Friday, February 21

LA City Council study may bring establishment of minimum wage for ride-hail drivers


Ride-hail drivers may receive a minimum wage in Los Angeles if the city council decides to enact a law after studying the subject. The move could create a minimum wage for drivers and potentially increase prices for users. (Daily Bruin file photo)


This post was updated Jan. 10 at 11:35 a.m.

A recent action by the Los Angeles City Council may lead to a minimum wage for ride-hail drivers and potentially increased prices for consumers in the city.

The Los Angeles City Council voted in October for a study of ride-hail drivers’ wages and expenses in response to Assembly Bill 5, a California bill that reclassified many contract workers, including ride-hail drivers, as employees.

The results of that study may lead the city to establish a minimum wage for Uber and Lyft drivers; however, this may increase prices per ride. With UCLA students taking thousands of rides per week, a potential price increase for such rides could affect their use around campus.

Uber and Lyft drivers are currently classified by the company as independent contractors rather than employees, despite AB 5, which does not guarantee them the same benefits that most employees possess. Some of the most common issues are drivers not being reimbursed for gas, vehicle maintenance or any damages to their vehicle while on the clock. Additionally, they do not receive a minimum wage, paid sick days or health insurance benefits.

The Mobile Workers Alliance, a union for drivers and gig workers in California, has been calling for fair wages and benefits. They protested at Uber headquarters in July and demonstrated in support of LA City Council’s vote in October.

“The key issues have really been on drivers misclassification, low pay and a voice at work,” said Mike Long, a spokesperson for the MWA. “It’s a pretty clever way to do business in that they then pass along all of the costs onto drivers.”

AB 5 addressed this issue by reclassifying drivers as employees and guaranteeing them more benefits. The bill was signed into law in September and went into effect Jan. 1, despite a lawsuit filed by Uber and Postmates that attempted to block it.

Uber and Lyft said they would spend $60 million in an attempt to be exempt from this new law and continue to evade providing benefits to their drivers. Even if AB 5 is applied to Uber and Lyft drivers, researchers at UC Berkeley estimate that drivers will only make $5.64 per hour as a result of several loopholes in the bill.

The LA City Council’s action is an attempt to enforce AB 5 on a city level. LA is one of several cities, including New York and Seattle, that have considered providing a minimum wage for drivers while imposing constraints on ride-hailing companies.

Among LA ride-hail drivers, 48% are working more than 35 hours a week and about three in five work more than five days a week, according to a study by the UCLA Institute for Research on Labor and Employment.

Manuel Rodrigues, an Uber driver and member of the MWA, said he is working to save up to attend law school but finds the job financially constraining.

“I’m on the road over 50 hours a week, because if I’m not there is no way I can survive,” Rodrigues said. “This Monday, I worked 8.5 hours. In those 8.5, I made $119, including tips, and I spent $20 on gas.”

Factoring in the $155 he pays weekly to rent a car in order to drive for Uber, Rodrigues still has several more hours to drive before breaking even.

Since a similar wage floor law was imposed in New York, the price of a ride has increased and Uber and Lyft have warned drivers that there may be a decrease in passengers.

UCLA students take approximately 11,000 rides every week around campus alone, although this number could change if the price of an Uber or Lyft ride increased.

Xue DiMaggio, a fourth-year geography and environmental studies and political science student, said she would consider taking alternate methods of transportation if there were a price increase given the financial struggle of being a student living in LA.

“It depends on how much extra, because we are also struggling financially,” DiMaggio said. “I think it’s an even broader issue because everyone is being impacted by rising cost of living. I want to say that I would, but I also need to save money.”

Riya Patel, a fourth-year economics and labor studies student, said she thinks the potential increase in the price of an Uber ride should be paid by the company itself, not its users.

“I’ve worked a minimum-wage job on campus, and I have also worked another job on commission, so I know how hard it can be living not having stability with your paycheck,” Patel said. “I think that Uber should just pay more, because they definitely could; they’re making a lot of money. Rather than putting it on the consumer, Uber should be paying the workers.”

Rodrigues said it was unfair that executives are making millions of dollars while drivers are so financially constrained. Uber co-founder Garrett Camp is estimated to be worth $2.8 billion and recently purchased a home in Beverly Hills for roughly $71 million.

“It’s not cool that (Camp) and other CEOs are making millions of dollars at the expense of us while driving our wages down to starvation wages,” Rodrigues said.

Lyft did not respond when asked for comment. An Uber representative declined an interview but said in an emailed statement that Uber is concerned this study will not be impartial.

“Uber supports commitments on driver earnings, but we are concerned this study is based on potentially false assumptions that will fundamentally bias its conclusions, and ultimately will lead to higher costs for riders and fewer rides for drivers,” the statement read.

Uber said they hope the study is conducted impartially and that they are willing to work with the city to improve driver experiences.

Rodrigues said he is optimistic that the study and the efforts of MWA will persuade politicians to establish a minimum wage for Uber and Lyft drivers in LA.

“Here in California, we’re known as one of the most progressive states in the nation, and I’m hopeful for the future,” Rodrigues said. “I hope they do the right thing.”


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  • jk

    Even if AB 5 is applied to Uber and Lyft drivers, researchers at UC Berkeley estimate that drivers will only make $5.64 per hour as a result of several loopholes in the bill.

    This is inaccurate. The Cal researchers’ study was specific to the possibility of Uber, Lyft & DoorDash successfully passing a proposed referendum that will almost certainly be on this November’s general ballot (including some other minor matters like, say, voting for a new president).

    Under the proposed referendum, rideshare drivers would receive a guaranteed minimum of 120% of the state’s minimum wage. As the study describes, this 120% estimate factors in all the time rideshare spend driving, including every interval when they’re not actually on the clock and earning fares. This includes time spent returning from trips (typically to distant locales) without a paying passenger in the vehicle – informally referred to as “deadheading” – as well as any time spent cruising the streets seeking out fares.

    The researchers estimated that drivers spend a full 33% of their time performing these tasks, and I’ve read separate reports suggesting the real figure is closer to 40%. Regardless of how you slice it, drivers will almost certainly not make even the state’s minimum wage under this scenario.

    Just to do the math: California’s minimum wage rises to $13/hour in 2021. 120% of that amount is $15.60. Even assuming the 33% downtime state, drivers would gross $10.30/hour – well below the minimum wage. And that’s before accounting for expenses for which drivers are responsible in full, e.g. gas & wear-and-tear on their vehicles (plus they’re required to pay their own self-employment taxes).

    So: they’d end up netting $5.60/hour. Which is plainly terrible. This, however, has nothing to do with what they’d earn if voters did not approve the referendum and AB 5 went into effect – which is impossible to predict at this juncture, given that Uber & Lyft would almost certainly raise fares (potentially by a lot) to compensate for the added expenses incurred in reclassifying drivers.

    Btw this is pretty clearly explained in the introduction found at the link in the article to the UC Berkeley report. Perhaps Bruin staff could read a smidge more closely next time?

  • jk

    And on a different tangent:

    UCLA students take approximately 11,000 rides every week around campus alone, although this number could change if the price of an Uber or Lyft ride increased.

    Huh, I thought the University for Spoiled Children was across town? Seriously: this. is. Ridiculous. UCLA has one of the most pleasant climates of any university in America, if not the entire planet. The fact that students are taking Ubers across campus is “cliché L.A. entitlement culture” taken to the point of farce.

    I suppose some undergrads in particular may not be familiar with them, but one can readily use a device called a “bicycle” to traverse UCLA’s not-really-that-big campus. Or the increasingly ubiquitous electric rental scooters. Or – heaven forbid! – the bus??

    Riya Patel, a fourth-year economics and labor studies student, said she thinks the potential increase in the price of an Uber ride should be paid by the company itself, not its users. “I’ve worked a minimum-wage job on campus, and I have also worked another job on commission, so I know how hard it can be living not having stability with your paycheck,” Patel said.

    Okay, so why are you taking private car rides instead of the free buses available to all students?

    I think that Uber should just pay more, because they definitely could; they’re making a lot of money.

    One would think a fourth-year economics & labor studies students at one of the nation’s most elite universities would be aware of the fact that Uber & Lyft are not only not “making a lot of money”; rather, they’re hemorrhaging money like stuck pigs, to the tune of billions of dollars each per quarter!

    So: no, they’re not “making a lot of money” (but yes, they should absolutely pay drivers more via fare increases, though the LA City Council’s proposed minimum wage is more than a little over-the-top and likely not going anywhere). No, a student working minimum-wage jobs should not be using private car services (!!) simply to get around campus (!!!). Take the bus, dude!