailing companies, over more than one month in 2021, though the earnings analysis is based on an even smaller sample of 21 drivers for whom the researchers had enough data. Drivers’ median gross pay, including bonuses and tips, was $26.30 an hour, according to the report. To arrive at the per-hour median take-home pay figure, the report’s authors took into account the drivers’ hours worked, plus benefits they would be entitled to if they were considered employees, such as reimbursement for driving expenses, unemployment insurance, paid leave and worker’s compensation. Because some, but not all, drivers are eligible for health insurance stipends under Prop. 22, that was excluded from the calculation. “Drivers are losing out on approximately $20.10 per hour because of Prop. 22,” the report’s authors wrote.
Uber and Lyft slammed the report and offered numbers from studies they backed.
“This is a flawed survey that is untethered to the experience of drivers in California,” a Lyft spokeswoman said. “With record low unemployment, and more than 1 million unfilled traditional job openings in California, drivers wouldn’t continue to choose this work if there was any truth to these findings.”
Lyft’s own economic impact report finds that 92% of Lyft drivers support “a policy proposal under which drivers would remain independent contractors” and have some benefits but not full employee benefits.
An Uber spokesman also called the survey “flawed,” and added: “Looking at the same dates in 2021, across the tens of thousands of drivers active on the platform, median gross earnings on Uber in California were over $30 an hour for all time spent online, significantly higher than what they claim.”
The period covered by the driver-led report was Nov. 1 to Dec. 12, 2021, during a quarter in which Uber and Lyft posted increased revenue and said their businesses had recovered to coronavirus-pandemic highs. Also, ride-hailing charges per mile were up more than 35% year over year around that time, according to receipt data from YipitData.
The Lyft spokeswoman mentioned the benefits that gig workers are entitled to under Prop. 22, such as quarterly healthcare stipends and occupational accident insurance. The Uber spokesman and a spokeswoman for the coalition that represents gig companies, the Protect App-Based Drivers + Services, cited an industry-backed survey by UC Riverside’s Center for Economic Forecasting & Development, which found drivers earning an average of more than $34 an hour.
Smith, the driver from the Bay Area, said that despite driving full time or nearly full time, he has “no ability to make the stringent quotas to receive the stipend.” In an interview after the news conference, he said “only a certain sliver of drivers can qualify. They have a high bar.”
But Chris Hoytt, a driver from Sacramento who has done ride-hailing in the Bay Area and elsewhere in California for the past eight years and used to be on Lyft’s driver advisory council, said that if Lyft drivers average at least 15 hours a week, they qualify for a partial stipend.
Hoytt, who said he voted for Prop. 22, also shared that he drove for Uber on Tuesday for about 3½ hours and made $130.
“The money is there to be made,” he said. “How you make it and how you go about doing it is really big.” He acknowledged that each driver has different circumstances, though. For example, he said “some people are renting cars. How much are they paying for it?”
The report also found that ride-hailing work has become “less flexible and more controlled” by the ride-hailing companies under Prop. 22. That’s partly because of changes the companies have made since Prop. 22, such as Uber changing the pay formula for surges, according to the report. Drivers interviewed for the report said that to try to earn as much as they did before, they had to work irregular or longer hours, accept more rides and depend more heavily on tips and bonuses.
“This is not about flexibility,” said Nicole Moore, president of Rideshare Drivers United, during the news conference Tuesday. “It’s about companies being allowed to pay a sub-minimum wage.”
The report’s authors also stressed that their findings show that Prop. 22, which was approved by 58% of California voters in 2020, contributes to racial inequity because of the demographics of ride-hailing drivers. Of the 55 drivers whose data was collected for the report, 71% were people of color and immigrants, said Eliza McCullough of PolicyLink, who was one of the report’s authors.
The National Equity Atlas is a research partnership by PolicyLink and the University of Southern California Equity Research Institute. Rideshare Drivers United is a workers group that says it has more than 20,000 members in California.