The Gig Economy’s Business Model Is a Racial Justice Issue

As gig economy companies have spent the last year pushing legislation in various states exempting them from following labor and antitrust laws, they’ve also experimented with rhetoric claiming a commitment to racial justice. 

Last summer, Lyft, Uber, DoorDash, Postmates, Instacart, and other gig companies published statements after a wave of protests were sparked in part by George Floyd's murder by a Minneapolis police officer. Some of these companies have also begun pointing to Black-owned businesses on their apps. While the statements may offer some salve to real problems, they also ignore the role these companies play in amplifying racial injustice as they amass profits.

Lyft, for example, shared a note last summer saying there had been internal discussions about how the company could "cultivate more inclusive experiences'' with its platform. One early move was to expand its LyftUp program, an initiative created in the early months of the pandemic to "make sure everyone has access to affordable, reliable transportation" by providing free or low-cost rides to vaccination sites, job training programs, and grocery stores. 

Last month, Lyft released a statement titled "Reflecting on our work toward inclusion, diversity, and racial justice" that offered a rosy update on their "commitment." On the question of racial justice, Lyft pointed to a few programs: an alliance of partnerships to expand LyftUp, which Lyft claims provided “over 1 million free or discounted rides to communities of color” in 2020; a Know Your Rights campaign to "provide drivers with information about how to protect their rights" if they got pulled over; and the Piloting Protest Rides and Solidarity Rides program, which provides discounted rides for attendees of certain protests and rallies.

That’s all fine, but it obscures how gig companies’ business models and lobbying actions directly and disproportionately hurt Black and brown workers. Put simply, the gig economy’s business model is a racial justice issue. In an ongoing lawsuit against Lyft, the ACLU and National Employment Law Project noted that gig economy companies’ business models “deepen the desperation of workers who have been excluded from stable employment.”

According to limited public data and internal stats that have been leaked, gig workers are disproportionately Black and brown, meaning that policies enacted by gig companies affect those communities more. A 2015 Uber report, for example, found that 63 percent of its drivers are nonwhite, while a survey of delivery workers and rideshare drivers in San Francisco found that 80 percent of gig workers there are nonwhite.

Last year, a pair of George Washington University researchers looking at Chicago transport and census data discovered both Uber and Lyft regularly hike prices for trips entering and leaving the non-white communities. Lyft also uses essentially the same rating system for workers as Uber, which has been sued over its system on grounds that it allegedly violates the Civil Rights Act and "has a disparate impact on non-white drivers.”

Lyft was also one of the architects of Proposition 22, a ballot measure that exempted gig companies from following California labor laws that would reclassify gig workers as employees. In October 2020, the National Employment Law Project published a comprehensive fact sheet detailing why Proposition 22―the ballot measure co-written by Lyft that exempted it from following California labor laws―posed a “singular” threat to people of color.

“Advanced by Uber, Lyft, DoorDash, Instacart, and Postmates, Prop 22 aims to strip workers of core protections such as overtime pay, unemployment insurance, and paid sick leave—benefits required by law but which these companies have flouted,” the fact sheet reads. “Workers of color in particular are routinely excluded from these workplace benefits, experience discrimination on the job, and earn far less than their white peers.”

Since the passage of Prop 22, we've seen pay cuts and price hikes that will disproportionately fall on the predominantly Black and brown workforce as well as the communities of color these firms claim to service. Even the benefits that Prop 22 promised to offer drivers, such as a health insurance stipend, are incredibly difficult to qualify for and incredibly inadequate.

But this has done and will do little to affect the coalition Lyft and other companies built to support Prop 22. Part of this is because of gig company ties to national and grassroots racial justice organizations, which companies have also forged to run cover for their decisions alongside the other programs. 

For example, the California chapter of the NAACP made the baffling decision to endorse Proposition 22 while echoing gig-company talking points. As it turned out, Lyft and Uber had paid $100,000 to a firm owned by Alice Huffman, president of the state NAACP chapter. Huffman stepped down from her position four weeks after news broke of these payments.

Some may point to gig-economy companies’ partnerships with civil rights organizations as proof that they’re putting their money where their mouth is, but that only means the PR is working. Lyft lost well over $4 billion across 2019 and 2020; when you’re burning that much cash, spending a mere fraction more to make communities more reliant on your services and generate positive media coverage has few downsides. This is especially true when you consider that positive coverage obscures the fact that gig companies are advocating for changes to labor law that hurt Black and brown workers the most. 

This combination of public relations campaigns, close ties with civil rights groups, and a healthy dose of racial justice rhetoric was tested extensively in California alongside a host of other methods, with great success: the ballot measure passed by a wide margin. Fresh off their victory, gig companies are busy extracting concessions from major labor unions that could codify and expand the set of legal exploits, loopholes, and violations we refer to as “the gig economy.”

Millions of dollars have already been spent on creating anti-labor political action committees to roll out Prop 22 clones in New York and Illinois with supposed independence from gig companies, even as the names of executives litter key documents. In New York, ride-hail companies have courted the NAACP again but are also relying on groups like Arc of Justice, an organization run by civil rights activist Kristen Foy (who co-founded one of the PACs gig companies are funding), to push messaging similar to what rolled out in California. Illinois is witnessing something similar, where partners of Lyft and Uber's lobbying group Moving Illinois Forward are publicly advocating for self-suited policy while weaponizing fears and concerns about hurting communities of color.

This is only the beginning: Prop 22 clones have also appeared in Connecticut, Massachusetts, and Canada, with Lyft, Uber, and DoorDash already putting forward plans to take it nationwide. With massive fights brewing across the county, we can expect to see more of the same tactics from companies, including a reliance on racial justice rhetoric and civil rights groups. 

While this might result in some policy wins, it can’t change the core of the business model and who it hurts the most. The “gig economy” model necessitates cutting every cost possible, usually by externalizing them. Misclassifying workers so they don’t qualify for expensive benefits like a minimum wage or health insurance makes their lives even more precarious. Pushing the cost of car ownership and mileage onto drivers means they may have to deal with loan sharks. Subjecting workers to unilateral pay cuts or pricing experiments means they’re forced to fend for themselves. All this so that companies that have never earned a profit can deliver an outsized return for investors.