Why is Uber/Lyft Spending $181 million on California Prop 22?
Uber, Lyft and fellow gig economy companies have created a business model of exploiting workers and manipulating government officials. Now they have set a record by dedicating $181.4 to urge voters to pass their self-written California Prop 22.
$181 million might sound like an obscene amount of money to spend on a ballot proposition. Yet its shrewd investment that will save the companies hundreds of millions each year. The UC Berkeley Labor Center finds that Uber and Lyft avoided $413 million in California unemployment insurance (SUI) taxes by misclassifying drivers as independent contractors.
Prop 22 is aimed at overturning Assembly Bill 5 (AB5) and the California Supreme Court’s ruling in Dynamex Operations West, Inc. v. Superior Court 4 Cal.5th 903 (Cal. 2018). Without Prop 22, workers such as gig economy drivers must be designated as employees and provided all the employment law rights and protections that employees enjoy (minimum wage, overtime, unemployment/disability insurance). The gig companies prefer to classify them as “independent contractors.”
The gig economy companies argue that Prop 22 gives drivers a minimum pay rate that they don’t receive as independent contractors, but this is nonsense. The UC Berkeley Labor Center also estimated that the effective minimum wage that would result from Prop 22 would only be $5.64 an hour because of all the uncompensated time and expenses (e.g. gas, tolls, time spent by drivers driving to pick-up locations).
Despite the ubiquitous TV ads playing now, the real beneficiaries of Prop 22 aren’t the drivers, but Uber, Lyft, and the other gig companies. Reclassifying their drivers as employees would be great for drivers and a disaster for the techies running these gig economy giants.