Proposition 22 and similar laws exacerbate workforce inequalities.
Over a century ago, in Lochner v. New York, the U.S. Supreme Court infamously struck down a workplace maximum hours law, suggesting that it was “an unreasonable, unnecessary and arbitrary interference” with an individual’s right and liberty to enter into contracts. But freedom of contract is no longer the economic ideology underlying the push to retract basic employment and labor rights.
Instead, the employer-backed myth of “entrepreneurial opportunity” has paved the way for state legislatures to undo basic work protections for certain service sectors occupied primarily by immigrants and racial minorities.
For example, in November 2020, after a $200 million campaign backed by Uber, Lyft, DoorDash, and Instacart, California passed Proposition 22, which classified drivers for those companies as independent contractors rather than employees. In effect, Proposition 22 carved out workers laboring for these companies from the state’s employment law protections—rights that the California state legislature and courts had affirmed.
According to Dara Khosrowshahi, the CEO of Uber, Uber drivers love the hustle and flexibility of gig work. These workers, in his view, have freedom to make as little or as much money as they want. For Uber, employment rights seem to embody a relic of the industrial economy, and state protections need to adapt to technological innovation and the 21st century workforce. But fundamentally, the company believes this means withdrawing minimum wage and overtime protections and privatizing the United States’ already meager social safety net.
In a recent article, I argue for understanding Proposition 22 as a new racial wage code that will exacerbate existing racialized inequalities—not as a progressive law that will support a “third category” of laborers. To pass these laws and make them appear desirable during a moment of heightened awareness of racial injustice, technology industrialists and their supporters have relied upon a narrative of racial benevolence rooted in the false promise of “micro-entrepreneurialism.”
The central feature of third-category laws such as Proposition 22 is that employers do not owe wages to their workers for all the time they labor, but only for “engaged time”—time after they are allocated work. This “earnings guarantee,” as companies have called it, is no guarantee at all. Ride hail drivers—nearly 70 percent of whom identify with a minority group—can still labor with the freedom to lose money. A worker’s earnings depend on how many engaged hours they work, which often depends not on the worker’s business acumen or consumer demand but instead on their employer’s black box algorithmic control. Given operating costs such as vehicles, gas, and insurance, workers may be putting more money into their work than they are getting out. Work, under these new laws, is not a consistent, predictable way to earn a living; it is an entrepreneurial gamble.
In the face of narratives that companies proffer about technology-based progressivity and individual empowerment, history is instructive as to why laws such as Proposition 22, which remain under debate around the United States, are bad for the future of racial equality.
This is not the first time that the United States has debated and enacted racial wage codes. In the decades following Lochner, the devastations brought on by the Great Depression dramatically shifted the nation’s approach to labor regulation. Congress passed the National Industrial Recovery Act (NIRA) in 1933, which instituted the first federal wage and hour regulations. After the NIRA was struck down by the Supreme Court, Congress created a federal wage floor for mostly white workforces in the Fair Labor Standards Act. But, at the behest of southern conservatives and industrialists, these wage regulations “created differential wages and wholescale legal exclusions for the majority African American workforces, building racial inequality into the structure of the economy and undermining the economic stability of Black communities for decades to come.”
In the context of these early 20th century racial wage codes, agriculturalists and industrialists relied on the rhetoric of classical racism to reduce protections for African American workforces. Black workers, employers argued, were less efficient, and their families could subsist off lower incomes than white families. Employers threatened that they would simply lay off Black workers if employers were forced to pay Black workers wages equal to white workers.
Uber, Lyft, DoorDash, and Instacart did not deploy racist arguments about the inefficiencies of their workforce to justify the low, unpredictable earnings embedded in Proposition 22 and similar legislation. Instead, these companies “instrumentalized benevolent discourses of race reform and relied on alliances with civil rights organizations to generate support” for these devastating laws. Uber committed $1 million dollars to the Equal Justice Initiative and the Center for Policing Equality to support criminal justice reform. Lyft partnered with organizations, including National Urban League and the National Action Network, to provide “affordable” rides in underserved communities, papering over empirical evidence that ride-hail companies reduce funding for—and therefore access to—the public transportation services most relied upon by communities of color.
By acknowledging racial subjugation in the criminal justice system but profiting from racial subjugation in the economy, the gig-economy companies that backed Proposition 22 “concealed the very structures of racial oppression that the initiative entrenched and from which companies benefit.”
As similar laws are debated in other states, the myth of “entrepreneurial opportunity” continues to undergird national debate. Most recently, the California Advisory Committee to the U.S. Commission on Civil Rights has set out to investigate whether expanded employment protections hurt minority entrepreneurs. Do employment laws hurt Black and Latinx workers? The answer seems to be an obvious “no.” Yet, on the heels of the Proposition 22 campaign, this perspective of individual empowerment through the rejection of basic wage protection has gained disturbing traction.
Understanding Proposition 22 and similar laws—including the much Teamsters-Uber sweetheart bill in Washington State—as regulatory limits on the rights of minority workers and placing them within the genealogy of racialized wage codes reveals their intrinsic danger. Rather than advancing true entrepreneurial opportunity and supporting the possibility of an economy constituted by small businesses, these laws facilitate anticompetitive markets and eviscerate wage protections for racial minority workers at the margins of the labor market. In doing so, they entrench racialized hierarchies.
Third-category worker laws should be understood as a form of abandonment of dispossessed workers—not as structures of entrepreneurial empowerment.
This essay is part of a seven-part series titled Race and Regulation.