States and cities eye stronger protections for gig economy workers

Joshua Wood recalls days during the COVID-19 lockdown when New York City’s streets were virtually empty except for workers like himself.

That experience convinced the 25-year-old Brooklynite, who works for both Uber Eats and a package delivery service, that the gig economy required immediate reform.

According to a Pew Research Center report for 2021, roughly one in every six American adults has done gig work for platforms like Uber, Lyft, and DoorDash. However, while these jobs promise flexibility and a low barrier to entry, they frequently pay less per hour than the prevailing minimum wage and lack basic safeguards such as overtime, sick pay, and unemployment insurance.

“There was a sense among workers, coming off the pandemic, that something really needed to be done,” said Wood, a member of the New York City labor group Los Deliveristas Unidos, which advocates for gig worker benefits. “So much of the city is dependent on our work — but if we want to improve our conditions, we have to be the ones to do it.”

Since then, New York City has passed legislation ensuring a minimum wage and other benefits for app-based food deliveryers, and communities across the country are following suit. Over the last five years, legislators in at least ten jurisdictions — including cities like Chicago and Seattle, as well as states like Colorado, Connecticut, and Minnesota — have proposed new protections for ride-share drivers and food delivery workers.

At least ten states have also considered programs to make it easier for gig workers to obtain traditional workplace benefits like retirement or paid family leave. Meanwhile, regulatory agencies and courts in Massachusetts, New Jersey, and Pennsylvania have sought to compel Uber, GoPuff, and other tech platforms to provide their drivers with the same benefits as regular employees.

The move coincides with a resurgent workers’ rights movement in the United States and a global rethinking of labor rights in the age of the gig economy. Since the beginning of the summer, both Australia and the European Union have taken steps to strengthen workplace protections for gig workers, and the United States Department of Labor is expected to finalize a new rule that could reclassify some gig workers as employees as soon as October.

However, gig companies are vehemently opposed to any attempt to reclassify gig workers, which would grant the workers new rights and protections under state and federal law. Gig platforms have argued in public statements, legal filings, and elaborate marketing campaigns that any significant change to their current labor arrangement would jeopardize workers’ flexibility and independence — as well as raise consumer costs.

Uber spokesperson Alix Anfang told Stateline in a statement that the company “supports comprehensive legislation that protects the flexibility drivers tell us they want while providing important benefits and protections.”

“They don’t want to pay drivers,” said James Parrott, a New School economist whose research on driver wages informed New York’s new pay standard. “However, when it comes to fighting regulations with which they disagree, their pockets are infinitely deep.”

Pandemic prompted planning

Gig platforms have forever changed work, for better or worse, according to both tech companies and their detractors.

Platforms like Uber and Airbnb have spawned a sprawling ecosystem of on-demand digital marketplaces spanning services ranging from food delivery to therapy to child care and education since their inception in the late 2000s.

Such marketplaces provide consumers with flexibility and convenience, and they may fill gaps in existing transportation, logistical, or social support systems. For similar reasons, workers flock to gig platforms: In a 2016 Pew Research survey of gig workers whose households relied on platform income, 45% said they needed more control over their schedules, while 25% said they had no other job options.

Gig work, on the other hand, comes with an unusual level of precarity, according to Daniel Ocampo, a legal fellow at the National Employment Law Project. Workers typically lack job security, traditional benefits, consistent income, and few opportunities to organize or advocate for themselves.

But, as a result of the COVID-19 pandemic, that last part is changing, according to Ocampo. As a result of falling wages and growing safety concerns, new advocacy organizations have sprung up in cities ranging from New York to Los Angeles to advocate for laws requiring minimum wages and paid sick leave, among other safeguards.

“There’s been a real wave of legislative action, especially in the last year,” said Ocampo. “Organizing a group of workers is extremely difficult… However, people are fed up with the situation.”

In addition to New York City, which approved a minimum wage for ride-share drivers in 2018, and for food delivery drivers in 2021, Seattle has seen a string of significant victories for gig workers. In 2020, the city unanimously passed a minimum wage floor for ride-share drivers, and in 2022, for app-based delivery workers. Seattle mandated paid sick leave and due process procedures for a broader swath of gig workers earlier this year if they are suspended from the apps.

Chicago lawmakers expect to pass a minimum wage ordinance for ride-share drivers in the coming months, according to Alderman Michael Rodriguez, a Democrat who introduced the bill with 25 co-sponsors. According to a study of 22 million trips conducted by the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute, Uber and Lyft drivers in the city earned an average hourly wage of $12.72 after expenses as of 2021.

“Many of these workers have had issues with their pay and deactivation,” Rodriguez explained. “We’re working to get new safeguards in place for the people who work tirelessly to provide rides in a city that desperately needs better transportation.”

While minimum wage floors and similar policies appear to be obvious ways to protect workers, gig economy advocates argue they will have unintended consequences.

Wage-floor policies, in addition to raising consumer prices, risk reducing worker incomes as higher pay rates attract more gig workers to the apps, according to Adam Kovacevich, founder and CEO of Chamber of Progress, a tech policy group whose corporate partners include Uber and Lyft. If there are more workers, each driver may receive fewer total orders, lowering their total earnings even if each individual order pays more, according to Kovacevich.

Under these policies, Gig platforms may also reduce the number of drivers or deliverers in a given area, or the number of areas they serve, according to Kovacevich. Similar arguments were made by Uber, DoorDash, and Grubhub in July lawsuits challenging New York City’s delivery worker protections, which have been stayed pending the court’s decision.

Alternatives and concessions

According to Parrott, the New School economist, there is little evidence to back up the companies’ claims: According to his research, New York City’s 2018 pay floor for ride-share drivers did not significantly raise user prices, as predicted by Uber and Lyft. Both companies have “a lot of latitude to pay workers more,” he says. They also stayed in Seattle after it implemented minimum wage provisions.

Nonetheless, gig companies’ arguments have proven persuasive in many places, aided in part by well-funded lobbying campaigns and direct appeals to app users. Bills aimed at protecting ride-share drivers were defeated this year in Colorado and Connecticut after gig platforms banded together to oppose them.

In May, Democrat Minnesota Gov. Tim Walz vetoed a pay floor for ride-share drivers in his state after Uber said it would force the company to reduce operations there. Three months later, Minneapolis Mayor Jacob Frey vetoed similar local legislation, citing a desire to further research the law’s likely consequences. Three members of the city council have stated that they intend to begin the process of reintroducing a new pay floor in late September.

“The gig companies have done a great job organizing and developing a strong message,” said LiJia Gong, policy and legal director at Local Progress, a membership organization for progressive legislators that supports gig worker legislation. “These are massive corporations; they have the resources and the ability to get their message out to a large number of people.”

That message is increasingly including new benefits and protections, though industry-backed plans have fallen far short of workers’ expectations. Several gig economy companies have backed state and federal efforts to develop “portable” benefits programs, in which employees accumulate benefits such as vacation days or retirement savings over time and keep them even if they change jobs.

In 2022, Uber and Lyft backed legislation in Washington that established a portable benefits program, which could serve as a model for compromise legislation in other states. The law, which took effect in January, made ride-share drivers eligible for paid sick leave and workers’ compensation, as well as establishing a pay floor that will rise in tandem with the state’s minimum wage.

Surprisingly, the law also classified gig workers as independent contractors and barred local governments from enacting additional ride-share regulations. This has made it unpopular among progressive activists and labor organizations, including the regional affiliate of the Seattle Teamsters union, which assisted in negotiating the legislation.

“There are some good things in that bill — but there’s no need to trade away employee status for any of these benefits,” Ocampo of the National Employment Law Project said. “I understand why businesses find this approach appealing. It allows them to continue with the misclassification on which their business models have always relied.”

However, as more places embrace gig worker rights — and take on powerful tech corporations — lawmakers will be forced to make difficult trade-offs, according to Washington state Rep. Liz Berry, a Seattle Democrat and the bill’s sponsor.

Berry believes that gig workers should be classified as employees, and she initially thought her bill would look more like Seattle’s minimum wage and benefits laws. Berry recalled that when she got on a Zoom call with representatives from Lyft, Uber, and the union, some realities became clear: There were areas where both sides could stand to give a little more. If they didn’t, gig companies had the money and political clout to fund a ballot measure advancing their cause, as they did in California in 2020.

“It was a bullying move — I certainly didn’t want that to happen,” Berry explained. “But you have to look past that and focus on your end goal.”

Unlike in most other parts of the country, “these drivers now have basic protections here in Washington,” she said, “which I think makes the bill we put together a great model.”

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