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Gig work tensions are not going away soon

Uber workers are still getting the short end of the stick

May 1, 2023

3-minute read

In April 2022, Ontario passed the Working for Workers Act 2022, including the Digital Platform Workers’ Rights Act, putting into place a right to minimum wage for Uber drivers and other gig workers.

This year, the Ontario government will publish regulations to fill out the meaning of the act and the B.C. government is holding its own consultations around gig work.

It may look like the end of a 10-year era in which Uber effectively wrote its own rules, but enshrining gig work into law as conceived does nothing to address the central problems that gig workers face and will not bring peace to this contentious and still-growing sector of the economy.

Gig work is piece-rate payment for tasks, coupled with free entry and exit, managed by a platform that assigns work and takes a commission on each task.

Uber drivers are paid for each trip and can sign in and out of the app at any time that suits them. Uber and others have used this model to wash their hands of the costs that gig work entails, including both the cost of car ownership and the time that drivers spend “on-call” waiting to be assigned a trip.

Some studies, especially those paid for by Uber, argue that since many Uber drivers are part-time or casual, the basic cost of car ownership should not be thought of as work expenses and some or all of the time spent “deadheading” without a passenger should not qualify as working hours.

But Uber drivers are diverse and minimum wage applies only to the lowest paid driver, not to the average driver. Our recent report, High Emissions and Low Pay: Uber is still taking regulators for a ride, showed that full-time drivers provide more than one in three trips on the platform. For these drivers, at least, the car is a cost of work and on-call time is a necessary requirement for working for their employer.

Full-time Uber drivers in Toronto are a long way from earning minimum wage. Based on data from the City of Toronto, Uber’s own financial reports and pricing data, and Canada Revenue Agency (CRA) data for the cost of car ownership, we showed that they are earning less than $8 per hour—a number that matches a figure of $6.20US per hour for drivers in California.

Ontario’s Working for Workers Act will not improve the pay of full-time Uber drivers. The act says that “minimum wage shall be paid for each work assignment performed by a worker” and the regulations will almost certainly interpret this to mean “minimum wage calculated while driving a passenger or en route to picking one up.”

So long as “free entry and exit” remains the norm for gig work, any increase in “pay while driving a passenger” will attract more drivers onto the roads. When there are more drivers, each individual driver spends less time with passengers and more unpaid time deadheading while on call. The increase in unpaid on-call time eats away all the benefits of extra pay during a trip.

We have built a computer simulation model of Uber traffic (a web version is available at https://tomslee.github.io/ridehail/lab/), which highlights how Ontario’s changes will benefit Uber’s bottom line, rather than that of gig workers.

According to the most recent data, from February 2020, Toronto drivers spent only 48 per cent of their time with passengers in the vehicle. Even if the demand for Uber trips increases, the model shows that this number will not grow beyond 60 per cent because the platform simply adds more drivers.

The model also illustrates that to shorten customer wait time by one minute, Uber must add an extra 1,500 drivers (out of an average of 6,000 in February 2020) to the roads, with all the congestion and pollution that entails.

In short, it is in Uber’s business interests to keep as many drivers on the road as possible without compensation for on-call time. Any realistic attempt to improve driver pay must involve, in one way or another, a limit on the number of vehicles operating on the platform.

Ontario’s Working for Workers Act and its Digital Platform Rights Act fail to address this crucial aspect of gig work. Unless upcoming regulations fill the gap, the new laws will leave full-time gig workers in this increasingly costly province to toil below minimum wage.

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