The Gig Economy is on the Ballot
This November 3, as America’s presidential and congressional elections receive frenzied media coverage, an unusually consequential election will take in place in California to much less fanfare. Californians will vote on Proposition 22 (P22), a statewide referendum that could affect gig economy work in not just California but many other states.
If passed, P22 would allow Silicon Valley giants such as Uber and Lyft exemption from a 2019 California law, Assembly Bill 5 (AB5), that will force various industries to reclassify their workers as employees rather than contractors. Under AB5, these new employees would gain basic labor protections such as workers’ compensation, a minimum wage, health care subsidies, and sick leave. P22 was created by gig economy firms Uber, Lyft, Doordash, Instacart, and Postmates precisely as an attempt to exempt themselves from these obligations by preserving their workers’ status as contractors.
Regulating the Gig Economy
The exploitative nature of much gig economy work is by now well known. In 2018, MIT’s Center for Energy and Environmental Policy Research found that US-based Uber and Lyft drivers earn a median profit of $8.55 per hour (before taxes); fifty-four percent of those drivers earn less than their state’s minimum wage. (Low wages help explain why few drivers stay on the apps long. Only four percent of drivers remain with Uber or Lyft beyond a year.)
Aside from low wages, the absence of the very labor protections AB5 would ensure has long made Uber and Lyft drivers poster children for economic precarity. And with fares dwindling during the pandemic, these contractor-drivers have been left without unemployment benefits.
Outside America, courts have begun to question Uber’s and Lyft’s claims that their drivers are mere contractors. In 2017 the European Court of Justice ruled that Uber should be regulated as a transportation company, not a technology company. Their ruling implies that Uber’s drivers are integral to its core business (transportation) rather than contractor-users of a different business (technology) and thus merit greater labor protections. In the UK, meanwhile, Uber has filed a final appeal with the Supreme Court after the UK’s Court of Appeal upheld an earlier ruling declaring Uber drivers employees.
US states other than California are beginning to take notice of this international trend. New York, New Jersey, and Illinois are preparing legislation similar to California’s AB5. How Californian voters respond to P22 this November, then, could shape approaches to crafting similar gig-economy regulations around the country.
Uber, Lyft, and other app-based titans stand to lose money from treating their workers as employees. A Barclays report estimates that Uber’s annual California labor costs could rise under AB5 by as much as $500 million and Lyft’s by as much as $290 million. To forestall such losses, the companies have proposed within P22 new employee benefits, hoping to give the impression that the protections enshrined in AB5 aren’t necessary for their workers. The problem, however, is that their proposed replacement benefits come nowhere close to matching AB5’s.
UC Berkeley’s Labor Center calculates that P22’s benefits would guarantee Uber and Lyft drivers only $5.64 an hour. Uber’s CEO, Dara Kosrowshahi, recently penned a New York Times op-ed claiming that Uber is ready to establish a benefits fund whose proceeds would cover “health insurance or paid time off.” (Note the “or.” AB5 would switch that “or” to an “and,” mandating both health coverage and time off.)
However, the main strategy Uber, Lyft, and other gig companies are using to combat AB5 is an advertising blitz in favor of P22. Uber, Lyft, Instacart, Doordash, and Postmate have spent $180 million so far on pro-P22 ads, by far the most money spent on a ballot initiative campaign in California history. They’re outspending P22’s opponents—mostly labor unions—by a ratio of eighteen to one.
Corporate Money and State Ballots
On one level, this grotesque disparity in P22’s campaign financing instances yet again how market logics pervade and arguably corrode American democratic deliberation. In the eyes of liberal critics of American campaign financing, the U.S. Supreme Court’s 2010 Citizens United decision to allow unlimited corporate (and union) campaign spending stands as this corrosion’s infamous exemplar. And to be sure, corporations have spent heavily on election advertising since 2010, to the tune of over $500 million (in addition to $1.4 billion in spending from just twenty-five ultrarich individuals).
According to one prominent line of legal reasoning, this is perfectly fine: corporations are persons with regards to their right to self-expression, and since people often spend money to express views, any restrictions on spending unfairly and arbitrarily limit free speech. Such restrictions interfere in a so-called marketplace of ideas that tests and discards faulty ideas and validates truthful ones. This theory ignores, as legal scholar Kent Greenfield has shown in Corporations Are People Too (And They Should Act Like It), how “a deluge of independent expenditures on one side of an election [can] dangerously skew the marketplace of ideas.” Its discourse dominated by the advertising of a few app giants, the marketplace of ideas in California’s P22 referendum is oligopolistic, perhaps even monopolistic.
On another level, however, what is most striking about this referendum’s gaping campaign-finance disparity is its illustration of an attentional deficit among US progressives to local and state politics. Critiques of Citizens United typically deride its potential to skew presidential elections. However, it’s at political levels below the presidential where Citizens United has arguably most distorted campaign financing.
As Greenfield and others note, corporate money’s role in presidential elections has remained surprisingly paltry relative to overall campaign expenditures since Citizens United. At the level of state ballot initiatives such as AB5, though, it’s an entirely different story. In the 2016 election cycle, across thirty-seven different state ballot initiatives in which at least one side was largely funded by corporate money, the corporate-backed side outspent the opposition by 33-1. (The corporate-backed side won 62% of these contests.) Little-discussed yet consequential state-level referenda such as P22 are thus where we can see Citizen United’s effects in their purest form.
Who’s Even Going to Notice?
California’s P22 referendum, then, instances the possibility that it’s precisely in those out-of-the-way, largely overlooked corners of America’s voting ecosystem that corporate cash can harm open, equitable democratic deliberation most severely. After all, in these venues public oversight is meagre. Across the US, local newspapers are dying. Americans also consume vastly more news related to federal politics than to the state and local politics. If corporate spending distorts beyond recognition the terms of debate over a local issue, who’s even going to notice?
That this is so is darkly ironic. In the minds of the U.S. Constitution’s framers, a virtue of American federalism was that a decentralization of power enables especially freewheeling, robust political expression at the sub-federal level. Debate at the scale of the locality, the region, and the state could proceed unchecked by the national majority’s overbearing demands. By now, these dynamics have arguably become reversed. The corporations are shaping local debate and they are not local but national and international in their interests, operations, and financing.
The marketplace of ideas, it seems, operates least like the zone of absolute freedom envisioned by neoliberal economists at the political scales—the state, the local—imagined as most conducive to discursive freedom. And insofar as P22’s fate will shape other state-level policies concerning gig economy work around the US, this distorted marketplace’s effects could reverberate well beyond the local.
Spencer Morrison is Lecturer in English and American Studies at Tel Aviv University