Uber And Lyft's California Reckoning Is Nearly Here

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Uber and Lyft, two companies that have never turned profits, really want you to believe that their very existence in California is riding on Proposition 22. That very well may be, but not because there is anything wrong with California state law. It will be because Uber and Lyft’s business models rely on worker exploitation.


To recap: last year, California passed AB5, which required so-called gig economy companies like Uber, Lift, and Doordash to classify their independent contractors as full employees, endowing them with benefits like unemployment insurance, sick leave, and healthcare. Uber promptly sued. The state of California later also sued, accusing Uber and Lyft of not complying with the law. The matter has been tied up in the courts since.

On Thursday, a California appeals court upheld a ruling against Uber and Lyft, saying that it had to comply with AB5, though that ruling won’t take effect until after the matter of Proposition 22 is decided at the ballot box on November 3.

How should you vote on Proposition 22, if you live in California? I’m glad you asked. The language voters will see makes it all pretty clear:

A YES vote on this measure means: App-based rideshare and delivery companies could hire drivers as independent contractors. Drivers could decide when, where, and how much to work but would not get standard benefits and protections that businesses must provide employees.

A NO vote on this measure means: App-based rideshare and delivery companies would have to hire drivers as employees if the courts say that a recent state law makes drivers employees. Drivers would have less choice about when, where, and how much to work but would get standard benefits and protections that businesses must provide employees.

This is a classic California proposition. To get what you want, you must vote NO. Californians love the ritual of checking and double checking ballot guides before voting and repeatedly asking themselves “am I stupid?” while trying to figure out who worded all of this shit.

One of the benefits of the gig economy, its proponents argue, is that it frees up workers to go from job to job, not tying them to any one employer. I can see how some part-time Uber drivers might argue that a higher barrier to entry to driving Uber—and having less flexibility about how much to work—might make remaining to be an independent contractor appealing. But on the other hand it’s hard to argue that the drivers who treat Uber or Lyft as full-time jobs don’t deserve the protections and benefits a full-time job usually gives you.


For some people, in other words, I can see how the issue isn’t open-and-shut, but for voters without skin in the game the best indicator of how to vote may be the fact that Uber, Lyft, and other Proposition 22 supporters have spent around $200 million in their campaign. An opposition campaign, meanwhile, has raised around $15 million, according to The New York Times. That money is mainly coming from labor unions.

Polling on the issue, perhaps unsurprisingly, presents a clouded picture. Per The NYT:

Despite the big spending and a barrage of television advertising, only 39 percent of likely voters said they supported Uber and Lyft in a poll last month by the University of California, Berkeley, while 36 percent opposed their proposal and others were undecided. People close to the campaign said they would want to see close to 60 percent approval in polling before they could breathe a sigh of relief.


That means passage—or not—is still very much up in the air with so many undecided. Uber has said that, in fact, it won’t bail from California should Proposition 22 lose; instead it’ll likely scale back significantly and raise fares. Maybe that’s the outcome that should’ve happened to begin with.

If your business model relies on exploiting workers and still doesn’t make money, it’s possible you have a bad business.



Can someone explain to me how making it more expensive to operate an already unprofitable business is good for the employees long term?

I understand Uber/Lyft are mostly just raking in money from investors, investors who will presumably one day decide that they’ve waited long enough for a return and decide to stop throwing good money after bad. Wouldn’t tilting the scales further towards unprofitability just hasten that decision? How is that good for people who want to drive for Uber/Lyft?