Prop 22 Is Here, and It’s Already Worse Than Expected | Hacker News Reader

Prop 22 Is Here, and It’s Already Worse Than Expected

prospect.org

32 pointslefrenchy33 comments

> gouging workers and consumers

Nice passion piece, looking to stir up some emotions with willful ignorance, and a prominent donation link. How are consumers being gouged? They are arguably benefitting the most. Just because companies benefit from a law, doesn't make it evil.

You can argue that after expenses, most Uber drivers make less than minimum wage (depending on the political slant of the researchers), but then if these exploited workers are not stupid (which I hope the author is not arguing), why don't they get a minimum wage job?

Because A. those jobs don't exist and/or B. they prefer to work ride-share. The true minimum wage is zero. And virtually ever ride-share I've taken from my local airport over the last three years has been in a Prius, invalidating the cited study. The full-time drivers aren't stupid and helpless as the author would have you believe.

There are plenty of ills with our economic system and plenty of ways to address wealth inequality. As most people who understand economics better than the author will tell you, the minimum wage is not one of them. Better alternatives to be talking about: UBI, more graduated tax brackets, getting rid of things like CA Proposition 13 (property tax lock-ins), improving zoning, etc.

> How are consumers being gouged?

The article states that Uber, Lyft, and others are already adding extra fees. That was part of their propaganda for prop 22 was to say it would keep prices low.

> Just because companies benefit from a law, doesn't make it evil.

Maybe if they didn’t create it and bankroll it by spending unprecedented amounts of money to get it to pass.

> And virtually ever ride-share I've taken from my local airport over the last three years has been in a Prius, invalidating the cited study.

Your own personal experience invalidates a study? Maybe drivers buy Priuses on credit so that they can save on gas in order to be able to walk away with more money?

Before the pandemic, you could make $15-30/hr AFTER expenses driving for Uber in my city. This includes gas, maintenance, depreciation, and cleaning. This was with a Honda Fit.

But only for 10-15ish hours per week. And you had to know when and where to drive.

You could find another 20 hours making above minimum wage.

Any hours beyond that though were usually at or below minimum wage.

I used to work for one of the gig companies, and familiar with the numbers. All those angers of people struggling to make survivable wage are valid, but this is barking down the wrong tree.

1, people are not stupid, they chose to be exploited by gig companies because other minimum wage jobs pay even less.

2, those companies already pay majority of their revenue to drivers, paying more means charging more, which leads to lower market share, which leads to bankruptcy in a winner-takes-all market.

I think the only way to pull gig workers out of their precarious position today is to lift the minimum across the board. So there are better alternatives than slaving away at gig jobs, gig companies will naturally provide better wage/benefits in order to retain those workers.

This can be achieved with basic income or higher minimum wage, but both have holes that require more nuanced design to ensure effectiveness and minimize unexpected side effects. This is sadly very hard, and I'm not sure if we have the legislators capable enough to do the right thing.

> 2, those companies already pay majority of their revenue to driver

I honestly have no clue what these companies major costs are. I've never really thought about it. A quick search seems to say that may not be the case, at least at Uber in 2019

https://www.forbes.com/sites/greatspeculations/2019/05/31/wh...

Though I'm also not sure where drives are paid in this list, it seems to be "Operations and Support Expenses" but I may be wrong. This says "Cost of Revenue" and "General and Administrative expenses" are just over half.

There must be something with some better and more recent numbers that can explain where costs are for gig companies.

It has to do with revenue recognition. What the riders pay is not Uber's top line revenue, instead what the driver pays Uber back from that fare is. See Uber's 2019 annual financial report [1]. That amount you are thinking of as revenue is referred to as "Gross Bookings":

> Gross Bookings. We define Gross Bookings as the total dollar value, including any applicable taxes, tolls, and fees, of Rides and New Mobility rides, Eats meal deliveries, and amounts paid by Freight shippers (p. 61)

Uber's cut of the transactions is defined as the Take Rate, and was 21.4% in 2019. That means that 79.6% of the fares Uber collects was paid to drivers.

[1] https://s23.q4cdn.com/407969754/files/doc_financials/2019/ar...

Well, there was a recent article which described how the bulk of Ubers ad spend was on click fraud or something like that, where canceling had no effect on business. That's money that could go to drivers.

I'm sure they also spend much more on hosting than they need to, because it doesn't often make business sense in the tech sector to spend a lot of developer time on cost reduction. When it doesn't, developers overall don't focus on reducing costs as much, and consequently, they're less skilled at it... to the benefit of cloud providers and to the slight (or sizeable? I'm unsure) detriment of our planet.

They are constantly experimenting with prices/payouts, and different areas have different rate so it's going to be hard to have a concrete number. But I believe Uber takes around 25% + a small fixed fee per ride.

Can we stop trying to shoehorn every worker into the model used for 20th century factories? We're the only country that depends on employers for health care and not every job is going to be 40 hours with one employer.

The question isn't whether Prop 22 is good, it's whether it's less stupid than AB 5.

HN seemed to be pro prop 22 (with many dissenting voices), it will be interesting to see the impact this law has over time.

My suspicion is that it won't be good for workers, but there certainly are many who disagreed with me.

> On top of that, those gig companies that paid handsomely to create and market Prop 22 to voters are now passing on the cost for these scant benefits to consumers

If you don't know that the costs of company are ultimately paid by the consumers, maybe you should stop writing on the topic. How was this supposed to work? Workers would be paid $25/hr with rides costing the same and the money would magically manifest itself?

Have you considered that maybe it wasn’t a viable business model to start with?

Reduced profit is the other source, along with blowing through investment capital from people with big pockets who feel lucky.

In practice that doesn't really work. These companies rely on economies of scale, and make minuscule margins (and yes, investment capital, but that kind of goes away if you try to regulate profits into oblivion).

So reducing profits doesn't have much of an effect on consumers or drivers. Anything that profits one is probably going to cost the other.

To no small extent, this is something of the point in this case. These jobs straight up shouldn't exist because they're simply not profitable and many of them never will be; we're seeing companies with no hope of becoming properly profitable trying to push their costs onto their own employees, rather than simply vanishing as they should.

Investment capital is what they burn while they try to become profitable, and if that doesn't work, the company should vanish or find another investor willing to take the gamble.

the whole thing is so bizarre as an outsider:

1. the entire economy is structured so you basically need a "job with benefits" to not be regularly ruined by healthcare costs or to at least live with the constant stress of such

2. the economy is also structured so tons of people have precarious work situations and precarious financial situations

3. megacorps like Uber and Lyft classify their drivers as "independent contractors" to ensure that the moral and economic responsibility of things like healthcare are not theirs (see 1) but also so their driver pool is huge enough to keep wages down (see 2) and also don't pay for any wait time

4. there's rising pressure for them to cut the crap and accept that if someone is sitting a in car on behalf of $somecompany all day waiting to drive people to enrich $somecompany with a preposterous cut for $somecompany's "app" and "platform", they're an employee with the meager yet critical benefits that might imply

5. so instead of fixing any of the above issues, some rich companies (that are still shovelling VC money into a furnace) lobby the *people of California* to pass a measure to to help "app based transportation companies" out, with an additional requirement of a 7/8ths majority of the state parliament to ever change it even if it becomes neccessary to fix any of the above problems

I don't understand why people aren't more deeply skeptical of anything that Uber and Lyft and Doordash think is worth spending $205 million to achieve in public and permanently embed in law in California.

This article is a good archetype of a strain of strange, counterproductive political thought I've seen a lot of recently.

Proposition 22 was very popular, passing with a 17% margin. Any useful analysis would have to reckon with that fact: look at the law, identify what it was that Californians found so appealing, and suggest ways to deliver those appealing parts while still improving the lives of workers. Doubling down on the idea that it's a transparently bad law written by VCs to oppress people might be emotionally satisfying, but it seems very unlikely to either accomplish the author's goals or help us understand the situation.

> …identify what it was that Californians found so appealing…

Having been part of a group chatting about the propositions on the ballot, my belief is that few people voting on this had a good idea what they were actually voting for and what the effects could be if it passed. That's what $186 million (the most expensive campaign ever waged in the history of U.S. ballot measures) poured into the "Yes on 22" campaign bought.

Prop 22 is a great model for how to use propaganda to pass laws that socialize an industry's costs.

Here is what appeared on the ballot, courtesy of the California Attorney General:

Exempts App-Based Transportation and Delivery Companies from Providing Employee Benefits to Certain Drivers. Initiative Statute.

* Classifies drivers for app-based transportation (rideshare) and delivery companies as “independent contractors,” not “employees,” unless company: sets drivers’ hours, requires acceptance of specific ride and delivery requests, or restricts working for other companies.

* Independent contractors are not covered by various state employment laws—including minimum wage, overtime, unemployment insurance, and workers’ compensation.

* Instead, independent-contractor drivers would be entitled to other compensation—including minimum earnings, healthcare subsidies, and vehicle insurance.

* Restricts certain local regulation of app-based drivers.

* Criminalizes impersonation of drivers.

> the most expensive campaign ever waged in the history of U.S. ballot measures

Michael Bloomberg's 2020 presidential run is close to the most expensive ever. Despite being a successful businessman (supposedly people like this) who also ran a city with more people and a larger economy than most states, the only votes he won were from American Samoa.

I'm not convinced money buys elections.

The Republican ex-mayor of NYC couldn't win the Democratic primary with money alone, I wouldn't put too much stock into that incident.

A Republican (who later went independent) who was able to win a mayoral election in a city that leans 75%+ Democratic in presidential elections.

It's pretty clear he did buy those elections though.

I don’t see how the popularity of something necessarily corresponds to its utility. How is it counter-productive to speak to the reality of the bill, popularity at passage is entirely orthogonal to “Has it been beneficial”.

People like having cheap Ubers and didn’t prioritize about the ramifications otherwise, that’s my personal take from conversations I had around the election.

There's nothing wrong with opposing and discussing the downsides of popular policies. What's counterproductive is saying that the policies aren't actually popular and people were just, in the author's words, "bamboozled into supporting the measure". I've seen many people (including a friend) with that attitude, and it makes engaging with anyone who does support Prop 22 impossible, because you're forced to assume they either don't know what they're talking about or don't mean what they say.

That quote is not supporting your point, though, because the author and your friend are in separate camps. They are separate on exactly the grounds you indicate — the author spends paragraphs supporting how Prop 22 is not turning out positively and then says welp, people have been bamboozled.

The bamboozling is the conclusion, not a premise of the article. Such a conclusion is done out of kindness for the voters who passed this proposition as the actual ramifications are now becoming clear. They either didn’t realize or didn’t care that we’d see incidents such as the recent firing of Von employees.

Easiest way to check if someone understood what they were voting in support of is to ask if they thought workers would be fired to be replaced with this new class of employee. That’s why I voted no. I didn’t understand how it would end up being rolled out reality and correcting ballot propositions is much more involved than an ordinary bill.

Everyone knows that democracy is an ultimately broken system that ends up oversimplifying complex systems and devolves into rule by a propaganda-influended mob*.

*except when it supports your beliefs, in which case it is the only true and just system that protects the people from autocrats that collude to oppress the masses and elevate their own self-intrests

That's an oversimplification of what democracy is. At the simplest level, democracy is a system of government where the people have the authority to choose their governing legislators. I would agree that in its current form in America, the government incentivizes the use of propaganda to get specific policies passed.

Instead of coming at an entire form of government, perhaps you could suggest a solution that actually solves some of these issues. Is there a way to require full understanding of a proposition before voting? Is there a way the government can restrict advertising on these topics? And, more importantly, can you suggest a form of government that solves these issues without creating any larger problems of its own?

I think the issues goes beyond the form of government. Even an autocracy can fall for the same issues. Just replace convincing a wide audience with convincing a single person. We see this failure in business - business leaders buy into an idea that's dressed up as attractive for them, but it ends up being harmful.

The problem is that there are more topics that influence people's lives than anyone can properly reason over in detail. You have to make choices on which issues to focus on more, but it also means that you're vulnerable to being sold a false story on the issues you don't focus on. The end result is that sometimes you're taken advantage of.

Soon to be made entirely irrelevant by self-driving cars.

A lot of talk and passion for/against UBI, "gig economy", etc, but seems like we could/should improve two root issues of: very high rent, and very high health insurance costs.

Not sure if UBI is the solution, but most of the gripes around part-time and gig workers (except for inconsistent schedules) do tie back to housing and health care. It's odd that people frame it as companies taking advantage of people when it's actually inadequate government policy.

Government should open more hospitals and provide free medical care. Why have insurance at all.

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