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Demand for E-Commerce Deliveries and On-Demand Car Hailing Services Spurs Gig Economy Worker Demand, Business and Industry Trends Analysis

One of the perks for independent workers is choosing when and where to work.  Uber reported that as of late 2019, 92% of its drivers worked less than 40 hours per week, and 45% work fewer than 10 hours per week.  RBC Capital Markets conducted a survey of Uber and Lyft drivers in 2019 which found that 70% of respondents being “extremely” or “very” satisfied with their job experience.
There is a significant debate underway in many nations as to whether or not people working as Uber drivers, Instacart shoppers and similar agents are actually employees, rather than contract workers.  Legislative reform may well be attempted on large scale in this regard.   In some cases, class action lawsuits have been filed by the contract workers.  If governments rule that such workers are employees, it would have a massive effect on the business models of sharing economy firms.  In the U.S., for example, it would mean that firms were subject to paying payroll taxes such as Social Security, and were subject to very high levels of labor, safety, health and anti-discrimination laws.  This debate will likely continue for many years to come, and may well lead to legal reform in some nations.  Another outcome may be the formation of contractor workers’ unions or union-like organizations that might demand better pay or working conditions.  The “Independent Drivers Guild” now exists in New York City, representing tens of thousands of local Uber drivers, but not quite acting as a true labor union.
In September 2019, the state of California passed landmark legislation, California Assembly Bill 5 (AB5), that requires firms that rely on gig (contract) workers to consider these workers to be classified as employees.  Legislation of this type can create massive changes within gig-based companies of all types.  Multiple laws and regulations that protect employees and regulate the ways in which firms must treat them is coming into play, such as minimum wage, unemployment coverage, employer’s liability, OSHA, EEOC and a long list of additional rules.  Unions are extremely excited at the prospect of unionizing the gig industry’s hundreds of thousands of California workers. In late 2019, the Competitive Enterprise Institute released the results of a study in which it estimated that reclassifying Uber drivers as employees would cost the firm in excess of $21,000 per worker and increase fares between 30% and 50%.  A California court ruled in early 2020 that the law does not apply to trucking companies.  (Many other industries had successfully lobbied for an exemption from the law.)
Shortly after AB5 was signed, companies directly affected by it, such as Uber, Lyft, Instacart and Postmates, helped to raise what was the largest voter referendum funding campaign in California to-date, totaling $204 million dollars.  The money would pay for massive petition signature drives in order to get proposed legislation begun that would modify AB5, as well as advertising campaigns to encourage voters to support the new proposition.
The result, Proposition 22, was placed on the California ballot and approved by California voters, in November 2020.  While Proposition 22 enables sharing and gig companies to continue to classify their people as contract workers, it also provides those workers with new levels of protection.  For example, the proposition provides workers with minimum compensation levels, health insurance subsidies (to drivers who meet certain qualifications), medical costs for on-the-job injuries and a prohibition to keep drivers from working more than 12 hours in a 24-hour period for a single company.  It also requires companies to develop sexual harassment policies, conduct criminal background checks and require safety training for drivers.  Proposition 22 will have widely felt effects on the gig economy as a whole.
It can be very interesting to compare the rights of gig workers in other nations to those in the U.S.  In the U.K., an officially commissioned review for the British government recommended stronger protection for gig economy workers.  In March 2021, Uber was ruled against in its efforts to fight court decisions that require the firm to reclassify its U.K. drivers as workers, not as independent contractors.  This “workers” status grants significant rights to drivers, but is a peg below true employees.  Uber announced that it would grant minimum wages to these drivers, and the ruling will likely make Uber responsible for paid time-off and pensions.  (Uber currently pays health insurance costs in many of its markets, as well.)  However, considerable legal wrangling may continue between Uber and U.K. regulators over how to interpret and implement requirements going forward.
In March 2020, a French court ruled that a former Uber driver should be recognized as an employee, enabling the driver to seek severance and back pay from Uber.  As of early 2021, gig economy companies in Europe were working to negotiate labor agreements with workers and unions as a way of averting rulings that would establish drivers as employees.
In China, the Beijing Jiaotong University and ecommerce giant Alibaba conducted a survey of gig economy workers and found that couriers for ecommerce deliveries number more than 1.2 million.  As many as 25% of them work more than 12 hours per day, seven days per week, while a majority work eight hours per day each day of the week.  Some work directly for retailers such as JD.com or for delivery services such as SF Express.  Others work for a group of delivery companies, including ZTO Express, Best Express and STO Express.  The Jiaotong survey further found that most couriers make between $300 and $600 per month, or about the same earned by migrant factory workers in China.  The going rate for couriers is about 15 cents per package.


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