Doing the Math on Prop 22
Two months ago, the New York Times published an op-ed written by Uber CEO Dara Khosrowshahi titled “I am the C.E.O. of Uber. Gig Workers Deserve Better.”
In it, Khosrowshahi makes several claims about how California’s recent ruling that Uber and Lyft must classify their drivers as employees would negatively impact drivership and ridership on these platforms, backed by data which at best, lacks the context needed for it to be useful, and at worst, is deliberately designed to misinform.
Firstly, Khosrowshahi cites that Uber would only have full-time jobs for a small fraction of its current drivers and be able to operate in many fewer cities than today if its drivers were classified as employees. Secondly, he cites that many drivers have said they don’t want to be employees and that two out of three app drivers would stop driving if their flexibility was compromised. This doesn’t take into account the fact that the majority of rides on Uber and Lyft are conducted by a modest percentage of full-time drivers. According to a Time article from 2015, only 19% of drivers drive full-time (35+ hours per week), and 51% work 15 hours per week or fewer. So only a fraction of its drivers are currently working full-time anyway, and these drivers make up the bulk of Uber’s rides. Naturally, classifying Uber drivers as employees and taking on the added costs that come with that will reduce ridership and drivership to some extent, but it feels like Khosrowshahi is trying to misrepresent the situation as one where Uber service will be decimated, when in reality the bulk of rides are already provided by what are essentially full-time employees anyway.
Next, Khosrowshahi makes a “substitute” proposal for benefits funds in lieu of full benefits such as health insurance and paid time off as a move to “be more honest about the reality of the work” and “strengthen the rights and voice of workers”. Uber estimates that under a benefit funds scheme, the funds that would accrue to a full-time driver in Colorado averaging 35 hours per week would have been $1,350 in 2020, which, in the example given, can either cover two weeks of paid time off or the median annual premium payment for subsidized health insurance available through an existing Uber partnership. This leaves out the context that on average, firms with “many lower wage workers” spend $5,021 on average for healthcare insurance premiums, according to a 2019 Kaiser Family Foundation study. This also leaves out the context that employers in Colorado would have to pay roughly $1,600 in payroll taxes for this hypothetical full-time Uber driver. In reality, the benefits Uber would be required to pay for full-time employees would cost several times what it would be required to pay for its proposed “third class” of employees. While Uber would have had to contribute $655 million to benefit funds in 2019 under its proposed “third class” scheme, that’s a steep discount to the billions of dollars it would need to pay for regular, full-time employees in order to provide the paid time off, health insurance, Social Security contributions, and other benefits they are entitled to. Khosrowshahi tries to frame Uber’s benefit funds proposal as one that is an adequate substitute for full-time employee benefits when in reality it is just a dressed-up scheme to avoid paying thousands of dollars in standard benefits.
He rounds off the article by claiming that most Uber drivers do not place health care as their most important benefit, which makes sense since a majority of drivers only drive part time and receive health care benefits elsewhere. This is not a relevant fact to bring to a discussion about protecting full-time employees that depend on Uber and Lyft for their benefits and it feels disingenuous to bring it to this piece at all.
Overall, I feel skeptical about any decision to publish an Op-Ed written by a C.E.O. about their own industry — I would question how it serves the public interest to give already powerful and well-resourced business leaders a space to speak on a media platform that pitches itself as balanced and critical. I feel even more skeptical when the article is written in support of a ballot initiative which will soon have very real consequences for the employees involved. And the decision to publish this op-ed feels even poorer given the slant and deliberate omissions in the facts presented in Uber’s defense — the facts Khosrowshahi presents are massaged to tell a public relations narrative.
Ultimately, this is just one piece out of many which have been written on the recent California ruling, and I’m sure the readers who are paying close attention to the story will treat this op-ed with the skepticism that it deserves. However, I think that an article like this undermines the credibility of the platform that publishes it in a time when credibility is already a rare and fragile currency.
