As a bill to reclassify ride-hail drivers as employees in California looms nearer to a final vote, Uber and Lyft are sending misleading emails to their passengers and drivers in a last ditch effort to lobby for an exemption.
Uber’s email to drivers specifically promises a lot of changes that appear on the surface to give in to many of the demands from drivers and labor. However, a closer look shows how Uber will sidestep most of these promises if they get their way.
What Uber Is Telling Driver’s In California
The email blast went out to drivers and passengers who use Lyft and Uber’s ride-hail services on August 28th. Uber’s email to drivers went a step further though, promising some major changes to protect the earnings of drivers IF they sign a petition to get an exemption from Assembly Bill 5.
Uber’s Promises Sound Nice…Until You Look Into How They’re Written
Uber is using this email to appear like they are making some serious concessions to driver demands. It mentions a $21/hour earnings minimum, paid time off, sick leave, workers compensation, and even a right to elect our own representatives. The commitments look eerily similar to the demands coming from drivers who are currently fighting for Assembly Bill. What’s not to love?
All of it. Let me break these promises down for you:
“Earn Approximately $21/hr when driving with a passenger or going to pick them up“
This is made to sound like an earnings floor or something that vaguely resembles a minimum wage. Multiple press outlets are even flat out calling it a minimum wage proposal. However, this is inaccurate because Uber is only promising to guarantee an earnings floor while a driver is giving a ride, or on their way to pickup their next passenger. It doesn’t account for the long periods of time a driver waits to receive a request. Even though they are logged in to the app, and waiting for business.
On a slow day, I can spend 60%+ of my time logged in and waiting for ride requests. This is especially relevant for drivers in smaller markets outside of major urban centers.
It completely ignores whether or not a driver is logged into the app and waiting for rides. We already have this. If we are “in” a ride and counting the hourly rate of earnings based on when we already have a ride, or when we are going to pick someone up, the pay would come out to around $21 per hour.
Of course, that’s not what we really make on an hourly basis. If I charged you $5 to take out your trash and it only took 5 minutes it doesn’t mean I made $60 an hour!
Incentive For Low Utilization & Congestion
If Uber is committing to paying drivers a certain amount per hour only while they are “in” a ride, it means that Uber now has a larger incentive to continue adding more drivers to the streets. Since they would only be held accountable for their “in” ride hours, meaning that Uber would have a lot to gain from adding extra cars and drivers to the streets that loiter and wait for a request. This extra supply of underutilized Uber drivers then creates exceptionally low ETA’s for passengers while decreasing the amount of time that Uber must cover their $21/hour promise.
Imagine a recession hits and there is suddenly a large glut of drivers on the road. Recruiting costs for Uber would plummet and they would end up with a large force of still-contractors getting fewer rides that they do not have to pay a minimum wage for.
This minimum wage proposal is effectively a continuation of what Uber has been doing for the last 7 years. It’s just dressed up in ad copy that poses as concessions to drivers to get them to complete their call to action.
Uber doesn’t suffer in the same way from low utilization rates than it’s driver do. Instead they benefit by keeping pickup times lower while only being on the hook for the now limited rides that are available to drivers.
Uber Alludes To Copying Lyft’s Unpopular Rate Cuts
Earlier last week, Lyft rolled out a new way of paying drivers in mid-sized markets. Likely as a test before rolling the changes out to the rest of us. These changes effectively cut every driver’s rate card in half. The rate card determines how much driver’s make for time, distance, pickup, etc. The new pay structure says this is offset by now also paying drivers based on when/where they accept a request to pickup their passenger. However, a market saturated with drivers brings these pickup times down; resulting in even lower pay for drivers.
The change in the rate card dropped rates from around $0.70/mile to around $0.40/mile where Lyft is testing this new system. Drivers are not happy with it.
“Access to paid time off, sick leave, and compensation if injured”
The key word here is “Access”
The email makes it sound like Uber is going to pay for all of these benefits, and that those who choose to drive full-time will receive them in addition to their present rate of pay.
However, Uber already offers “access” to most of these benefits through its Personal Injury Protection partnership with Aon/Affinity Insurance Solutions. Drivers pay an extra $0.04 per on-ride mile that they give. An 18 page explainer obtained by the intercept begins with “THIS IS NOT WORKERS COMPENSATION INSURANCE” In all caps on the first page.
The program was a pretty big game-changer when it first came out, offering a degree of protection to full-time drivers that previously did not exist when it launched. Uber even raised fares $0.04 at the time so driver’s wouldn’t be hit by the impact of signing up (and everyone else got a small increase in pay).
However, if Uber intends to follow Lyft’s path in cutting per-mile rate of pay from ~$0.70/mile to ~$0.35/mile, than shaving $0.04 cents off a driver’s pay suddenly becomes a much bigger deal. The IRS Standard Mileage Deduction for 2019 in $0.585/mile.
Access Via A Benefit Marketplace?
Uber’s petition doesn’t ask for state-enforced benefits or protections. It only mentions access to those benefits. I’m not entirely sure Uber would open up access to it’s highly valuable database of insurance leads without at least getting something in return via referral money or payment to rent/blast portable benefit
“a collective voice with rideshare companies”
First off, Uber is a ride-hail company. Nothing is shared. We do this for profit and we pay our bills with it.
With this, Uber is essentially promising their own version of Lyft’s Driver Advisory Council. Lyft’s Driver Advisory Council holds elections for drivers AFTER Lyft approves them. Nothing they do is binding and the most common complaint that I hear from former and current Lyft Driver Advisory Council members is that Lyft does not let them discuss increasing the rate of pay for drivers. Instead, leading the council members to focus on app-improvements and small to mid-sized features.
The members of the council are well-intentioned and they do work hard to help their fellow drivers. However, I think they will never realize their goals unless they do so as an independent organization with real collective bargaining power.
A “Collective Voice” Is Not Collective Bargaining!
Again, this language is intentionally deceiving because it makes it sound like Uber will now allow drivers to use one of the most powerful union tools remaining: collective bargaining.
Under current law, drivers cannot collectively bargain until they become employees because independent contractors receive no federal protections to organize. Uber is even supporting this argument in a lawsuit against collective bargaining for ride-hail drivers after Seattle passed such a law in 2015.
Everything being promised in this email is already here. It is built purely to garner the desired reaction from the reader; a misleading plea to “help” drivers via promising nothing more than they already provide.
If the exemptions happen, Uber and Lyft will continue to treat us the same way they do as today. If they wanted to bargain in good faith and innovate some collaborative portable benefits, they would have already done so.
The only thing we get be signing those petitions is burned.