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Why I’m Supporting Proposition 22: The Self-Employed Deserve A Voice

September 17, 2020
Opinion

By Greg Ferenstein

This post makes the case that there are millions of gig workers who genuinely benefit from being independent contractors; the law should reflect their voice with public policies that improve conditions for self-employment, rather than restricting access to it.

For almost 7 years, since the beginning of Uber, I’ve done extensive interviewing and polling of gig workers’ political beliefs. I’m sympathetic to voters who feel utterly confused by Proposition 22 since I’ve been tracking the issue for years and still find it frustratingly complex.

So, I’ve written my opinion in a Q&A format, answering the questions I had while investigating what gig workers actually want and why the opposition was willing to push a well-meaning agenda over majority opinion.

When I spoke with labor unions and critics, most argued that “the majority of drivers don’t have the first clue what is good for them”.

As I explain below, labor unions are well-meaning, but I found clear evidence of well-informed drivers who understood the tradeoffs and wanted to remain self-employed.

As a California voter, I’m choosing to give them a voice (disclosure: I’m biased).

Q: Very briefly, what is Prop 22 and who supports it?

Prop 22 would allow drivers on app-based platforms, such as Uber, to remain independent contractors rather than be employees. It would also add minimum wage rates, safety standards, and a contribution to drivers’ health insurance premiums. The ballot measure is a response to California Assembly Bill 5 (AB5, 2019), a labor union-led law which set up additional restrictions on who could be legally considered a contractor or an employee.

Typical classification laws allow someone to be hired as a contractor if they can set their own hours, use their own equipment and can work for the competition.

AB5 went one gigantic step beyond America’s typical employee classification laws by making it illegal to have any contractor who performed functions considered “core” to a business. So, a math tutoring center can hire a contractor to sweep the floors but anyone who teaches must be an employee.

This novel spin on employee classification essentially banned self-employment for a large chunk of the workforce and businesses were held financially liable if they kept contractors on staff. After it passed, there were mass layoffs of contractors around the state; so, California lawmakers later revised the bill to exempt a few occupations heavily dependent on contractors, but did not exempt driving gigs.

“In all, more than 100 white-collar, overwhelmingly white professions have been exempted from AB 5, restoring their ability to work as independent contractors,” wrote the NAACP’s Alice Huffman, in an op-ed supporting Proposition 22. “They’ve been exempted for the same reasons app-based drivers reject AB 5: They want the freedom to set their own schedules, the freedom to work in ways that make sense for them, and the economic freedom that comes from self-employment.”

The brazen lobbying of AB5 is also why the left-leaning editorial board of the San Francisco Chronicle endorsed Proposition 22, “Opponents are the labor unions and the politicians they control, who refused to come up with a reasonable compromise in Sacramento…Our preference would have been for our elected representatives to come up with a forward-looking solution in the public interest. AB5 failed to do that.”

I’ve done in-depth polling of gig workers: most are aware of the trade-offs and repeated polls show that more than 70% prefer being independent contractors; I’ve witnessed the grassroots mobilization of tens of thousands of California freelancers fighting back against the threat of AB5/AB2257 to their freedoms to work on their own terms.

Q: Who does Prop 22 help? Who does it hurt?

I think about this question based on what a labor union advocate told me about his opposition to Proposition 22. “We shouldn’t want 10,000 terrible jobs, if we can have 1,000 really strong jobs and make sure that the other 9000 are in just as strong jobs.”

I think there’s a fundamental disagreement between what labor unions and gig workers consider a ‘good job’. To labor advocates, I think a ‘good job’ is one where a single employer provides a steady 9–5 paycheck with benefits and pays membership dues. But, that’s not what I hear from gig workers.

“Let’s say I won the lottery, after that, I would still drive Lyft”, one driver told me.

I talk to many (many) drivers who legitimately tell me they “love” Uber because it has benefits beyond a steady paycheck: it’s dignity, it’s emergency money for an unexpected expense, it’s the flexibility that allows them to spend precious time with a child suffering from health issues (and more).

Retired folks find dignity in work and drive because traditional employment won’t allow them the kind of flexible hours they need. The same is true of full-time caregivers and students, who have erratic schedules tethered to a child’s health issues or the uncertain timeline of completing a midterm essay.

So, who does Prop 22 hurt? The argument can be made that the small minority of drivers who depend on gig platforms for their primary source of income would be hurt. As immigrants, retirees, students, entrepreneurs, temporary workers, and caregivers flood the apps, they are willing to accept either lower fares or less predictable income.

Gig workers are the minority of the workforce: best estimates reveal that about 1 in 4 workers engages in self-employment, while just 1% works for an online platform. Currently, they have little political representation and, without gig platforms, less opportunity for their particular economic needs.

Prop 22 helps millions of workers who get left out of traditional employee arrangements.

Q: Why can’t Uber just give drivers full-time hours and benefits?

They can! But, they couldn’t also have such expansive positions for temporary, flexible supplemental income.

I’ve talked to many gig workers who drive as an addition to steady, full-time employment, because they still have unexpected educational, family or medical expenses. Only a tiny fraction (around 15% of drivers) are full-time or rely on it as their main source of income; the vast majority use it as secondary or temporary income.

“You want to earn an extra penny, you cannot do it”*, one driver told me, who said he worked for the postal service for 10 years and lamented the difficulty in finding opportunities for more money. “They have a union.”

The most compelling research I’ve seen shows that gig work is a reliable source of secondary income for most workers. JP Morgan financial analyzed the private bank records of gig workers and found that, on average, they had more stable savings than non-gig workers because app-based platforms offset unusual expenses.

Now, if drivers become employees, tech companies will simply make rides more expensive. Unfortunately, this will put their entire, already-fragile business model in jeopardy, because consumers may not be willing to pay the extra cost for a ride and they could potentially go bankrupt; this is why Uber and other gig companies prefer contractors.

More importantly, from a worker welfare perspective, if Uber survives and goes the traditional full-time employment route, millions of people who need supplemental income will lose a financial safety net overnight.

Q: Why is gig work important for marginalized communities?

Self-employment is a common pathway into high-tech careers (I began my journalism career as a freelance writer with no degree). Freelancing is much more accessible than school, since it helps workers overcome the frustrating catch-22 of needing job experience in order to get a job.

In fact, I worked with a nonprofit in the San Francisco Bay Area that taught struggling workers how to be better at self-employment so they could get into a high-paying profession or earn extra income for financial stability.

Ironically, at the same time as California state lawmakers were crafting a bill to restrict access to the gig economy, it’s San Francisco workforce development agency was actively teaching people how to use gig work for financial self-sufficiency and upward mobility.

“I definitely encourage people to do more independent work,” wrote one graduate of the gig-training program, who landed a technical support role at the NBA after gaining work experience as a freelancer.

And, it’s not just high-skilled jobs. I was in New York touring an IT school for economically disadvantaged workers and talked to an African American father who moonlit as an Uber driver while going to school; he had job options and yet he choose to drive for Uber because it was the best way for him to focus on school, make money and be there for his family.

I think this is one of the (many) reasons why the NAACP of California is supporting Prop 22. These groups deserve a voice.

Q: Is voting for Prop 22 letting Uber and other rich tech companies off the hook?

Let me be clear that tech companies are not blame-free; a minority of early drivers were misled by Uber and Lyft to believe it could provide them financial stability as a full-time, long term occupation. Workers were unaware that the economics of venture-funded tech platforms meant that wages had to decrease rapidly and it should not be treated like a regular job.

I’m convinced by Prop 22 critics that tech companies confused drivers, as one told me in an online forum, “Rideshare is designed in a way to confuse and hide the true cost of the work, While rewarding and triggering you with positive reinforcement. All while the algorithm directs and manipulates you into a more positive for the company”.

I write this with a bit of melancholy. I have friends at Uber and Lyft. I spent much of adult life meticulously researching the moral compass of Silicon Valley; tech founders tend to build products for people like themselves: hustlers, entrepreneurs, and folks who don’t conform to the single-employer 9–5 work life. It turned out that there were millions of workers who benefited from a non-traditional schedule.

The thrill of matching the dual needs of better transit with a massive unserved alternative workforce blinded tech companies to the fact that many people were misusing their platforms as a primary occupation. They knew some workers were sleeping in their cars and pulling 90+ hour weeks. Through it is a minority of folks who are hurting on the platforms, they should not have ignored it.

I warned my contacts that they should have much more aggressively managed driver expectations, been transparent about declining pay, and severely restricted full-time work. Unfortunately, the marketing departments were encouraged to exaggerate success stories of high-earning drivers and downplay those who saw their primary income source dwindle.

Uber and Lyft’s marketing departments sold a false dream of easy access to steady pay. They should be held accountable (and, in some cases, already have by compensating early drivers).

But, we shouldn’t punish millions of workers on a vengeful quest against a few companies.

Q: What are the alternatives to AB5?

When the San Francisco Chronicle laments that the legislature should have proposed “reasonable” policies instead of AB5, it’s because there were a bunch of options they ignored.

California could easily start designing a system of portable employee benefits, do large-scale self-employment vocational training, and increase cash welfare, such as the Earned Income Tax Credit. These would do nearly as much (if not more) than strict employment classification.

California could have compelled labor unions and tech companies to cooperatively pilot innovative ideas. If Proposition 22 passes, it’ll force the legislature to include self-employed voices in the policymaking process.

Q: Are employed drivers better off?

The premise of AB5 was that making more people, including app-based drivers, employees would be a solution to pay inequity and the shrinking middle class. It says so right in the bill, but the truth is that it was a wild gamble into unknown territory. There’s a lot of evidence supporting the conclusion that employee arrangements are worse or, as is the case for California app-based drivers, may destroy the widespread benefits of the gig economy.

The entire California cannabis industry could be considered a crystal ball into what happens when all drivers are employees, since, by law, they cannot be contractors. Reports from cannabis drivers are mixed at best. Driver ratings of delivery companies that mandate drivers be employees are much lower than those who have contractors, with multiple reports from angry drivers complaining about insufficient hours and flexibility.

To be clear, California has tested employee models and it does not, in fact, give a significant percentage of drivers a better experience.

Opponents of Prop 22 have conveniently ignored the voices of people who are employees but are still not entirely happy with the arrangement.

Q: Do workers feel exploited?

Many critics of Proposition 22 claim that workers are being “exploited” because tech companies coerce them into low-wage situations without protections. Critics told me that drivers simply didn’t understand their own worth or how much better conditions could be if they only let unions create regulations on their behalf.

So, to investigate this concern, I took a page from the “deliberative democracy” field of political science and designed a poll that paid gig workers to read arguments in favor and in opposition to Proposition 22. After they proved their knowledge by summarizing articles, I asked them questions about their opinions.

When I ask gig workers if they feel “exploited”, I got an answer like this:

“I do not think that I am being exploited. I do not think that anyone is being exploited. You can spend a week in the app and see if it works for you, and if it doesn’t then find something else, but for the people that are willing to put the work in it is rewarding this way.”

Critics of Prop 22 have a hard time admitting that labor unions, in this case, don’t necessarily represent workers. The more intellectually honest answer is that unions need to put more effort into including a new demographic of worker who want something quite different than they currently provide. Instead of being more innovative and inclusive, labor advocates villainized self-employment proponents and leveraged their considerable influence over the legislature to force an undemocratic law.

In conclusion, I’m sympathetic to voters who feel confused by Prop 22. It’s a strange issue with extremely unpredictable outcomes and difficult moral choices.

I’m voting “yes” on Prop 22 because when the self-employed tell us that they believe independent contracting is valuable, we should believe them; it’s time for representatives to start doing their job and give the self-employed the voice they deserve.

Source:

Medium


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