Labor Center research and Proposition 22

UC Berkeley Labor Center

One of the initiatives California voters are deciding this fall is Proposition 22. This initiative carves out an exception from state labor law for app-based transportation and delivery gig companies, including Uber, Lyft, DoorDash, and Instacart, allowing the companies to continue to classify their workers as independent contractors rather than employees.

Labor Center chair Ken Jacobs along with Michael Reich, economics professor and co-chair of the Center on Wage and Employment Dynamics, have produced several papers that examine the implications of Prop 22 compared to employee status for drivers, consumers, taxpayers, and the companies.

Pay, Passengers and Profits: Effects of Employee Status for California TNC Drivers
October 5, 2020
IRLE paper by Michael Reich
Finds that most drivers are paid much less than the current minimum wage and that, with employee status, overall compensation of drivers would increase 30 percent; that driver schedule flexibility would not be affected; passenger demand would fall by 1 or 2 percent; and profits of the companies would increase.

The Effects of Proposition 22 on Driver Earnings: Response to a Lyft-Funded Report by Dr. Christopher Thornberg
August 26, 2020
Ken Jacobs and Michael Reich
Thornberg overestimates driver gross earnings (before expenses) based on data that is not representative of drivers in California. He also underestimates driver costs. In doing so, he significantly overstates what drivers earn on net now, and would earn under Proposition 22.

What would Uber and Lyft owe to the State Unemployment Insurance Fund?
May 7, 2020
Ken Jacobs and Michael Reich
In this data brief, we estimate how much Uber and Lyft would have contributed to the state’s Unemployment Insurance Fund between 2014 and 2019, had the companies classified the drivers as employees. Our finding: If Uber and Lyft had treated workers as employees, the two TNCs would have paid $413 million into the state’s Unemployment Insurance Fund between 2014 and 2019.

The Uber/Lyft Ballot Initiative Guarantees only $5.64 an Hour
October 31, 2020
Ken Jacobs and Michael Reich
Uber, Lyft, and DoorDash have unveiled their ballot initiative to undo historic worker protections enshrined in AB5, California’s new law that tightens the criteria for worker classification. The initiative claims drivers will receive a guaranteed pay equal to 120% of the minimum wage (that would be $15.60 in 2021, when the California minimum wage will be $13). Our review of the initiative leads to a very different estimate. After considering multiple loopholes in the initiative, we estimate that the pay guarantee for Uber and Lyft drivers is actually the equivalent of a wage of $5.64 per hour.

image by Pkg203 – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=27443592