How the Gig Economy Won in California

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S1: This week has been pretty relentless, it’s been hard to keep up with every twist and turn of the presidential election, let alone think about all the other races in the country. So you’d be forgiven if you missed a vote in California. It was on a state ballot proposition. And this vote, it has the potential to change the way millions of people work, not just in California, but across the country in the context of the United States.

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S2: People often look at California as this giant blue state, a sort of idealistic democratic state.

S1: That’s Sam Harnett. He covers tech and labor for KQED, a public broadcaster in California. And yeah, since the 1990s, California has had a reputation for progressive politics. Every current statewide office holder is a Democrat. Fuel emission standards or strict marijuana’s legal. And just this week, the state voted to restore voting rights to some formerly incarcerated residents.

S2: But, you know, being a tech reporter in Silicon Valley for the last 10 years, like a lot of what you see here in terms of income inequality, in terms of capital accumulation, it looks very much like what you would associate with the Republican Party.

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S1: So when it comes to statewide votes, they aren’t always that progressive.

S2: You sort of get out like what is a progressive liberal person in California and you would assume that a progressive person would support what Labor supports. It would be on the side of the worker.

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S3: But this week, labor organizers lost and Californians by and large sided with the tech companies. Californians voted yes on Proposition 22, an effort bankrolled by companies like Uber and Lyft, Prop 22 allows those companies to continue treating their app based workers like ride share drivers or Dawidoff careers as independent contractors, not employees.

S2: It’s a huge win for these companies, and it’s a blueprint for what they want to do across the country as soon as Prop 22 passed in their sort of celebratory emails. Big companies have been talking about how they want to make this the model for the nation.

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S3: Today on the show, we’re going inside the most expensive ballot measure in California history. How big tech convinced Californians to vote their way, what it means for workers in the state and what it could mean for workers all over the country. I’m Lizzie O’Leary, and you’re listening to What Next, TBD, a show about technology, power and how the future will be determined. Stay with us.

S4: So can you tell me in the simplest terms what this result, what the Yes on 22 means?

S2: So in the simplest terms, this creates a carve out for at base delivery and transportation companies to classify their workers as this kind of new sub employee category. So they’re contractors, but they get some benefits, but the benefits are watered down employee benefits.

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S1: Sam says these watered down benefits were actually designed to look good to California voters who want to help workers.

S2: So instead of health insurance, you get the option to buy health subsidies. Instead of worker’s compensation, you get the option to buy insurance. Instead of having a minimum wage guarantee, you get the one hundred twenty percent of minimum wage, but only for engaged driving time. And a lot of work in gig gaps is waiting for your next job. So it’s 120 percent of minimum wage. But if you’re only working 60, 70 percent of the time, that’s actually far less than minimum wage.

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S4: Were you surprised by how this vote when?

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S2: I was a little surprised, but I think that was naivete. Really? Yeah. So we’re in the middle of a pandemic, right? Uber and Lyft, the largest companies, have often relied on consumers to push back against politicians who want to regulate them. But here in the pandemic, ridership was way down. And in California, you saw all these Uber and Lyft drivers who were unemployed and couldn’t get unemployment insurance. They had to come to the state. The state didn’t have any money because Uber and Lyft had never paid a dime into unemployment because they’ve always classified their workers as contractors. So then they’re getting the bailout from the federal government. They’re getting federal taxpayer dollars. So so there’s things like that where you’re like, OK, Uber and Lyft don’t have a strong leverage point with their consumers as they normally have. So there was that. There was the fact that the proposition was written as a specific carve out for a few companies. And you figured voters might look at that, especially in the context of the pandemic, and think, why should we help out just a handful of these companies right now? Hmm. And then in the vote, you know, in the last week, up to the election, the vote was forty six. Forty two, no. So given all that, it looked like it was going to be at least close and instead it was a landslide. I mean it is fifty to forty two. I mean, that is a huge, huge victory.

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S4: Well, let’s back up for a second because California has a lot of ballot propositions. And I think if you don’t live in California, that can be surprising or confusing. Why are they so popular in the state?

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S2: Yeah, the ballot propositions have an interesting history. I mean, they started the whole intent of the propositions was for regular people to have pushed back against the government. If it was overtaken by corporate interests, it was like, OK, if the legislature and the governor and the courts are all bought by corporations, then people could at least vote and get things done that would help them out. Right. But as we’ve seen over the years, more and more corporations have seen ballot propositions as a way to get stuff done that they can’t get done through the legislature. And of course, as we know about elections, you know, we’re not perfect, rational creatures. You take in all the information and make the best decision. We are affected by marketing and advertising. Right. So you saw corporations start pouring tons of money into advertising to get people to vote a certain way on a ballot proposition.

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S4: So Proposition 22 was very much not a grassroots effort. How did it come to be?

S2: Sure, the 2012 women were come on the scene, they start classifying their workers as contractors, this becomes the basis of the entire gig economy model. Postma is the car door dash. They all follow suit because they’re saving tons of money, right. Six years go by. California government does nothing to sort of figure out this question of, well, is this legal or not? They sort of just ignore it. Finally, the California Supreme Court ways in which makes it much harder for companies to classify their workers as contractors.

S5: Ford says that Uber and Lyft have to treat their drivers as employees instead of the independent contractors that they treat them like now.

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S2: So that happens. And everyone thought, you know, wow, Uber, Lyft, they’re going to have to reclassify their workers. But the companies just ignored it.

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S6: So the state legislature, Lorena Gonzalez, assemblywoman, she writes about five, which is targeted specifically at big companies, and it codified the Supreme Court decision into law.

S7: I have never been so excited by a court decision.

S2: And she was very crystal clear.

S7: This is to target gay companies because I guarantee you the new normal, if I hire you over an app, you have no rights. Every one of our jobs are fine because we will all become demand when the law passes.

S6: It goes into effect in January of this year. Still, the gay companies keep closing their workers, contractors. And when EB five became law or when when it passed, that’s when the companies said, you know, let’s go to the ballot box. So they wrote Proposition 22 and they wrote it in such a way that if it passed, it would require seven days of the legislature just to make an amendment which is unprecedented and the legislature can’t achieve. So they basically they wrote this proposition to to be like a final blow really in this eight year battle. And they figured if this passes were set.

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S1: To get a ballot measure like this on everyone’s radar and to build support for it took money, a lot of it, Uber, Lyft and the other companies backing Proposition 22 spent more than 10 times what their opponents did. That added up to more than 200 million dollars, making this the most expensive ballot measure in California history.

S2: And they used a lot of that money to shape a campaign that was centered around social justice. Because here’s the thing. I mean, California, right? It is progressive. It is Democratic. It is liberal. Yeah. So they had to figure out some strategy to make people who care about workers want to get behind something that organized labor was against. And their tactic was to go the social justice route.

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S1: That meant couching the campaign in the language of workers rights or sending mailers that looked like they came from trusted allies.

S2: If you’re not a voter in California, let me tell you, I am a reporter. I I’ve been reporting on some of these propositions, you know, all year. And I get to the ballot box and I still have trouble understanding exactly what it would do, what it’s deciphering what it says. And most voters in California actually rely on voter guides. They don’t even read the propositions. You just do what some voter guy that you trust tells you to do. So they did the typical mailers and these mailers that they sent out, they often or many of these mailers they made, it looked like it was coming from a progressive organization and these progressive organizations didn’t really exist. They had one. I got it from like, feel the burn. It looked like it came from Bernie Sanders, but it had nothing to do with Bernie Sanders. It was a fake progressive organization.

S4: I gather that there was also involvement with the NAACP.

S2: So this was like central in the yes. On campaign’s approach. But yes, I’m proud to campaign one to get local chapters of the NAACP to endorse the prop. The California chapter of the NAACP ended up endorsing. But it turns out the same Prop 22 campaign sent eighty five thousand dollars to the political consulting firm of the chapter’s president, Alice Huffman. So she received the power money and then she wrote a bunch of op ed and editorial supporting the proposition.

S1: Sam says the progressive social justice messaging was only half of the Yes on 22 campaign strategy. The other part that massively extended their digital reach was built into their very DNA. Their apps, Uber and Lyft, were able to reach voters with their message directly by sending alerts and pop ups to customers and drivers phones. The company wanted customers to talk to their drivers about the measure and wanted drivers to show their support for it.

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S2: And there’s one pop up that really sticks out this driver. Send it to me. And the pop up says Prop 22 is progress, you know. Yes, on Prop twenty two. And it said a couple other details about the proposition. And then to exit the prop up, the driver had the option of clicking. Yes. On Prop twenty two or OK, those are the only options. There was no other way to exit the pop up. Well right. So and the driver, this is a driver who had gotten into an accident several years ago driving for Lyft, wasn’t covered by workers compensation. His daughter had to drop out of college and work while he he had shoulder surgery. After that, he decided I really want to be an employee. So he really didn’t want to click yes or OK, but he had no other option. Now, Uber tells me that the pop up was poorly designed. Then they redesigned it so drivers had an option to close it. But I think that pop up is is indicative of the campaign. They were running with drivers like it was a full on assault in the app. Just pop up after pop up messages. A couple of Uber drivers actually sued the company over the pop ups.

S4: Yeah, because they were getting so many of these right.

S2: There was that door Dash had delivered. It gave free. Yes. Um, probably two bags to restaurants and then the gig workers would have to use those bags to deliver food. So they basically became walking advertisements for. Yes, on Prop twenty two insta card at a at a Bay Area grocery store had in stock car workers put yes. On Prop 22 stickers inside customers orders. And all of these things are in a legal gray area because the workers are still classified as contractors.

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S4: Let’s talk about workers here, because I listen to you and it’s clear to me that you think workers are getting a very raw deal here. Are there are there drivers are there gig workers who want this? We heard from them in the debate around five.

S2: So this is really complicated. And it takes a while to, like, explain all of this. So we’ve got a minute. I can go into it because it’s really interesting. Yeah, actually. So the first point is, is a majority of the work done on these platforms is done by people of color working full time or in a second part time position. Right. But there also happens to be tens of thousands of people working on these apps and very casually just working a couple hours here and there, you know, maybe five, ten hours a day. Now, the surveys of all the workers. Do not wait for how much time and how much work you’re doing on the platform, so you’re getting these surveys that seem like a lot of drivers maybe supported Prop 22, but the driver is doing the most hours. We’re not getting adequately represented. I think the only way to really know what drivers want was to sit down with them, talk with them a lot, figure out what their story is. And I would say in my six years of reporting on this, it’s actually been very consistent. Drivers actually want autonomy and flexibility, but they want to be paid enough that it’s true autonomy and flexibility. They want to have rates so high that they can say, you know what, I’m not going to drive in rush hour today. I’m going to drive later and I’ll still make enough money or you know what? I am going to take a week off or, hey, I make enough money that I can put money aside in a savings account for if I have a medical emergency.

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S4: Have you talked to workers or you’ve stayed in touch with through your reporting since the vote? And if so, what have they said?

S2: Yeah, I talked to a few there, but you know what, it’s basically a sense of like, yeah, of course, like Uber and Lyft especially, of course they’re going to keep fighting like course they want and we’re going to have to fight more. I mean, this for some of these drivers, as has been going on for six, seven years, and they’ve seen so many things. There was there was class action lawsuits against the companies. They were the California Supreme Court case. There was the legislature there, the attorney general case, and nothing’s been successful. So I would say there’s extreme disappointment and there’s a there’s this feeling of like, well, of course, they’ve got tons and tons of money. Why would they stop fighting?

S4: There have been some pushes in different specifically local jurisdictions, New York, where I am, for example, to raise the wage floor for some of these drivers, to try to put something akin to a little more structure, if not full employee protections in place. Do you see the potential for something like that to happen in other places that aren’t California?

S2: I mean, there are three states, New Jersey, New York and Illinois, that are pursuing some kind of AB five law. There are other states that are doing that. But you’re saying looking to to put local regulations to improve gig work. But I think Prop 22 is going to put a chilling effect on all of that. Everybody was looking at this battleground and the big companies won by a landslide.

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S4: You know, one of the things that I’m struck by here is these companies, Uber and Lyft and a lot of the others, they don’t make money, they’re not profitable. And yet they spend a whole lot of money on this campaign, which tells me that they have an endgame outside of California.

S2: Right. I mean, these companies have never been profitable. Their business innovation was not their technology. They call themselves tech companies. But I mean, take take Uber, for example. It’s an app on a phone. It uses GPS, smartphones. This is not some revolutionary technology. The business innovation of these companies has always been the worker classification scheme. It has always been about having a workforce that is classified as contractors, which means they are far cheaper and it has been operating without following local transportation and taxi laws. Those are the business innovations. This is why venture capitalists poured tons of money into these companies. So it’s no surprise that these companies fought it tooth and nail and they see this as an existential threat. If you take away the worker classification and they have to classify their workers as employees, well, then how are they actually different than a taxi service?

S4: It sounds like there are a couple of different ways to look at Proposition 22 as a precedent for both what these kinds of companies want in national law, but then also how to get that message out nationally.

S2: Right. So if you look at the history of the contractor worker category, you can see that more and more industries have been exploiting it to save money and underpay workers. And I think the big worry from labor here is that by creating this new sub employee contractor worker category is going to open the floodgates. And right now it is restricted to app based transportation delivery services. But you could see other companies and other industries seeing the savings that Uber and Lyft and Dorda are getting by not paying for employee benefits and trying to find some way to craft an app that will also be able to take advantage of this contractor status. And then, as I said, the use of apps in this ballot race was unprecedented. I mean, we’re talking about millions of apps and millions of pockets, and the tech industry was watching very closely to see how this played out. And it played out very well for the good companies.

S5: Sam Harnett, thank you. Thanks. Sam Barnett is a tech and labor reporter for KQED. And that’s our show for today, TBD is produced by Ethan Brooks and edited by Allison Benedikt and Torie Bosch. TBD as part of the larger What Next family. And it’s also part of Future Tense, a partnership of Slate, Arizona State University and New America. Have a great weekend. Maybe go outside and just take a walk, and Mary Harris will be back in your ears on Monday. I’m Lizzie O’Leary. Thanks for listening.