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The Exciting New Trick That Converts Good Jobs Into Crappy Gig Work

The labor carve-out that allowed a California grocery giant to replace employees with contractors might be coming to a state near you.

Mario Tama/Getty Images

The highly contentious and wildly expensive Prop 22 is already doing what it was designed to do, and Californians are seeing the grim reality of an economy saturated with independent contractors. (Or “entrepreneurs,” as Uber might want you to say.)

The 2020 ballot measure—the product of a historic $200 million–plus campaign by Uber, DoorDash, and Instacart—exempts these companies from treating their workers as employees, making them largely ineligible for standard workplace protections like wage floors, overtime, and collective bargaining, The measure passed in November, with 58 percent of California voters opting for it.

This week, we got a glimpse of the world these gig giants just bought for themselves: Local media reported that all Albertson-owned grocery chains—among them, Vons, Safeway, and Pavilions—are switching their business models and laying off the in-house grocery delivery drivers they’ve long employed. The move was first reported by Knock and soon afterward confirmed by MarketWatch, with an Albertson spokesperson saying that the switch should happen by the end of February. “Albertsons was happy to reap public goodwill during the pandemic,” Knock reported. “But once Prop 22 gave the company the option of replacing workers with lower-paid contractors, they jumped at the opportunity.”

As Knock also pointed out, the majority of Albertson’s delivery drivers were union workers; in their place, the company is planning to hand the service over to DoorDash—one of the driving forces behind Prop 22.

The ripple effects of Prop 22 won’t stop at Albertson’s or the California state line. Even as Uber, Lyft, and other gig companies continue to hemorrhage money, they’ll throw unfathomable sums at campaigns to replicate their Prop 22 win. The model isn’t especially fresh or innovative, but if they’re successful, they’ll only expand their power to write their own labor law while also helping to turn other industries into different styles of gig work. It’s a slippery slope that will inevitably stretch beyond the decimation of DoorDash’s and other platforms’ workers’ rights—as the Albertson’s example has already shown, most company executives are just looking for a reason to join the club of getting rid of their employees in favor of an army of “entrepreneurs.”

As my colleague J.C. Pan wrote after Prop 22’s passage, the measure “was always the tech giants’ to win.” They ran a public awareness campaign that included putting stickers in support of the measure on people’s groceries, with many of these efforts designed to mislead voters on what exactly Prop 22 did. Because nothing makes sense, these gig giants convinced—or just confused—voters that they were on the side of workers and that a labor law meant to help enforce minimum wage and other protections was the real villain. The gambit worked, with one poll showing that 40 percent of voters in favor of Prop 22 said they thought it was designed to provide workers a living wage.

Prop 22 was sold by the tech companies funding it as a way to grant their drivers more freedom and more flexibility. In reality, the measure did little to actively improve their working conditions and instead solidified the ability of these companies to pay their workers less than the minimum wage and dodge the benefits packages that are regularly the cornerstone of union contracts. As author Steven Hill wrote for Fortune in December, the supposed benefits of Prop 22 were more sleights of hand:

The value of Proposition 22’s health benefit is estimated at about $1.20 an hour—well below the $4 to $6 hourly value of benefits mandated for employees under state and federal laws.

Proposition 22 also appears to offer to drivers a new hourly minimum wage of at least $16.80 per hour. But read the fine print: A complex formula will be used in which only “engaged hours” (when the driver has a passenger in the car) will be counted as hours worked when calculating the minimum wage.

A driver, in a 10-hour shift, might only have passengers for five hours. If the driver earns $100 in that shift, that would amount to only $10 per hour—less than California’s legal minimum wage of $12 per hour.

It should come as little surprise that the companies are now increasingly invested in seeing this measure spread beyond California. The gig giant gang and their associated sycophants got back together in New York, with Spectrum reporting in late December that corporate lobbyists and state business leaders are already starting the push, ahead of the upcoming legislative session. The language is essentially being lifted straight from the Prop 22 ads. “These workers have made it clear, they enjoy their work flexibility that is proving to be valuable during a time when incomes mean so much,” Business Council President Heather Briccetti said.

In other places, like Massachusetts, the state government has been proactive in trying to head off a similar effort from taking root. Last July, Attorney General Maura Healey initiated an ongoing lawsuit against Lyft and Uber in an attempt to force the companies to classify their drivers as employees.

Killing Prop 22 lookalikes and maintaining the status quo or even getting Lyft and Uber to classify their drivers as employees is clearly not a long-term solution. These companies are vampires, but the problems they create are bigger than just them: If America operated a single-payer health care system, workers would not have to worry as much about their companies scamming them out of health insurance; similarly, if the federal wage codes were rewritten to enforce a livable working wage for all businesses, shallow arguments about “flexibility” wouldn’t hold any water. The past year is proof that enough workers are living on the edge already: There’s no need to help Silicon Valley push them off.