Despite AB 5, Uber Drivers Would Rather Quit Than Be Employees
December 31, 2019
By Tony Pierce
This is part one of a two-part series on AB 5.
On Wednesday, Gov. Gavin Newsom signed into law Assembly Bill 5, which is intended to reduce worker misclassification by turning “independent contractors,” like rideshare drivers, into employees of the companies they work with. The new law would force giants like Lyft and Uber to do things like pay a minimum wage, provide health insurance benefits and paid sick days off.
As well-meaning as the change may have been intended, the consensus among the rideshare drivers waiting for pings from an LAX holding lot on a recent Friday said, thanks but no thanks.
Despite all of the complaints, protests and anger from drivers about their treatment from their so-called partners at Uber and Lyft, the top reason people endure the traffic and headaches of driving rideshare professionally in and around L.A. is that the hours are flexible. If you only want to drive after dropping off your kids at school, you can simply turn off the app when you’re done. If you want to take a month, two months, six months off from driving you won’t even get so much as an email from the companies inquiring your status. I should know. After being an Uber/Lyft driver for over five years, I stopped using the apps almost a year ago and have not heard a peep from either company asking me to return.
Other gigs might say they have flexible hours, but for all its faults, driving for Lyft and Uber is truly a side hustle with few peers. Thus, the proposition of losing that freedom in order to be an employee of a company that has rarely shown it cares about anything, including its bottom line, is something these drivers would rather quit over than embark into.
Likewise, the prospect of these ridesharing companies cutting their overly saturated fleet of drivers if they were forced to pay benefits is also troubling to these men and women.
“When the lawmakers make these laws, they don’t live our lives,” says Uber driver Hayk (who refused to give his last name). “They don’t live like we. They don’t struggle like we. Imagine the hundreds of thousands of people who will stop doing Uber, where will they find another job? I have a big family in a two-bedroom creepy apartment. I pay $2,500. My wife got a full-time job. I have to pick my kids up or drop them off. I do that and come back to work, driving. What shift is going to let me do that other than this?”
As planes flew overhead, Hayk also said he did not trust that the health benefits would be worth the change in employment status.
“More benefits you have, it’s better,” he says, “but any time they change something — either Uber or lawmakers — they make it worse.”
Joel Turk, a soft-spoken chef from Arcadia who looks like a younger, modern-day Smokey Robinson also says he would pass on becoming an employee with the rideshare companies. Turk owns various larger vehicles which he uses for his catering company and for delivering small items for UPS and driving for Uber and Lyft on the XL platforms.
“I’ve got four kids. This is the first year for me where they’re in four different schools,” he says. “So there’s drop-off, pick-up, in the morning, the afternoon, my cooking, my food prep, all of that. My driving is very specific when I need to go, but it’s great when it lightens up.” And he can fill in his downtime being a rideshare driver.
Turk says that six months ago the opportunity to receive health benefits for being a driver would have been appealing because his wife was working on a contract. But now, she has returned to working for a film studio which provides benefits for their whole family.
As of now, much of AB 5 is speculation. The rideshare companies and a few delivery startups have sworn to fight the law in hopes of convincing the courts or the voting public into allowing them to be exceptions to the law.
Brian Lee is a driver from Pasadena who drives between 50-60 hours a week. According to the new law, the rideshare companies that he would become an employee of would have to pay him overtime if he continued that practice, but odds are unless he received special permission, the app would not allow him to receive trip requests after 40 hours in a week. He would probably have to work for a second rideshare company if he wanted to drive those extra 20 hours.
“Every driver knows if you’re not driving over 50 hours a week, you cannot make any money,” Lee, who has been a driver for over two years, says with a laugh.
That too might change if the companies slash the number of available drivers on their fleet. Drivers like those waiting for hours for a ride at LAX would presumably be constantly busy since demand will remain the same but the supply of cars would diminish.
Reached by phone, Harry Campbell, founder of the Rideshare Guy blog, book and podcast, says that Lyft and Uber shouldn’t view this new law like a one-star trip. Treating drivers like employees, he says, could solve a problem the companies have struggled with since their inception: churn. The reason you rarely ride with the same driver twice is because the vast majority of drivers quit before they’ve driven for one full year. A report that leaked in 2017 (a time when drivers were making more than they are today) showed that only 4% of drivers continued with the companies through their one year anniversary. The job is demanding, stressful and far less profitable than most assume it will be.
“Retention is, frankly, a big issue for Uber and Lyft,” Campbell says. “They have to spend a lot of money acquiring new drivers because they lose so many. But I look at it maybe a little simplistically. You’re already losing a billion dollars a quarter, what’s another couple hundred million?”
Campbell, however, speculates that any increase of cost to the companies to be used on benefits would be passed on to the passengers at a tune of about two bucks per ride, which would still be cheaper than the service was when it hit critical mass. He doesn’t think a few dollars more would be a dealbreaker for the majority of customers.
“Up until this point, riders have gotten a great deal. They have not had to pay the true cost of the ride,” Campbell says, alluding to the fact that in order to attract customers rides were cheaper than they should have been. Meanwhile, they doled out millions a year in bonuses to encourage drivers to sign up and stay.
“A lot of those losses are subsidized by venture capitalists … a lot of the early ones ended up making a lot of money. So you have riders who have gotten a great deal, investors who have gotten a great deal and a lot of [corporate] employees at Uber and Lyft who have gotten a great deal,” Campbell says. “But for drivers it’s been sort of status quo, it’s remained the same, or for some people, it’s gotten worse. And for those who felt it’s gotten much worse, [those] are the supporters of AB 5.”
Back at the airport lot, teeming with about 100 drivers, one of whom was screaming on his phone at Uber support for virtually bumping him out of the waiting queue, a Lyft driver named Kent says it will be business as usual for a while in the Golden State, despite what happened in Sacramento.
“Nothing will change immediately,” he says. “It’s gonna take years. It’ll go through the courts, there’ll be appeals and then they’ll get a waiver or something. They’re willing to spend like $30 million each to fight it? How about just pay us some of that $30 million?”
Kent, who lives in Orange County and also works as a driver for Amazon, criticized the downward spiral of fares over the years and odd ways the companies have developed to make the rides cheaper via Pools.
“Quit trying to be public transportation,” he says. “This is a convenience for people. They just want a quick and a nice ride. If they wanted to take the bus they would take the bus and they’d spend their $2 there. But if they spend $2 here, they will, but who’s making any money then? Nobody.”
Speaking of nobody, not one driver in the lot said that they would continue to drive for Uber or Lyft if they were forced to become employees of the companies. They value their freedom too much and they’ve been burned too often by the rideshare giants. And while they have earned less and less over the years, they’ve watched the actual employees of the companies become rich.