States and cities eye stronger protections for gig economy workers
FILE – In this March 16, 2020 file photo, a delivery worker rides his bicycle along a path on the West Side Highway in New York. New York City was ordered Friday, July 7, 2023, to temporarily delay new minimum pay standards for food delivery workers after being sued by Uber Eats, DoorDash and Grubhub. (AP Photo/John Minchillo, File)
Joshua Wood remembers days during the COVID-19 lockdown when New York City’s streets were practically empty, save for workers like him.
That experience convinced the 25-year-old Brooklynite — who makes deliveries for both Uber Eats and a package delivery service — that the gig economy needed some urgent changes.
Roughly 1 in 6 American adults have engaged in gig work for platforms such as Uber, Lyft and DoorDash, according to a 2021 report by the Pew Research Center. But while those jobs promise flexibility and a low barrier to entry, they often pay less on an hourly basis than the prevailing minimum wage and lack basic protections such as overtime, sick pay and unemployment insurance.
“There was a sense among workers, coming off the pandemic, that something really needed to be done,” said Wood, a member of the labor group Los Deliveristas Unidos, which fights for gig worker benefits in New York City. “So much of the city is dependent on the work that we do — but if we want to make the conditions better for us, we have to be the ones to do it.”
New York City has since passed a package of legislation guaranteeing a minimum wage and other benefits for app-based food deliverers, and communities across the country are following suit. In the past five years, lawmakers in at least 10 jurisdictions — including cities such as Chicago and Seattle, and states such as Colorado, Connecticut and Minnesota — have proposed new protections for ride-share drivers and food delivery workers.
At least 10 states have also considered programs that would make it easier for gig workers to access traditional workplace benefits, such as retirement or paid family leave. Meanwhile, regulatory agencies and courts in states including Massachusetts, New Jersey and Pennsylvania have sought to force Uber, GoPuff and other tech platforms to grant their drivers the same benefits as regular employees.
The push comes amid a resurgent workers’ rights movement in the United States and a global reconsideration of labor rights in the age of the gig economy. Since the start of the summer, both Australia and the European Union moved to strengthen workplace protections for gig workers, while the U.S. Department of Labor is expected to finalize a new rule that may reclassify some gig workers as employees as soon as October.
They don’t want to pay drivers. But their pockets are infinitely deep when it comes to fighting regulations they disagree with.
– James Parrott, economist at The New School
But gig companies fiercely oppose any effort to reclassify gig workers, a change that would grant the workers new rights and protections under state and federal law. In public statements, legal filings and elaborate marketing campaigns, gig platforms have argued that any significant shake-up to their current labor arrangement would jeopardize workers’ flexibility and independence — as well as raise consumer costs.
In a statement, Uber spokesperson Alix Anfang told Stateline the company “supports comprehensive legislation that protects the flexibility drivers tell us they want while providing important benefits and protections.”
“They don’t want to pay drivers,” said James Parrott, an economist at The New School whose analyses of driver wages informed New York’s new pay standard. “But their pockets are infinitely deep when it comes to fighting regulations they disagree with.”
Pandemic spurred organizing
Tech companies and their detractors can at least agree that gig platforms forever changed work, for better or for worse.
Since their launch in the late 2000s, platforms such as Uber and Airbnb have spawned a sprawling ecosystem of on-demand digital marketplaces, spanning services from food delivery to therapy to child care and education.
For consumers, such marketplaces offer flexibility and convenience, and may fill gaps in existing transportation, logistical or social support systems. Workers flock to gig platforms for similar reasons: In a 2016 Pew Research survey of gig workers whose households relied on their platform income, 45% said they needed control over their schedules and 25% said they lacked other job options.
At the same time, gig work comes with an unusual level of precarity, said Daniel Ocampo, a legal fellow at the National Employment Law Project. Workers generally have no job security, no traditional benefits, no consistent income, and little opportunity to organize or advocate for themselves.
But that last part is changing in the wake of the COVID-19 pandemic, Ocampo said. Spurred by falling wages and growing safety concerns, new advocacy organizations have sprung up in cities from New York to Los Angeles to push for laws that establish minimum wages and mandate paid sick leave, among other protections.
“There’s been a real wave of legislative action, especially in the last year,” Ocampo said. “It’s a very difficult group of workers to organize … but people are fed up with the conditions.”
In addition to New York City — which approved a minimum wage for ride-share drivers in 2018, and for food deliverers in 2021 — gig workers have also notched a string of significant victories in Seattle. The city unanimously passed a minimum pay floor for ride-share drivers in 2020 and app-based delivery workers in 2022. Earlier this year, Seattle mandated paid sick leave and due process procedures for a broader swath of gig workers if they are suspended from the apps.
Lawmakers in Chicago also expect to pass a minimum wage ordinance for ride-share drivers in the coming months, said city Alderman Michael Rodriguez, a Democrat who introduced the bill with 25 co-sponsors. As of 2021, Uber and Lyft drivers in the city earned an average hourly wage of $12.72 after expenses, according to an analysis of 22 million trips by the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute.
“Many of these workers have had issues with their pay and with deactivation,” Rodriguez said. “We’re working to get new protections for the people toiling day in and day to provide rides in a city that desperately needs better transportation.”
But while minimum wage floors and similar policies seem like obvious ways to protect workers, gig companies and their allies argue they’ll also produce unintended consequences.
In addition to raising consumer prices, wage-floor policies risk cutting worker incomes as higher pay rates attract more gig workers to the apps, said Adam Kovacevich, the founder and CEO of Chamber of Progress, a tech policy group whose corporate partners include Uber and Lyft. If there are more workers, Kovacevich said, each driver could get fewer total orders, pulling down their total earnings even if each individual order pays more.
Gig platforms may also move to limit their costs under these policies, Kovacevich said, by reducing the number of drivers or deliverers in a given area, or reducing the number of areas they serve. Uber, DoorDash and Grubhub made similar arguments in July lawsuits challenging New York City’s delivery worker protections, which have been put on hold pending the court’s decision.
Solutions and concessions
Parrott, the New School economist, said there is little evidence to support the companies’ arguments: His research has found that New York City’s 2018 pay floor for ride-share drivers did not significantly raise user prices, as Uber and Lyft predicted. Both companies have “a lot of latitude to pay workers more,” he said. They also remained in Seattle after it adopted minimum pay provisions.
Still, gig companies’ arguments have proved persuasive in many places — bolstered, in part, by well-funded lobbying campaigns and direct appeals to the users of their apps. Bills aimed at protecting ride-share drivers died in both Colorado and Connecticut this year after gig platforms rallied against them.
In May, Minnesota Gov. Tim Walz, a Democrat, also vetoed a pay floor for ride-share drivers in his state after Uber said it would force the company to reduce operations there. Minneapolis Mayor Jacob Frey vetoed similar, local legislation threemonths later, citing a desire to further research the likely impacts of the law. Three city council members have said they plan to begin the process of reintroducing a new pay floor in late September.
“The gig companies have done a great job organizing and developing a strong message,” said LiJia Gong, the policy and legal director at Local Progress, a membership organization for progressive lawmakers that supports gig worker bills. “These are massive corporations — they have the funds and the ability to get their message in front of a lot of people.”
Increasingly, that message does include new benefits and protections — though industry-backed plans have fallen well short of workers’ demands. Several gig companies have supported state and federal efforts to create what are known as “portable” benefits programs, in which workers accrue benefits like vacation days or retirement savings over time and retain them even after they switch employers.
In 2022, Uber and Lyft backed a law creating a portable benefits program in Washington that could serve as a model for compromise legislation in other states. The legislation, which went into effect in January, made ride-share drivers eligible for paid sick leave and workers’ compensation, and established a pay floor that will rise in tandem with the state’s minimum wage.
Controversially, the law also classified gig workers as independent contractors and preempted local governments from adopting further ride-share regulations of their own. That has made it unpopular with progressive advocates and labor groups, including the regional affiliate of the Seattle Teamsters union that helped negotiate the legislation.
“There are some good things in that bill — but there’s no need to trade away employee status for any of these benefits,” said Ocampo, of the National Employment Law Project. “I understand why companies think this is an appealing approach. It allows them to get away with the misclassification that their business models have relied on from the start.”
But as more places take up gig worker rights — and take on powerful tech corporations — lawmakers will need to make difficult trade-offs, said Washington state Rep. Liz Berry, a Seattle Democrat and the sponsor of the portable benefits legislation.
Berry thinks that gig workers should be classified as employees, she said, and had initially thought her bill would look more like the minimum pay-floor and benefits laws passed in Seattle. But when Berry got on a Zoom call with representatives from Lyft, Uber and the union, she recalled, some realities became apparent: There were areas where both sides could stand to give a little. And if they didn’t, gig companies commanded both the money and political will to fund a ballot measure advancing their position, as they did in 2020 in California.
“It was a bully move — I certainly didn’t want that to happen,” Berry said. “But you have to look past that and focus on your end goal.”
Unlike in most places in the country, she said, “these drivers now have basic protections here in Washington, which I think makes the bill we put together a great model.”
Stateline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Stateline maintains editorial independence. Contact Editor Scott S. Greenberger for questions: [email protected]. Follow Stateline on Facebook and Twitter.
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.