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Among the many measures on the ballot in the U.S. midterms last month were a handful aimed squarely at the gig economy. They included proposals on gig worker pay and labor protections; a push by Lyft to subsidize its transition to electric cars in California; and a referendum on who can deliver alcohol in Colorado. This week I want to dig into a bunch of those measures, starting with the labor ones.
Portland, Maine
Arguably the most interesting gig-related measure this election season appeared on the ballot in Portland, Maine. Question D proposed an ambitious overhaul to the rules for Portland’s low-paid and gig workers. It sought to eliminate the sub-minimum tipped wage often paid to restaurant staff and other service-industry workers; to boost the local minimum wage to $18 an hour over three years; to redefine ride-hail and delivery platform workers as employees within the city limits and include them in the $18 wage floor;1 and to create a Department of Fair Labor Practices that would enforce compliance with wage and worker safety laws.
I’ll give you one guess who didn’t like Question D.
That’s right, gig firms and the restaurant industry. Uber, DoorDash, and restaurants together spent more than $500,000 to oppose the measure, according to the Portland Press Herald. Around half of that came from Uber via two ballot committees, Enough is Enough and Restaurants Industry United. On the other side, Hillary Clinton cut an ad spot urging a ‘yes’ vote on Question D, while Bernie Sanders called it the “most progressive, inclusive minimum wage in the history of the United States.”
A small sample of drivers interviewed by the Portland Press Herald was more ambivalent. One speculated that Uber would leave Portland if Question D passed; another complained of low pay and opaque fare structures; a third worried a ‘yes’ on Question D would force him to accept unwanted trips and lose the status of being his own boss, a concern that surely must have delighted the Uber folks who have spent many years and a lot of money pushing the line that employee status and/or a minimum wage are fundamentally incompatible with flexible work.
Portland voters ultimately rejected Question D by a 61% to 39% margin. The Question D results contrasted with a handful of minimum wage proposals elsewhere in the U.S. that fared better. Nebraska voters passed a measure to raise the state’s minimum wage to $15 an hour, from $9, by 2026 and to adjust it annually by inflation after that. Nevada voted to raise its minimum wage to $12 per hour by July 2024. In D.C., a proposal to eliminate the tipped minimum wage won by a landslide, with 74% in favor. Unlike in Portland, these other minimum wage measures didn’t bundle in anything about gig worker status, which may have helped them pass more easily, or at least taken some deep tech company pockets out of the race.
Washington, D.C.
The tipped minimum wage might not directly affect gig workers, but it’s important to talk about because it’s part of the broader system of low-wage work in America, which gig companies compete with to source their labor.
As a quick refresher, the tipped minimum wage is earned by most service industry workers in the U.S. It’s a shamelessly American policy that allows employers to pay as little as $2.13 an hour toward employee wages—a figure unchanged since 1991—while relying on customer tips to cover the rest. Employers must contribute more if workers don’t earn enough in tips to reach the federal minimum wage ($7.25 per hour) or their local wage floor, but this rule is tricky to enforce and often violated by employers.
This sub-minimum tipped wage is rooted in slavery and racism. It was popularized after the Civil War as a way for employers to avoid paying formerly enslaved workers a real wage. These disparities persist today, with tipped workers more likely to live in poverty, be on food stamps, and be harassed at work. The modern tipped workforce is nearly 70% female and disproportionately made up of Black and brown women, who nonetheless tend to receive smaller tips than their white male colleagues. At the height of the pandemic, more than 40% of workers surveyed across five states reported an increase in unwanted sexual attention from customers, including female service workers who said men asked them to remove their masks so the men could judge their appearance and thus determine how much they wanted to tip.
D.C.’s Initiative 82, which passed with 74% of the vote, will bring the hourly minimum wage for tipped employees in line with the wage floor for all employees in the District by July 2027, eliminating the sub-minimum standard. The increases are scheduled gradually over the next five years, starting with an immediate jump to $6 per hour from the current $5.35 as of Jan. 1, 2023.
This is the second time D.C. has tried to end the tipped minimum wage. In June 2018, the District passed Initiative 77, to raise the sub-minimum to the citywide minimum, but the D.C. city council voted to repeal the measure that October. Per the Washington Post, there’s less appetite to repeal the change this time, which has not only now passed twice, but also won in a landslide despite supporters being outspent by opponents including the National Restaurant Association.
Bringing it back to the gig economy: should minimum wages continue to rise and tipped minimums to be retired, it will be an interesting test of gig companies’ rhetoric that workers choose to drive and deliver first and foremost because of the flexibility those jobs offer. It’s important to remember that companies like Uber typically compete for workers with the likes of Walmart and McDonald’s (Uber said as much in an internal slide dek five years ago). Flexibility is an appealing proposition especially when compared to other low-wage jobs and shift work that don’t offer it. If some of those alternatives start to get more appealing, however, such as with higher wages and better working conditions, it’s possible we could see workers reevaluate their choices.
Washington State
Last and also least, for a change, voters in Washington State opted in a purely advisory vote to repeal a tax on ride-hail companies passed by the state legislature earlier this year to fund workers’ compensation for the drivers. The vote is a legacy of anti-tax activist Tim Eyman, who in 2007 won a campaign to require the Washington Legislature to put any tax increases they pass up for voter judgement. These votes, again, are purely advisory, so nothing actually happens either way. But yeah, apparently people didn’t like that tax.
Next time for paid subscribers: a look at gig-related ballot measures in California and Colorado. To get those emails, consider becoming a paid Oversharing reader. I’m offering 25% through the end of the year as part of Oversharing HOLIDAZE at the link below.
Portland never actually got as far as figuring out how, exactly, it would determine the minimum wage that ride-hail and delivery service workers were earning, but suggested in draft legislation that the method would consider, at minimum, “the duration and distance of the trip, the expenses of operation to the driver, any applicable vehicle utilization standard, rates of fare and the adequancy of driver income considered in relation to driver expenses.” If that sounds familiar, especially the mention of a utilization standard, it’s because it’s similar to the wage floor designed by James Parrott and Michael Reich for ride-hail drivers in New York City.