Sarah Holder is a staff writer at CityLab covering local policy, housing, labor, and technology.
Supporters and foes of California’s AB5 marched on the capitol this week over the bill that could transform the business model for Uber, Lyft, and drivers.
Two coalitions of Uber and Lyft drivers went down to California’s Sacramento Capitol building on two different days this week to talk about what AB5, a state bill that would turn many gig employees into full employees, would mean to them.
One group of drivers stood firmly against the bill on Tuesday, fearing it will erode the freedoms they enjoy as independent contractors. Their stance is shared by Uber and Lyft, both of which have called on the state to commit to a classification compromise, arguing that destroying the gig-worker model upon which their business is based will be bad for drivers, too.
The other group of drivers, made up of ride-hail organizers from Rideshare Drivers United and Gig Workers Rising, advocated strongly for AB5’s passage on Wednesday, hoping that with traditional employment will come expanded rights and less volatile pay.
Observers are divided, too. David Weil, who worked on wages and hours in the Obama-era labor department, argued in an op-ed in the L.A. Times this week that though there are some companies whose workers operate somewhere in between contractor and employee, “Uber and Lyft are not among those close, gray area cases. Their status as employers is really quite clear. And though that designation would reduce their profits, it wouldn’t be a threat to their existence.” The L.A. Times editorial board, meanwhile, advocated for more regulations protecting drivers, while calling the idea that flexibility can be preserved under reclassification “a risky fantasy.”
To break down the stakes of AB5 for drivers—and understand what’s made the debate so heated—CityLab spoke with Harry Campbell, whom you may know better as “The Rideshare Guy.” Campbell was once an Uber driver himself. Now, as an all-things-ridehail blogger, podcaster, Youtuber, research analyst, and consultant, he estimates he has had conversations with as many as 50,000 ride-hail drivers. “Drivers, when we survey them and we’re talking, they actually want to be independent contractors,” Campbell told CityLab. “But the problem is that right now they’re just not independent contractors.”
The conversation has been edited and condensed for clarity.
CityLab: Though the debate over the value and the role of gig work has existed since Uber’s inception, AB5 is the first bill that seems close to passing that could totally reimagine the platform economy. What perfect—or imperfect, as the case may be—storm brought us here?
Harry Campbell: I think it was really just a matter more of coincidental timing more than anything. If you look at the history of the Dynamex case [which created a definition of independent contractor that Uber and Lyft drivers likely won’t meet, and which AB5 would enshrine into law], it was first brought up ten years ago [though it was decided by the California Supreme Court in 2018]. Uber and Lyft didn’t even exist yet.
Even though the case is focused on a lot of other gig and freelance workers, the brand awareness that Uber and Lyft have, and the issues that they’ve had over the past few years (whether it’s internally at the company, or with the drivers), means that they’re very topical news stories. The combination of that has thrust Uber and Lyft into the spotlight of this Dynamex decision.
And then also, frankly, the fact that if you talk to anyone who’s ever driven for Uber and Lyft, what they advertise—“be your own boss, set your own hours, work whenever you want”—is a lot different than the actual reality of being a driver. To their credit, there’s definitely a lot of flexibility in this gig, but it’s not the same as sort of it looks from the outside.
What’s the reality like, then? What are some of the challenges drivers face, and how have those challenges evolved?
One of the nice things about driving and working these gigs is that there’s a very low barrier to entry. Basically anyone and everyone can sign up, and Uber and Lyft will almost take anyone and everyone. I've interviewed lots of drivers who couldn’t get work in other areas: because they got laid off, or they were nearing retirement age, or they felt that they’d been discriminated based on the basis of age or sex or race. With Uber and Lyft, there’s none of that.
There’s a lot of potential people who this job might make sense for, so there could be a lot of people coming in with different expectations. But once drivers get up and running they start to realize that there’s a little bit more to the gig.
I call it the honeymoon period: The first three months are pretty great. It’s a pretty fun job. You’re meeting all these different people; you can work whenever and wherever you want. But once you start to really think about your earnings, for example, like how much money am I making? What about the depreciation and expenses that I’m putting on my car; the cost of gas—every week you fill up once or twice a week, but now you start realizing, oh, I’m driving full-time, I’m getting oil changes every month; I’m getting new brakes every three to four months. A full-time driver will easily do 1,000 to 1,500 miles a week, so that’s four to six times the average driver who puts in like 1,000 miles a month.
Uber shows you the fare breakdown and on some [pool] trips—they take 50, 60, 70 percent of the fare—so they're taking the majority, even though you’re doing all the work. Uber and Lyft are both notorious for very poor customer support. So if you have an issue with a deactivation, or a passenger, or a safety issue it’s really hard to get a result that is either in your favor or that kind of satisfies your request.
A lot of these micro issues start to build up over time. There is a very low retention rate—not a lot of drivers stick around, but there's just so many potential people out there that they can hire, so it seems like it's never really become an issue.
One of the big questions surrounding AB5 is how many people are actually driving for Uber and Lyft full-time, and how many are truly treating the gig as a side hustle. From your experience, what’s the breakdown?
If you look at the surveys that we've done and that Uber and Lyft have done, the majority of drivers are doing somewhere in the 10 to 20 hours a week or less range. A lot of people get into rideshare driving to make a few hundred bucks a week. They get into it looking for part-time, flexible work.
But what I see that trips a lot of other drivers up is that there’s a ton of variability. We've got one contributor here in L.A. who’s a top driver. He goes out, he makes over $30 an hour before expenses driving for Uber and Lyft in L.A., and he's got a lot of strategies he’s using: he’ll log off when it’s not busy enough, and then go log back on when the surge goes up. He’s really thinking about it meticulously. At the same time, I get e-mails from other drivers in L.A. who are struggling to make a minimum wage, because they don’t know all of these other little tips and tricks that the more experienced or savvy drivers do.
Of course, for someone who’s making a ton of money and enjoying the system right now, maybe they prefer to be an independent contractor. But someone who’s struggling to make minimum wage and hasn’t quite figured out the system, they would obviously benefit much more from a more fixed wage like you’d get in other part-time or service-level, entry-level jobs.
What would AB5 do to address these variability problems?
If drivers were employees, they’d all be entitled to minimum wage, and it would put a floor on earnings. And that’s something that I think makes a lot of sense, because you do have a lot of drivers who are just learning the ropes or struggling at the start, and I think Uber and Lyft could do way more to help drivers at the beginning.
What I like about the minimum wage is that it doesn't necessarily limit the upside. If you’re a good driver, you can still go out and make more than minimum wage. But it does prevent anyone from making a few dollars an hour for all of their driving, and having a really frustrating experience.
One of the biggest arguments the companies, labor scholars, and drivers themselves have used against AB5 is that while it might increase pay it would also reduce flexibility. Are those fears founded?
There’s nothing in the law that says as employees you have to work a more rigid schedule. But obviously, when you look out on the playing field of employee jobs, the flexibility is much more rigid than driving for Uber and Lyft. So I think that there’s definitely a fear that things could become [less] flexible.
But we also just don’t know. It’s a lot easier for Uber and Lyft to fear-monger and say that everything’s going to get [less] flexible. But there are pretty smart people working at both companies, and it’s not out of the realm of possibility that they could come up with a system that was still somewhat flexible, and drivers were employees.
Because it’s the companies themselves that are setting the terms of that flexibility.
Yes. Right now, a driver can go log on whenever and wherever they want—but frankly there are some times and places where, even if you can drive during that time, you probably shouldn't. So if you’re out in the middle of nowhere and want to log in on a Tuesday at 2:00 p.m, that's a really slow time. You can do that that, you're just not going to make any money. You may not even get a single trip.
If Uber or Lyft reduced some of the flexibility to do things like that, I don’t think it really hurts that many drivers—and it probably helps a lot more drivers than it hurts.
This sort of gets at an argument that Alex Rosenblat makes in her book Uberland, and that labor economist David Weil made in the L.A. Times this week: That Uber and Lyft drivers do have bosses, but those bosses are algorithms. They’re still influencing when and where drivers work, and how much they make.
Right. Overwhelmingly drivers, when we survey them and we’re talking, they actually want to be independent contractors. But the problem is that right now they’re just not independent contractors. Uber and Lyft exert so much more much control over everything and the direction that they’re headed is that they’re exerting more control over time. It’s not getting more flexible. It’s getting less flexible.
Look at that trend, and see the path that we're on: Drivers are having a lot of the requirements of an employee, yet they're not being paid like one, and don’t have any of the worker protections, and don’t have any of the benefits. That’s where it gets a little complex.
Last month, the CEOs of Uber and Lyft published an op-ed in the San Francisco Chronicle asking California to compromise on AB5; implying that they could address pay instability themselves, and promising to create an in-house driver organization. What was the significance of that joint op-ed, and what did you think of their offer?
I think the significance of the op-ed is huge. As far as the actual compromise that they’re offering, I think that the minimum wage piece makes sense, and also I like the idea of a driver organization. But if there isn’t any type of structural change then they can always adjust the system in the future.
Sort of like what Lyft is doing in New York City: The city came out with this minimum wage, and now Lyft said to drivers okay, well, we're not going to let you go online during these certain times. So what if in the future they decided if you picked up a ride way out in the middle of nowhere, they're going to make you go offline and drive back to the city and not pay you for that time because you're not online technically?
That can keep going, tit for tat. Unless there’s some sort of organization that has a structural bargaining power then I think it's going to be tough, because Uber and Lyft can always change things and drivers are sort of more at the mercy of the rules. That’s my only concern with the compromise. But if there was a minimum wage and a driver organization, I think that's definitely a great step for drivers.
Should the onus be on Lyft and Uber to set that minimum wage? Or do you think cities could (or should) set local minimums first, like New York City did?
I think that Uber and Lyft probably won’t do it themselves anytime soon, but if a few big cities like New York City, L.A., and Chicago pass legislation like that and they could see the writing on the wall, then they might go ahead and just do it on their own. New York City was a big battle for them, but the city got their way: They put a cap on vehicles, and added minimum wage requirements.
Who are the biggest players in this AB5 debate right now, and how are they interacting behind the scenes to pass—or halt—this legislation?
My biggest observation so far has been that it does seem like the actual drivers are not the ones being listened to or negotiated with. The negotiations over the actual bill are happening between the labor groups—like the Teamsters Union and the SEIU—who don't have any real rideshare drivers in their ranks; and Uber and Lyft, who obviously have their own basic interests at heart. So that’s my one worry.
There’s a big Uber rally today [Tuesday] in Sacramento, sponsored by Uber. Basically, they sent out emails to all the Bay Area drivers and in-app notifications saying that drivers will lose flexibility under AB5, and if you want to come support your rights to flexibility we’re having a rally and there’s free food.
A lot of the drivers just interact with Uber and Lyft. They’ve got hundreds of thousands of drivers in California and I would guess that half of them don't even know that there’s forums or Facebook groups or online resources. When they get messaging from Uber and Lyft, that’s through a specific filter. AB5 does seem like a pretty bad thing for drivers if you’re only reading what Uber and Lyft are telling you—which I think is a little [hyperbolic].
The nature of the work meant that drivers were once in silos. Now, many of them are coming together through labor groups and online forums; and they’re getting information from institutions that aren’t just Uber and Lyft—on May 8th, they organized an international strike. What do you see as the future of this driver organizing?
I think Rideshare Drivers United is growing a much more grassroots organizing effort. They claim they’ve got 5,000 members, and it does seem like they’re a lot more organized than other groups in the past.
It’s a big risk for both Uber and Lyft if drivers start to get organized, and if some of these organizations really start to take off—and I don’t think any of them are anywhere close, but some, like Rideshare Drivers United, are definitely on the right path.
When we talk about AB5, we’re talking about transformative change, perhaps, but only in California.
I think what’s not really clear is that even if AB5 passes, Uber and Lyft could just say “forget about it, I’m not going to abide anyway.” They’ve got this arbitration clause in their agreement. And so even if drivers did want to take them to court over it they would have to go through [expensive] arbitration. If you look at the Dynamex case that's a perfect example: it took 10 years.
Uber and Lyft are already not complying with the [Supreme Court ruling established in Dynamex]! But I can understand the lawmakers’ point of view. Just because it’s going to be tough to enforce, doesn’t mean we shouldn’t try. The California Public Utilities Commission controls Uber and Lyft’s TNC licenses; maybe they could revoke the licenses if they don't comply.
Assuming AB5 passes—or even if it doesn’t—how will other cities and states look to California to set their own standards?
I think that’s why Uber and Lyft are fighting so hard against it: because California is their biggest market. If it passes in California, they basically have to retool their entire business, and they’ll be faced with a really tough question: Do they want to do it nationally, or basically have two different business models, one in California and one outside of California?
As you might imagine, if this passes in California it’ll probably set precedent for other states, and eventually over time those other states will kind of pile on, and Uber and Lyft will have to again determine if they want to fight it piece by piece, or just keep on delaying the inevitable.