America's Gig Workers Turn to an Old-School Union

Dow Jones
2 hours ago

LOS ANGELES -- When Margarita Peñalosa began driving for Uber and Lyft in 2017, eight hours a day was enough to cover living expenses and send cash to family in Colombia. Now she said it takes 12-hour days.

"The cost of driving is twice what it was when I started," Peñalosa said.

Peñalosa's frustrations go a long way to explaining why she and more than 50,000 California ride-share drivers recently signed cards to join the newly formed California Gig Workers Union.

Organizers have told drivers the union could help them secure more take-home pay in one of the nation's least affordable states, where the country's highest gas prices and a growing fleet of driverless taxis are undercutting the economics of gig work.

The union marks the biggest U.S. effort yet to organize a workforce that numbers in the millions nationwide. Ride-share drivers are free to set their own schedules, giving them flexibility to care for children or work other jobs. But since they are classified as independent contractors rather than employees, gig workers lack traditional labor protections in most of the U.S. Those include minimum wage laws, workers' compensation and collective-bargaining rights.

Instead of an hourly wage, Uber and Lyft drivers are paid by the ride. To receive trip requests, they must be "online" with the ride-share app. Drivers are offered upfront rates determined by the platforms' proprietary algorithms and must learn to quickly distinguish worthwhile trips from low-paying ones.

They don't get paid for time spent behind the wheel waiting for trip requests, or driving back from a distant drop-off with an empty back seat.

A growing number of mostly Democratic cities and states are extending new labor protections for gig workers. Massachusetts certified the nation's first union for ride-share drivers in May, a few months ahead of California. Illinois could soon follow after Gov. J.B. Pritzker signed a law in August that will allow Uber and Lyft drivers to unionize.

California and Massachusetts also guarantee drivers a minimum wage based on the time they spend actively driving passengers, though the rest of their time remains uncompensated.

In Oregon, Portland's city council considered a proposal earlier this year to cap the "take rate," or share of a passenger's fare that goes to Uber and Lyft, at 20%. New York City, Washington state and Minnesota have adopted rules in recent years guaranteeing drivers earn a minimum amount per mile.

Despite the new protections, mounting overhead costs are eating into gig workers' earnings.

They pay vehicle-related expenses, including insurance, repair and maintenance costs that have all outpaced inflation in recent years. And they are especially hit by gasoline prices that are up more than 50% this year nationwide. California drivers were recently filling up at about $6.31 a gallon for regular gas, the highest average of any state, according to AAA.

Lyft declined to comment on driver pay, but a spokesman said the company "does well when drivers do well." An Uber spokesman said the company's drivers make more than $34 an hour in California "when actively working" -- meaning the time between accepting a ride and dropping off a passenger -- an increase of about 17% since 2019.

After factoring in their operating costs, like gasoline, and the time they spend online but not actively serving customers, several ride-share drivers in Los Angeles said their actual hourly earnings often fall below the state's $16.90 minimum wage.

"The gas is killing me," said Artur Gevorkyan, 46, who has been driving for Uber off and on since 2015.

He made $1,006 before taxes and expenses for about 22 hours of active driving time in one of his better recent weeks, according to a review of his pay statement. Measured by active driving time, that means he was grossing nearly $45.50 an hour.

But after including nearly 30 additional hours he spent online for Uber -- time Gevorkyan considers working hours -- his pretax income for that same week would come out to less than $19.50 an hour.

His expenses include a $600 monthly payment on his 2019 Infiniti QX60, nearly $800 every six months for the insurance and close to $70 for gas on a typical 250-mile day.

Gridwise, an analytics platform used by hundreds of thousands of Uber and Lyft drivers, estimates that average gross pay nationwide was $24.38 an online hour in the second quarter. That was up 7.3% from a year earlier but down about 10% from 2021, when drivers' earnings peaked amid a postpandemic labor shortage.

Driver earnings have lagged behind in Los Angeles, among the first cities to allow driverless Waymo taxis to compete for customers since 2024. More than 900 of the self-driving taxis now roam the streets here, doing the work of thousands of human drivers and posing what many analysts consider a threat to ride-share platforms -- and drivers.

In contrast to their fierce opposition around the U.S. to workers being classified as employees, Uber and Lyft haven't fought the unionization push. That is partly because the California bill that allowed drivers to unionize was part of a legislative bargain that also reduced the ride-share companies' insurance costs.

Union organizers made their pitch to drivers at airport ride-share parking lots in Los Angeles, San Francisco and other cities, often over free coffee, doughnuts or pizza. In addition to pay and benefits, the union has said it could help appeal so-called deactivations, whereby the companies cut off drivers' access to the apps for alleged violations of their rules, unsafe driving or other reasons.

California Gig Workers Union spokesman Tim Sandoval said the organization will eventually represent all of the estimated 300,000 to 350,000 ride-share drivers in the state.

Sam Gutierrez, 54, broke down in tears as he described having to apply for Medicaid and food assistance this year for the first time in his life, even though he drives 10 to 11 hours a day for Uber and Lyft in the Inland Empire east of Los Angeles. He said he typically grosses $140 to $150 a day, minus about $30 of gas for his Ford Focus.

"It's crazy the way we're living right now," he said. "I just went on medication, my blood pressure went up so drastically."

 

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