This is not even comparable. The law already passed and is not banning Uber/Lyft/Dordash it just places the same requirements other jobs have.
They could either treat them as employees and provide benefits that law requires, or make drivers to be truly independent.
They are threatening to leave California, but that's similar to baby making a tantrum to get what they want. While I don't use their services, and don't care about them leaving, I really doubt they will leave California, because of AB5.
The failure of Prop 22 will cause a massive disruption of an existing marketplace. No matter what you think of the morality of the existing setup, the failure of Prop 22 will force some large structural changes to how it operates.
It seems likely that this will cause ride-sharing not to be economically feasible in rural areas where per-driver utilization is low.
Operating in SF and LA will likely remain profitable but many drivers will be forced, by AB5, to stop driving. This will increase wait times and increase prices and cause lower ridership.
It's very possible that Uber/Lyft will decide that the overhead of being an employer is not worth the reduced revenue, it's not like they're making a lot of money in the first place. It's also possible they'll decide they won't want to dilute their brands by offering a service which makes you wait 7 minutes for a ride.
It is, of course, also possible that they'll decide to send a message / throw a tantrum, but your comment implies this is the only explanation. It's definitely not the only possible explanation and I'm not even sure it will be the most likely explaination.
This may buttress your point: in Denmark there are very strict labor laws and a very old taxi medallion cartel. Taxi drivers must be guaranteed a base pay, be insured, certified, so on and so forth. At any given time dozens of taxis can be seen queuing up for their right to a ride with no one taking them. Those drivers are all being guaranteed a very high rate and they all drive Mercedes Benz.
We had Uber for a short period and consumers loved it. The taxi medallion cartel got together and pressured the Danish government to push on Uber. The government complied with hefty fines. Uber left.
Now things are back to what they were: hundreds of taxis idling somewhere in Denmark to protect the cartel and no one taking taxis because it's literally 50 dollars for a 15 minute ride. It sucks. Everybody hates it except the taxi services. I really hope this isn't what happens in the States.
Uber got kicked out of Israel as well - the taxi driver cartel wouldn't have it.
On the other hand, Japan has amazing taxis and they're everywhere all the time, AND extremely affordable. Japan also has very strict labor laws, and becoming a driver is not the easiest thing in the world.
overcharging the remaining customers and government or similar work: If you are in an old peoples' home, refugee camp, etc, no public transport available and you need to see the dentist, government or health insurance will pay for the taxi. (at least that is the situation in Germany)
>It's very possible that Uber/Lyft will decide that the overhead of being an employer is not worth the reduced revenue, it's not like they're making a lot of money in the first place.
Here's the thing... they're not making _any_ money in the first place. Every single segment of Uber's business is loss-making. So AB5 will uh, force a loss-making, VC-capital-burning, parasitic business to be slightly more loss-making at the cost of providing a living wage to drivers?
The point of labor laws is to force companies to conduct business in a way that doesn't infringe on the rights of employees. Making certain business practices financially unsound is the point.
Uber/Lyft have found a loophole that enables them to skirt by one of the "Riders Must Be At Least This Tall" measuring sticks, and the law basically says: No, you actually have to be this tall, sorry.
It's a backwards way of going about it. Instead of forcing anyone who ever wants to hire a human being to pay for their health insurance, the government should be providing it for everyone.
If I want to hire teenagers on my street to mow the lawn or babysit the kids, should I be forced to pay them benefits as well?
The alternative is the way California is heading: instead of taking care of people's needs directly, it's regulation after regulation to lock everything up so that only entrenched corporations with the scale to afford all these benefits can afford to operate.
No, that kicks in once you have 50 or more of them and they work for you full time.
> The alternative is the way California is heading: instead of taking care of people's needs directly, it's regulation after regulation to lock everything up so that only entrenched corporations with the scale to afford all these benefits can afford to operate.
These companies spent almost 200 million for this proposition (highest in California history, and since it's California - highest in all of the states). They are not poor mom and pop shop.
The issue is that uber and lyft will likely shutdown in much of california.
I guess you can think that this isn't bad, if you want. But I can assure you that many of their drivers, and customers, do not agree with you.
> Making certain business practices financially unsound is the point.
Ok, fine. But most of their california drivers probably disagree with you that it would be good for them to be fired. Most of them probably do not want to be fired. Which will likely happen.
> I guess you can think that this isn't bad, if you want. But I can assure you that many of their drivers, and customers, do not agree with you.
I'm not sure about that:
https://www.cnet.com/news/uber-drivers-sue-they-say-company-... and who cares about the customers? Many of their customers wouldn't have problem if Uber was using a slave labor as long as price is low, and ultimately that's what it is about.
Well the customers do. Most people are customers are something.
And most people would say that the opinion of customers matter.
If your opinion is "I don't care about the opinion of people who buy things", I guess you can feel this way. But most of society and our legal system regarding businesses is targeted toward consumer welfare.
I think you might be conflating two related things. The unit economics of Uber/Lyft, in principle, work out. If there was no way for them to make a profit nobody have invested in them.
They're currently unprofitable in the same way that Amazon spent a decade being unprofitable; every cent was invested back into growing future revenue. It's a little different; if Uber flipped their switch and started taking a profit Lyft would swoop in and steal away market share. But the unit economics do work out, I'm claiming that once prop 22 fails there will be markets for which the unit economics will no longer work out at all.
> It seems likely that this will cause ride-sharing not to be economically feasible in rural areas where per-driver utilization is low.
Or they will have to make allowances for areas that have very low supply and/or supply that is very dispersed. For example, charging for some/all of the the time/distance from the driver's origination point to the pickup point. That will necessarily make ride sharing more expensive in those places, but that's because providing rides in those places is more expensive.
Another option that might work in tandem is to allow drivers to log in as a sort of "if the offer is good enough I'll take it" sort of tier, and then you might get a lot more people in rural areas signed in in that state, and while any one potential driver might reject, a lot more eyes might see it that wouldn't bother to have been looking before, and that might make cheaper rides more likely as closer people are logged in as potential drivers. It's worth noting something like this might also have kept Uber/Lyft from having to classify the drivers as employees in the first place, since as I understand it choice of work is a big part of why they didn't qualify as contractors.
> It's also possible they'll decide they won't want to dilute their brands by offering a service which makes you wait 7 minutes for a ride.
7 minutes is actually on the lowest end I've seen where I live, and that's in a metro area of ~250k people. Usually it seems to be around 15-20 minutes. Maybe it's just particularly slow around here, but my guess is that you don't get under 10 minute pickup times on average anywhere except for major cities.
> Or they will have to make allowances for areas that have very low supply and/or supply that is very dispersed. For example, charging for some/all of the the time/distance from the driver's origination point to the pickup point. That will necessarily make ride sharing more expensive in those places, but that's because providing rides in those places is more expensive.
Yeah, definitely. I agree that to make it work they'll have to raise prices. My guess is that they'll have to raise prices by so much that riders decide to just drive themselves. If drivers must be paid minimum wage that might raise the cost of a ride by enough that in some locations there is no clearing price.
> Another option that might work in tandem is to allow drivers to log in as a sort of "if the offer is good enough I'll take it" sort of tier
AB5 is strict enough that this will not save Uber. You are an employee unless "The person performs work that is outside the usual course of the hiring entity’s business." Though, they did experiment with this model [1] and I wonder why they decided not to pursue it. If they had allowed drivers to set their own prices that might have been enough to prevent AB5 from being passed.
> 7 minutes is actually on the lowest end I've seen where I live, and that's in a metro area of ~250k people. Usually it seems to be around 15-20 minutes.
Yeah, absolutely :) Sorry, I should have been more specific! In major cities it's usually something like 2-3 minutes, I would not be surprised if it becomes 7 minutes once prop 22 fails. Wait times in places which are not major cities will increase by even more.
And of course Californians will vote for the exact same legislators in the next election, as they always do, and then they will complain about rising housing costs, homelessness, deteriorating schools, crumbling infrastructure, wildfires, electric blackouts etc, as they also always do, but somehow they never manage to connect the two.
> No matter what you think of the morality of the existing setup, the failure of Prop 22 will force some large structural changes to how it operates.
No it won’t. Uber and Lyft will operate identical to how it is today. They will outsource the HR and employment issues to staffing agencies.
Drivers will simply have to be “employed” by one of these agencies and then go about driving the same way they are now. These agencies will likely allow their “employees” to drive for whatever companies the agencies have agreements with during their shift and call everything over minimum wage “incentive pay”.
Uber, Lyft etc will contract these staffing agencies and pay them per ride instead of the drivers and the agencies will passthru that income minus their cut.
This is an interesting theory and I'm excited to see it tested. I like how it lets you share supply between multiple platforms but if the problem is that supply has been simultaneously reduced and made more expensive I'm not sure that the extra flexibility afforded by using an agency makes much of a difference.
You can't defeat a structural problem with staffing agencies. If the drivers are the employee of anybody, they don't get to choose when they work, or how often, or where. Some of the drivers need that, so they lose work. The riders in the areas or times served by those drivers can no longer get rides, or have to pay more, and then more people drive drunk and lower income people pay more for transportation.
If the employer has to provide benefits, those costs have to be passed on to the riders, even if there are drivers who don't need those benefits, e.g. because they get them through a spouse or a second job. Then costs increase even more and there aren't as many riders, which means there aren't as many drivers and even more lose their jobs.
How is a staffing agency supposed to solve any of that?
> If the drivers are the employee of anybody, they don't get to choose when they work, or how often, or where. Some of the drivers need that, so they lose work.
There's nothing about having a staffing company involved that forces drivers not to pick when they work or how often or where. When you're a contractor, your contracting company cannot enforce those things, however, when you're an employee, you absolutely can have those things -- or not -- at the discretion of your employer subject to the terms of your employment relationship.
All having a staffing agency involved does is force a minimum wage, and an employer-employee relationship. They, the staffing company, take on fares from Uber and disperse them across their drivers. They pool the fares to provide a minimum wage and benefits, and then anything else above that gets distributed to the driver who created the specific revenue as "incentive pay" in exactly the way the parent suggested. Or as profit sharing proportional to work performed.
There's nothing crazy or unprecedented about this.
tl;dr: The company contracting you cannot tell you when and how to work, an employer can -- but does not have to.
True, it doesn't have to tell you when you work. But it does have to pay you a minimum wage. If a staffing company said: "work whenever and we'll pay you a minimum wage", then drivers would probably routinely drive at times they found pleasant, not profitable times for the staffing company. In this case the staffing company would start up restrict the hours a driver could drive.
A staffing company wants to reduce the amount of unprofitable hours driven. To do that they have to restrict working hours. It's not guaranteed but a highly likely outcome of the set up.
> ...then drivers would probably routinely drive at times they found pleasant, not profitable times for the staffing company.
Are you sure? Have you ever worked in a job at the mall that was relegated to telling you to "I dunno, why don't you come in when you're feeling pleasant or comfortable?" Similarly, airlines that schedule flight attendants don't tell them to come in whenever they want. You can fire people who are your employees, yeah? And you can pay people who outperform more.
Kind of dead thread but... If the company says to you: "you can work whatever hours you want!" And then turns around and says, "oh, but if you work those unprofitable hours, we'll fire you.." then how exactly is that not restricting the hours that you work? You can't have both.
> They pool the fares to provide a minimum wage and benefits, and then anything else above that gets distributed to the driver who created the specific revenue as "incentive pay" in exactly the way the parent suggested
Zero chance the bulk of the surplus gets distributed to the drivers. I know of a few New York medallion era brokers keeping an eye on the California market, and they aren’t doing it because they plan on passing along profits.
That's an opinion, not fact. The charter of such an organization or co-op could be written to that effect, and in fact, Uber and Lyft could refuse to do business with employers that didn't support that structure. My point isn't that employees are immune to being screwed over in such a structure, my point is that they do not have to be which is what the parent post was suggesting.
But they do have to be, otherwise they would go out of business. If someone can choose when and where to work and they choose a time and place where people mostly don't need rides, they mostly don't do any work or make any money. Which they may be fine with if they're willing to be signed in for 40 hours a week but only work 10.
If you force them to a fixed hourly wage, you can't hire that person and still let them work those hours in those places, because you'd be paying them for 40 hours while they're still only working 10. So the now money-losing employee either gets a pink slip or has to work different hours.
A fixed hourly wage is not mandated by this rule, a minimum wage is. So you do this, ready? Everyone continues to drive exactly the way they do right now. All revenues go into one big bank account.
Next, you provide incentive payments for drivers proportional to the extra amount they brought in above and beyond the minimum wage for the hours they drove, as a slice of the pool of revenues after subtracting out minimum wages and benefits. Then you stack rank your drivers at the end of each half, and fire the bottom 20%.
I'm not even advocating this approach, I'm just saying there are ways of incentivizing this that are shown to work. This part here isn't rocket science.
The stunning success of Uber/Lyft shows that there's a massive segment of consumers who were not satisfied by traditional taxi services and prefer the alternative Uber/Lyft offer. There's also a large contingent of drivers willing to become drivers under the current model. All of them seem to disagree with you on your opinion that things were fine, actually, just the way they were before Lyft/Uber arrived.
I agree with the argument I think you're implying: there's a minimum level of protection that everyone should be afforded. Though your assumption that your employer must be the source of those protections seems unwarranted. If people deserve healthcare then surely unemployed people also deserve healthcare. If people deserve a minimum standard of living, some kind of minimum wage, then surely even the unemployed deserve that minimum standard. And once even the unemployed have these protections, what does it matter whether you're an employee or a contractor?
This is the workers' rights version of a gadgetbahn. I am arguing for universal healthcare and for central government to cover things like medical leave and childcare. As and when that's actually implemented, I might support some relaxation of the standards for when people are considered as employees (though I suspect Uber probably wouldn't care whether these people were classified as contractors if it didn't mean they were on the hook for healthcare and benefits). In the meantime, the laws that we currently have are that employers are required to provide these things; Uber needs to step up and fulfil their legal obligations.
I don't think it is. If an employer sends a memo to all staff that says "If this law stands, we cannot continue as a business in California, and this could mean disruption to employment." It's not directing anyone to vote for anything, just informing them that hey, this will be very bad if it becomes law. It's up to the employees if they want to vote for or against the measure.
Obviously the implications matters. And when the implications is "we go out of business", that's not retaliatory, and shouldn't be a problem.
If they were saying it would be a shame if something would happen to your precious belongings, and they were talking about regulations designed to stop electrical companies from starting fires, it would be completely kosher.
Attitudes like this are why I hate California, calling companies reacting to economic disincentives 'childish' with blithe disregard to the value they provide and the harm disincentives can have on the rest of us[0].
[0]Effectively banning Uber will literally kill people, for starters. To say nothing of the increased economic friction going back to the cab system.
> Effectively banning Uber will literally kill people, for starters.
The state is morally responsible for folks who cannot work, however, they don't have to achieve this responsibility by creating below-market-rate or otherwise crap jobs. They can achieve this responsibility through, for instance, basic income, unemployment benefits or a social safety net.
The moral responsibility of a state is not to make people work at all costs. It's to look after its citizens and to your point make sure they don't die. Americans tend to conflate the two but they are distinct.
Combining the two creates a weird world where the state needs to stay out of the way of individuals getting any job at all no matter how bad or underpaid, and that's not really the mission statement.
If you're talking about "killing people" because of drunk driving, I would suggest that there are plenty of other ways for folks to get home, between public transit, a designated driver, or yes, a taxi. I enjoy drinking as much as the next guy, but not having Uber isn't going to cause me to die. At some point personal responsibility comes in to play when the goal is to optimize for the greater good. I do think having Uber or Lyft is strictly better.
Drunk drivers tend not to only kill themselves. I'd also like to point out that your argument for 'personal responsibility' has a lot of similarities with the 'abortions would stop if people just exercised abstinence' argument. The flaw is the same: people don't act responsibly[0] and others suffer for it[1].
>They can achieve this responsibility through, for instance, basic income, unemployment benefits or a social safety net.
Those would be reasonable approaches but instead CA seems more interested in hacking a massively useful service into unprofitably. It's akin to pushing mass transit by bulldozing highways instead of building subways.
[0] A lot can be written about why people don't, but its demonstrable that lowering the barrier to alternatives decreases irresponsible behavior.
[1] If you consider abortion and/or drunk driving to be social ills.
> Drunk drivers tend not to only kill themselves. I'd also like to point out that your argument for 'personal responsibility' has a lot of similarities with the 'abortions would stop if people just exercised abstinence' argument. The flaw is the same: people don't act responsibly[0] and others suffer for it[1].
I will very much give you this one, and that's the first thought I had as I was writing up my post. Still not entirely sure how to reconcile that tbh, and I tried to encapsulate that in "I do think having Uber or Lyft is strictly better."
A lot of things "literally kill" people, by the definition you're using.
It's a weak argument if you move from "people will die, to say nothing of the impact to the economy" — presumably, of using a different taxi app?
The strict adhesion to economics you're proposing would say a new marketing clearing price would be reached, not start making alarmist overstatements about what higher prices could imply
GP is probably referring to the MADD campaign, which points to statistics that say that the rate of drunk driving decreased after ridesharing entered the picture.
I would guess that it's not ridesharing, but app-based hailing which reduced drunk driving, by reducing the friction of hailing a ride. There is also the added effect of there being more vehicles available, which reduced wait times, but that can be achieved with increasing the number of medallions, so I don't believe there is a direct need for companies like Uber and Lyft to reduce drunk driving.
It is likely a local effect, as taxi hailing apps have succeeded in countries where ridesharing has failed, such as South Korea. I don't know the exact mechanisms behind the different circumstances, but as I said before, I believe the benefit is from the app-based aspect and not the ridesharing aspect.
I'm not too informed about the South Korea market specifically either, but reading about it, what the news suggest is that the decrease in DUIs in SK are heavily correlated to progressively stricter DUI laws over the years.
I'm not sure to what extent we can infer a correlation between the app-based aspect and DUIs there.
Though to be clear, I do think the app-based aspect plays a role. It's just that when I say "rideshare", I assume we are talking about the whole package as it exists in reality, as opposed to dissecting what aspects of Uber affect what types of statistics.
This seems a bit misinformed. The reason they stated for leaving CA is due to logistics, i.e. a company can't process hiring paperwork for hundreds of thousands of people out of thin air. A more apt comparison would be your state government saying you have 6 months to rebuild your wooden house with bricks or face exorbitant fines. In that position, it wouldn't be a tantrum for you to decide to leave said state.
Regardless, CA is a big market for rideshare, so even if they leave, Uber will surely come back to CA once they make whatever changes they need to their platform to conform with the local regulations. That's what they did in Austin.
This is where you’re wrong. This would set a precedent. Uber will definitely not renter CA or else it would send a message that other states can follow like California. CA was about 9% or Uber’s total rides before the pandemic, so it is significant, but they wouldn’t re-enter as it would risk the profitability profile of the whole company as the rest of the US adopts similar laws.
That's a really good argument. Personally - and admittedly this is purely speculation - I think they would find some creative way to conform to the letter of the law without a drastic shift in business model. Someone elsewhere suggested, for example, something akin to an agency model, where they pay some amount to a sourcing company, and said company then retains a pool of workers that service requests from all rideshare and delivery apps. They could spin it into an opportunity to become said middle man themselves and profit from competitors and/or enter different gig economy verticals. Or they could settle for some middle ground with some loss of coverage but still more or less the same service. Or find some way to devour or partner with the taxi industry proper. Etc.
The thing w/ regulation and precedents is that it doesn't have to be Uber. If a precedent is set by any other company, your hypothetical scenario of risk to profitability profile would affect Uber regardless, so it doesn't seem in their best interest to just part ways with CA and call it a day.
On an opposing note, something else to consider is that the rest of the country (or the world, for that matter), may not agree with CA policymaking, especially as the CA political landscape drifts more and more towards the radical left side of the spectrum.
I looked it up just now and actually you're partly right. What actually happened is Texas passed a bill that overrode Austin. I stand corrected.
With that said, I have also read that Uber did do significant changes to its platform for the UK market (another place where there was an existential crisis for Uber). So platform changes are not entirely outside the realm of possibility.
Whether Uber's position on AB5 is correct isn't relevant to the question of whether they should be legally prohibited from saying it. The government can't go around banning people from having the wrong opinions on laws.
Did you mean to respond to a different comment thread? The parent commenter indicated that they think it should be illegal for Uber to say it might not be feasible to operate in California if the law passes.
Well this sums up the progressive mentality extraordinarily well.
"I don't really have a personal connection to this thing, pay much attention to it, wouldn't really care if it went away, but by God we need to set this rule I want to make it work exactly how I say it should. No, I haven't really studied it, I'm not going to rely on any data or "facts" or any of that nonsense, I'll only argue from first principles in a vague, hand wavy way. And I am not going to acknowledge any complexity the world, this is black and white and it will work exactly the simple way I say."
And then by the time it's clear what the result of this decision was, you've already forgotten about it because, like you said, you don't even really care that much if these companies stay or go, and by extension if these drivers can keep driving to earn money or not.
They could either treat them as employees and provide benefits that law requires, or make drivers to be truly independent.
They are threatening to leave California, but that's similar to baby making a tantrum to get what they want. While I don't use their services, and don't care about them leaving, I really doubt they will leave California, because of AB5.