Showdown at the Ballot Box in California: Gig Workers Versus Big Tech

| 10.29.2020

A major decision that may impact the future of work and have implications for food justice will be made on November 3rd by voters.

No, I’m not talking about the US Presidential election, but the pitched battle between Silicon Valley and “gig economy” workers taking place in California in the form of Proposition 22.

In 2019, the California legislature passed AB5, a piece of legislation that heavily regulates and restricts the definition of independent contractors, potentially placing the entire (exploitative) business model of some tech companies in jeopardy. This became certain after the courts ruled that many app-based transportation and food delivery workers were being misclassified as independent contractors instead of regular employees. California has seen a loss in $7 billion per year in payroll taxes due to misclassification. In response, Uber and Lyft undermined both the courts and democratically-elected politicians by threatening to suspend its operations (otherwise known as a capital strike or lockout). The state of California backed down, allowing the companies to continue business as-usual and evade the law until the voters ultimately decide on November 3rd.

If Proposition 22 passes, app-based companies who misclassify their workers as independent contractors will be exempt from AB5. This means they will continue excluding their labor force from unionization, health benefits, overtime pay, reimbursement for work expenses, paid time off, workers’ compensation, protection from discrimination, and unemployment benefits.

Already, proposition 22 has become the most expensive ballot measure in the history of California, with over 199 million dollars spent by Silicon Valley tech companies and other powerful interest groups attempting to persuade voters to vote “yes” on the proposition. A diverse array of corporations such as Uber, Lyft, DoorDash, and Postmates, along with police unions and business civic organizations ranging from the Black Chamber of Commerce to Mothers Against Drunk Driving, are standing steadfast in their support for the tech companies. To date, Uber and Lyft have contributed over $98 million, while DoorDash, InstaCart, and Postmates have donated over $86 million, signaling the desperation of these companies to overturn the pro-worker piece of legislation.

The opposition, which has managed to raise around 19 million dollars, is backed by a number of unions, civic organizations, and politicians representing both the progressive and centrist parts of the Democratic party, such as Bernie Sanders, Kamala Harris, and Joe Biden.

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While tech companies have outflanked organized labor, regulators, and politicians over the last decade to squeeze workers, worker activism and intensive litigation in the courts has finally caught up, bringing this growing confrontation to a head in 2020.

Why Misclassifying Workers Matters

Gig economy companies that focus on transportation, delivery, and more, produce their profits by placing all of the labor costs onto the worker. This means workers are on the hook for everything from their car or bicycle to their waiting times and more. The companies’ method for accomplishing this is by simply labeling their workers as independent contractors instead of employees, saving enormous amounts of money and responsibility while also denying workers the right to unionize. What ends up happening for workers in the gig economy is that their costs of production subtract so significantly from their overall earnings, they end up making less than minimum wage in many cases. It has even been reported in some cases that to make an adequate living, Uber drivers have to work 70-80 hours a week just to make a living, erasing any hint of so-called “flexibility”. What app-platforms have successfully done is to place all the risk upon laborers instead of the company itself, worsening the erosion of working people’s livelihoods.

What is more important to know is that being labeled an independent contractor implies some sort of equal relationship between the company and the contractor. Under this logic, gig workers are simply just freelancers and the gig companies with their apps are intermediaries between them and customers. However, this is not the case for workers using app-based platforms to make a living or just trying to subsidize their underemployment. They have to abide by the rules set by the companies; have no real control over choosing the customers they serve; and they’re even penalized for turning down customers.  These gig workers don’t even have control over the pricing of their services in order to increase revenue. The best they can hope to do is simply increase their hours to increase revenue. It has even come to light in a recent lawsuit that Uber drivers have been bombarded with company messaging around proposition 22, causing them to fear retaliation if they don’t answer surveys telling how they voted or will vote on Proposition 22. Under these conditions, it is clear that gig workers are not their own bosses and end up resembling employees far more than independent contractors. 

New Industries, Old Tactics

Many industries that rely on highly precarious, cheap labor use their political and economic weight to make exceptions to the labor laws we do have in order to keep their business models going. Agribusiness and Southern Democrats during the 1930s ensured that black, brown, and even white farmworkers would be excluded from union rights and social security. The restaurant industry has long fought hard to prevent tipped workers from receiving real minimum wages, and many other companies like Amazon and Walmart fight tooth and nail to prevent unionization. The Silicon Valley titans, for all of their enthusiasm about being on the forefront of social advancement, are attempting to use their political power to exclude workers from basic protections by continuing to misclassify them in order to protect their profit model.

Challenging Corporate Power and Building Up Workers’ Collective Strength

Since COVID-19, many of these same gig workers have become “essential,” making the lives of many others incredibly easier and safer, but with little in return for themselves. As the economy continues to deteriorate into the most unequal recession in US history, disproportionately impacting low-wage workers of color worse than any other economic recession in history, the gig economy will likely tap into this pool of workers similar to the way it had during the years following the Great Recession in 2008. The large reserve of unemployed or underemployed workers may find themselves more dependent on the gig economy which offers little in the way of anti-discrimination protection or living wages due to the independent contractor status. While companies like DoorDash claim that the “democratization of convenience is more important than ever,” it has become clear that this empty idealism simply papers over increasingly egregious forms of exploitation.  If Proposition 22 passes, research has shown that Lyft and Uber drivers may end up only making $5.64 an hour, well below California minimum wage. The trajectory of the gig economy to grind its workers down to maintain profits will only exacerbate an already unequal economy.

A crucial part of defeating the injustices that cause hunger means strengthening workers’ rights, protecting against discrimination, improving working conditions, ensuring a living wage, providing a social safety net, and allowing for unionization.  Financially struggling workers in the gig economy who are making less than minimum wage have been engaging in strike actions and other strategies to push back against unfair practices of gig companies. There have been successes due to worker pressure, legislation, and court mandates, but these companies continue to push back and intensify their race to the bottom. Defeating proposition 22 is an important step towards decreasing corporate power that undermines workers and democracy. By helping build up workers’ collective strength, we can begin to tip the balance of power back in the favor of working people. Allowing corporations to proceed unchecked, as in the case of Proposition 22, will not only be a loss and injustice to gig economy workers, but for working people in other states as well.

Cover photo: Precarious Workers Strike Back. Photo by War on Want (CC BY 2.0)