Researchers see driver wage floor of $4.82 under ballot question

Boston Statehouse

Close-up of vertical sign with logos for ridesharing companies Uber and Lyft, with wheels of a car in the background, indicating a location where rideshare pickups are available in downtown Los Angeles, California, October 24, 2018. (Photo by Smith Collection/Gado/Getty Images)

BOSTON (SHNS) – Alleging “loopholes” in a proposed ballot question, researchers at the University of California-Berkeley estimated Wednesday that drivers for Uber and Lyft would be guaranteed less than 40 percent of the Massachusetts minimum wage if the proposal becomes law.

The analysis drew criticism from the industry-backed group supporting the initiative, which contended the report attempted to “silence the voices of workers and voters across Massachusetts.”

A worker who drives 15 hours per week for the companies could legally earn the equivalent of $4.82 per week after accounting for unpaid idle time, additional benefit costs, and unreimbursed mileage, a pair of academics concluded in their report. For those who drive 40 hours per week and qualify for a health care stipend — a group authors said is a “minority” of drivers — the estimate rises to a pay equivalent of $6.74 per hour.

The authors of the research said the proposed new law would allow app-based companies to pay drivers — who would permanently be declared independent contractors and not employees — well below the $15 hourly state minimum wage that will be in effect in 2023.

“They’re claiming to create a minimum wage for drivers,” Ken Jacobs, chair of the UC Berkeley Labor Center, said in an interview. “That’s how they talk about this and that’s what they claim this law does. What we found is they create a subminimum wage.”

Jacobs and his co-author, Michael Reich, produced a similar analysis in November 2019 forecasting how California’s Proposition 22 would affect guaranteed driver earnings in California.

The authors conducted their analysis of the Massachusetts ballot question at the request of the groups fighting the proposal, and no payment or funding was involved, Jacobs said.

“This is another ludicrous attempt to silence the voices of workers and voters across Massachusetts,” said Conor Yunits, a spokesperson for the Coalition for Independent Work working to pass the ballot question. “The reality is this ballot measure is supported by drivers by a margin of 7:1. We remain focused on what matters: elevating the voices of drivers and finding a solution that protects their flexibility while extending benefits and protections.”

Yunits pointed to a Harvard Business School report published last week analyzing DoorDash data. That report found that eliminating the ability for drivers to set their own schedules would have the same impact as cutting their weekly earnings by more than 5 percent for an average driver or up to 17 percent for a top driver.

Both the UC Berkeley report and criticism from the companies — including a rebuttal Uber wrote two years ago to the California study — target a point at the heart of the ballot question: whether drivers should be paid for time that they are online and logged into the app, but not transporting someone or traveling to pick up a passenger.

The proposed Massachusetts ballot question would guarantee drivers an “earnings floor” equal to 120 percent of the state’s minimum hourly wage plus 26 cents per mile, but both of those would only apply to “engaged time,” defined as the span between when a driver accepts a customer’s request and when a driver fulfills that request.

UC Berkeley authors estimated that about a third of “actual working time” for drivers falls in between trips or when they are returning from a drop-off in a more outlying area, none of which would count toward the earnings floor. Jacobs said that data comes from an analysis a consulting firm performed for Uber and Lyft.

“Not paying for that time would be the equivalent of a fast-food restaurant or retail store paying the cashier only when a customer is at the counter,” Jacobs and Reich wrote. “We have labor and employment laws precisely to protect workers from this kind of exploitation.”

After the duo made a similar point in their California analysis, Uber acknowledged that drivers and couriers “spend a significant portion of their on-app time available but engaged.” However, a company economist argued that the analogy to retail employees falls short because of the different nature of app-based work.

“A cashier cannot, for instance, show up to work whenever or wherever they want,” Uber economist Alison Stein wrote in November 2019. “They cannot choose to ignore certain customers, or to take an unscheduled break. And they certainly cannot alternate serving customers of competing retailers. For the analogy to the cashier to hold, and for this time to be reasonably compensable, on-app time would need to become subject to monitoring and control by Uber, an outcome that we believe to be highly undesirable from the point of view of a driver or courier.”

The researchers estimated that the engaged time definition would shave about a third off the guaranteed minimum earnings for drivers.

Other “loopholes” they described include reimbursing drivers for mileage and vehicle maintenance at a lower level than the standard IRS rate, driver costs toward health care, and unpaid payroll taxes and benefits.

The report only offers estimates for Uber and Lyft drivers in Massachusetts and not for drivers on app-based delivery platforms such as DoorDash or Grubhub. Jacobs said researchers have not seen “good data” indicating how much idle time those delivery drivers encounter while online.

Uber, Lyft and DoorDash together spent more than $200 million successfully advocating for passage of Prop 22 in California.

Those three and Instacart are now funding the Coalition for Independent Work, which is pursuing both the Massachusetts ballot question and separate legislation on Beacon Hill (H 1234) that would make some benefits available to drivers and declare them independent contractors under state law.

Mike Firestone, director of the Coalition to Protect Workers’ Rights opposing the ballot question, said his group will demand company leaders testify at a legislative hearing next week on the bill.

“Uber and other massive tech companies should contribute to Social Security, pay their taxes, and pay their workers fairly, like every other business in Massachusetts,” Firestone said. “We’re calling on the Big Tech CEOs behind this lobbying campaign to answer the serious questions in the UC Berkeley report and testify at the hearing next week on why $4.82/hour and no Social Security is the right choice for Massachusetts.”

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