Rideshare drivers show massive displeasure after Gov. Gavin Newsom’s assembly Bill 5, designed to reclassify independent contractors as regular employees.
Although coming with good intentions, AB 5 fails to consider the ground-level repercussions, ultimately making things more difficult for gig economy workers.
We’ve seen several protests and anger over the widescale ill-treatment of drivers by rideshare giants like Uber and Lyft. But when it comes down to it, most drivers prefer having the flexibility and freedom to choose their own timings over becoming employees. Let’s explore why.
Why Drivers Reject AB 5
On paper, the AB 5 bill seems to give gig workers a cushy deal on a silver platter. The new reform would bring positive changes like paid sick leaves, health benefits, and stringent minimum wage rules. So why is the bill met with a scoff and a general thumbs down?
It’s very simple; drivers can turn on the app when they want to work and switch it off when they’re done. It makes things like dropping their kids off at school and picking them back up an easy task. What’s more, no one can stop them from taking a month off, or even two for that matter. Right now, the companies they work with don’t have the power to control them, and that could change with the AB 5 bill.
Of course, plenty of other companies claim to offer flexible hours. But it’s nothing like the freedom you get when driving for Uber or Lyft on your own terms and timings.
With all this to consider, we aren’t surprised that drivers aren’t the least bit interested in letting all that go to become full-time employees of a company that never really bothered about their problems in the first place. And that’s why most drivers would rather quit.
A Night At An LAX Lot
We traveled to an LAX holding lot, where we interviewed several drivers waiting for their next rides. The consensus amongst these drivers is that they prefer flexibility over anything else. Choosing their own working hours is the biggest reason they do this, and no amount of benefits can replace it.
Amidst the sound of planes flying overhead, we spoke to Hayk, an Uber driver with severe concerns over the new bill. “They (Lawmakers) don’t live our lives,” he says as he patiently waits for the next ping.
Hayk lives in a two-bedroom apartment for which he pays $2500. His wife works a full-time job, so he has to take the kids to school and pick them up afterward. He emphasizes that no other job with particular shift timings will allow him to do all that. Being an Uber driver is the only way he can take care of his personal chores and work at his convenience.
When asked about the health benefits, Hayk sneers and voices his skepticism. He doesn’t believe the benefits are worth giving up his freedom and signing up as an employee. “Any time they change something, they make it worse.”
“If you’re not driving over 50 hours a week, you cannot make any money”, Says Brain Lee, a Pasadena-based driver with over two years of experience. Lee usually drives approximately 50 to 60 hours weekly, and the new law might prevent him from doing so.
You see, the moment Lee becomes an employee, his company would have to pay him overtime for the extra hours. It might sound on paper, but it’s not practical when you think about it.
The app won’t send him trip requests after he crosses the 40-hour threshold. Beyond this point, he would need special permission to keep getting requests. It will force him to moonlight at a different company if he wants to make up for the remaining 20 hours.
And then there’s the question of companies simply cutting down on the number of available drivers. That’s something employees won’t have any control over, unlike now. Becoming an employee puts them at the company’s whims and brings the possibility of getting fired due to downsizing, budget cuts, or any other factor.
An Arcadia chef, Joel Turk, speaks to us with a soft-spoken charm. Turk would have been open to getting health benefits six months back when his wife was a contract worker. But ever since she got a studio job with health benefits, Turk isn’t enticed by the offer anymore.
The Smokey-Robinson look-alike owns several large vehicles, which allows him to make small deliveries for UPS and work as an XL category driver for Lyft and Uber. He also uses his cars for his catering company.
As a father of four kids who attend four different schools, Turk needs the time to drop off and pick up all his children. His cooking and food preps also make his work (driving) timings very particular. Considering all of the above, there’s no way he would agree to become a ride-sharing company employee that would make him conform to stringent work timings.
Lyft Driver and Orange County resident, Kent, seems more relaxed on the matter than his peers. He believes it will take years for any change to come through, and he’s not exactly wrong. There will obviously be many court hearings and appeals before anything solid occurs. Plus, several delivery startups and rideshare companies already plan on fighting the bill tooth and nail. All of this indicates a lengthy and expensive trial.
“They’re willing to spend $30 million to fight it? Just pay us that $30 million.”, Kent jokes. He used to drive for Amazon some years back and had plenty of criticism regarding the ever-decreasing ride fares. Kent believes that companies keep trying to make rides cheaper through pool systems. He compares it to public transportation and claims it will ruin things for everyone.
After all, what’s the point of bringing down prices to $2 per ride if nobody makes any money in the end? Ride-sharing is convenient for people; if they wanted to go on the bus, they would spend $2 over there instead.
Analyzing The Real Problem
By this point, we’ve understood that the AB 5 bill brings many problems for the people it aims to help. Forcing companies to pay a regulated minimum wage and provide health insurance sounds like the noble thing to do. However, we must also ask where the money for such policies will come from.
We’ve already seen the downsides of the $15 per hour rule. Rather than help employees, it ended up with many losing shifts and jobs, as smaller companies couldn’t afford to pay these wages. As a result, many businesses had to downsize just to make a profit. We fear the same will happen due to the AB 5 bill.
Harry Campbell runs a popular podcast and blog called the “Rideshare Guy” and offers us some fascinating insight over the phone. According to him, turning freelance drivers into employees can solve rideshare companies’ oldest problem: driver retention.
Companies constantly have to spend tons of money just to replace the drivers they have lost. Looking at a leaked report from 2017, we can confirm that only 4% of drivers stayed with a company for more than one year. It is mainly because the work is incredibly stressful, highly demanding, and less profitable than people think.
What’s glaringly evident is that companies will face increased costs in the wake of employee benefits. Campbell suspects that this will result in a slight increase in fare prices, approximately $2 per ride.
The multi-talented persona reveals that customers didn’t have to pay the full price for rides until now. Companies deliberately decreased fare prices to get more customers while spending millions yearly on bonuses to get drivers to continue working.
He also points out that most company losses are subsidized, thanks to venture capitalists. As a result, customers, corporate employees, and investors walked out with a fantastic deal. However, things have always stayed the same for drivers or gotten even worse. Campbell claims that the only supporters of the AB 5 bill are the same drivers who have faced the worst scenarios so far.
The AB 5 bill will be closely watched by everyone at this point. As of now, most drivers don’t seem to support the bill and state they would rather quit than be forced to become Lyft or Uber employees. Freedom is the most important thing for these drivers, and we can’t really blame them.
Our investigation has brought to light several issues with the AB 5 bill, which presents itself as a noble fix and solution for the plights of millions of gig workers in the country. Forcing companies to reclassify gig workers as “employees” might increase costs, ultimately making things worse for the drivers. If profit margins are threatened, companies will simply terminate a large portion of drivers or have to increase ride prices, ultimately leading to fewer customers. After much analysis, it’s clear that the AB 5 bill is far from perfect, and as the sun rises over Los Angeles, we are left wondering, who does the AB 5 bill really benefit? Definitely not the drivers.