This story was originally published by the Illinois Answers Project as part of their series Making it in Chicago: Detours and Dead Ends on the Path to Opportunity.
Joe Negrau has been a rideshare driver for Uber and Lyft for nearly ten years, but he has not been rewarded for his years of experience.
“In that time, I’ve seen pay drop year after year, without fail.”
When he started driving around 2015, rideshare companies took about 20 percent of his earnings, he recalled. Now, the app is using an algorithm to determine the driver and app split, and he’s getting half of passenger fares.
“I have to drive twice as long to make the same money.”
The gig economy, where people pick up work on an as needed basis, has grown over the past decade to become a significant part of the low-wage service economy and a major point of conflict in the labor rights movement.
Gig work has been around for a long time in different forms: babysitters, handymen, artists, street vendors, writers and designers. But around the turn of the millennium, tech companies accelerated the trend by turning anyone with a smartphone into a potential gig worker. The trend of converting jobs into gig work, researchers say, is expected to grow, and with it some of the questions around fair pay and job security.
As gig work like rideshare apps has become facilitated by tech companies that set terms for pay and job security through control of the phone applications used to connect workers to clients, some workers say they’re being exploited and kept in unstable and low-paying jobs that prevent them from getting ahead in life.
In Chicago, this tension is most prominently playing out in the fight for worker protections at rideshare companies, most notably Uber and Lyft, where labor rights organizers are calling for due process for termination, minimum pay, safety protocols and even negotiating power.
Drivers say that tech companies are using algorithms to depress their pay—with some workers saying they are making less than Chicago’s minimum wage—and to kick them off the app without any due process. Both are labor rights that many workers rely on to feel secure in their jobs. Drivers are demanding the city intervene and set standards for pay, safety and stability for tens of thousands of people working in the rideshare industry.
A representative for Lyft said the company has addressed safety and pay concerns through its rider verification program, improved deactivation appeals process and commitment to paying drivers at least 70 percent of weekly fares after fees. The ordinance, the company spokesperson said, would increase fares for riders and make it harder to keep unsafe drivers off the road.
Uber and City officials did not respond to requests for comment.
Because gig work is informal and there’s limited to no tracking of the industry. There’s limited information about the demographics, wages and working conditions of this economy. The city doesn’t collect demographic data on who works rideshare jobs. But residential data shows that some of Chicago’s most diverse neighborhoods, like Rogers Park, North Park, Near West Side, Belmont Cragin and Auburn Gresham, have the highest number of drivers.
A survey of 502 drivers from 2021 to 2022 by University of Illinois Urbana Champaign gave more insight into the work. Researchers found that most drivers work full time and depend on their earnings for basic expenses, like rent and utilities. Yet, some four in ten drivers earn less than Chicago’s minimum wage of $15 an hour, with the average driver making less than $13 an hour.
The survey also revealed key problems with the current rideshare model. Nearly 80 percent of respondents said they feel unsafe at least once a month while driving. Some 40 percent have experienced sexual harassment on the job. In fact, the National Council for Occupational Safety and Health named Uber and Lyft among the most unsafe employers last year, alongside certain meatpacking, industrial farm and lumber mill companies.
Despite such issues with these jobs, drivers say they depend on them because they need a flexible schedule, Negrau said. As more work becomes temporary, seasonal or part time, there are fewer options for well-paying stable jobs that don’t require degrees or specific skills.
“There are drivers who are stuck, either for health reasons or they’re taking care of somebody and they have to have flexibility in their work, ” Negrau said.
“Most drivers aren’t making money”
Camila Hudson, who drives Uber and Lyft in Chicago occasionally since 2016, doesn’t think the algorithm—which determines the fares, fees and driver-app splits of the profits—is just a driver’s issue. It impacts riders too.
Two people who need to go from the same place to the same location often have different fares depending on how much they’re willing to pay, which is information the rideshare companies can figure out from personal data, such as when you’re likely to need a ride and how reliant you are on rideshare.
The same goes for drivers. Two different drivers might have the same route but earn different pay depending on the fare they’re willing to accept, she said.
Hudson is picky about what rides she accepts, only driving routes that she finds lucrative.
“I’ve rejected and said hell no to 85 percent of the rides offered to me because they’re trash,” she said.
But not everyone has that luxury. And, drivers say they’ve noticed the more low-paying trips they accept, the more low-paying trips they are sent by the algorithm.
“Most drivers aren’t making money. They are just not. And they’re killing their cars,” she said.
Drivers and others have sued rideshare companies for misclassifying employees as freelancers and used that legal threat to negotiate for higher pay and more stability for workers, but with limited success.
In many states, such as California and Pennsylvania, Uber and Lyft have successfully won legislative fights, court battles or had the cases dismissed to maintain drivers as independent contractors.
A number of states used the lawsuits to force rideshare companies to negotiate with them on pay and benefits for drivers. In Massachusetts, lawmakers negotiated with Uber and Lyft for a $32.50 per hour minimum pay for a driver’s “engaged time”, sick leave, accident insurance and health care stipends.
According to the settlement, a driver’s “engaged time” is the period between when a driver accepts a ride and drops off the rider.
The agreement also includes $148 million from Uber and $27 million from Lyft in backpay to current and former drivers who were underpaid.
“For years, these companies have underpaid their drivers and denied them basic benefits,” said Massachusetts Attorney General Andrea Joy Campbell. “This agreement holds Uber and Lyft accountable,” she said.
Campbell credited labor allies and rideshare drivers in Massachusetts for being instrumental in achieving a settlement.
“[Uber and Lyft] saw the wave coming,” said Franswa Jan-Ena de Vertières, an Uber Black driver in Massachusetts who supported the settlement. “They monitored [drivers] around the state and saw what was going on. They decided to get out in front of it,” he said.
Vertières said social media advocacy and outspoken organization helped avoid a trial.
Voters in the state also approved a proposal allowing rideshare drivers to unionize.
“We have the opportunity to continue organizing, I believe we should push on,” he said.
Seattle workers pushed for protections from unjust deactivations. There, app-based delivery and rideshare companies have to provide notice of deactivations, and in some cases allow for workers to appeal the decision.
A Lyft spokesman said in an email that the app has been updated for “deactivated drivers to display why they were deactivated, applicable next steps and common questions on how to get their deactivation resolved or appealed.”
In Chicago, drivers are hoping to come to an agreement with Uber and Lyft about setting standards for work in the city before putting it to a vote among city lawmakers.
Will Tanzman, executive director of The People’s Lobby, a Chicago-based organization that helped launch the Gig Workers Alliance, committed to fighting for fair labor and working conditions, said drivers are actively pushing for their own approach to collective bargaining by fighting to establish a pay floor and pass a living living wage and safety ordinance.
The ordinance is backed by dozens of human rights organizations and hundreds of rideshare drivers in the city.
Tanzman said the draft resulted from years of organizing and a negotiation with the city to establish a prospective pay floor for drivers.
“Earlier this year, we got to a version [of the ordinance] that the city agencies in charge of implementing believe is implementable, and preserves the key elements that the drivers wanted to make sure was in this ordinance,” said Tanzman. “We shared that draft with the [rideshare] companies, and have had some conversations over the past couple of months with the companies,” he said.
The People’s Lobby is hoping to pass the ordinance before July 1, when Chicago’s minimum wage inflation adjustment goes into effect.
“It’s a great victory for the city that thousands of low wage workers are going to get a raise and sadly, tens of thousands of rideshare drivers are going to be excluded from that raise,” said Tanzman.
If the ordinance is passed before the wage increase goes into effect, “we can make sure the rideshare drivers at least know they’re in the pipeline for a raise,” he said.
Hiding behind the algorithm
When Uber first emerged in American cities in the 2010s, they offered lower-cost rides compared to taxis and offered more competitive pay because it was flushed with investor money.
That financial backing helped to push out taxi companies across the country.
Lori Simmons, a gig work organizer and rideshare driver, remembers making as much as $60 to $70 an hour when she drove Uber in 2014.
Now, her net hourly earning looks more like $20-$25 an hour.
“They had a lot of promotions back then because they were trying to lure people to work during busy times,” she said.
But those wages started to decrease. The first wave of drivers were replaced by drivers willing to take lower pay, said Simmons.
This trend of converting full time jobs into gig work, and depressing pay, is expected to grow, claiming more jobs in industries like health care, said Jen Sherer, the acting deputy director of the Economic Policy Institute’s Economic Analysis and Research Network.
For example, to squeeze more profit and cut costs, some health systems are considering hiring nurses for just the days they are needed.
Apps like CareRev and Shiftkey connect health care workers with hospitals, but like rideshare drivers, nurses have expressed similar concerns over poor pay and safety issues, as reported by Stat News.
While Silicon Valley tech companies accelerated the growth of low-wage self-employment jobs, the destabilization of full time work started before then, said Erin Hatton, professor of sociology at the University of Buffalo College of Arts & Sciences and author of the 2020 journal article “Gig Work: All Hustle and Little Gain.” In the 2000s, Fedex, like Uber and Lyft, faced lawsuits when they classified their drivers as independent contractors, which would have required them to buy the provided trucks and uniforms. The company paid hundreds of millions to settle these claims.
“They view themselves as tech companies who create algorithms and computer programs to do jobs, which, of course, ignores the actual human beings doing vast proportions of the work,” said Tanzman.
Tech companies created a “veneer of direction connection between a worker and a consumer,” Hatton said.
“They can effectively hide behind the platform, behind the algorithm and they can therefore claim that ‘we’re just a platform company, we’re just an app.”
Lack of protections and benefits is becoming increasingly common as the gig economy grows and employers are distancing themselves from workers to avoid the cost and responsibility of ensuring safety, said Sherer. It’s not just people who are self employed in the informal economy who face these problems. Part of the way employers are increasingly engaging in the gig economy is also by outsourcing work and using more seasonal and temporary workers.
The use of outsourcing for jobs like janitors and security guards, not just abroad but to smaller and lesser known staffing companies, is another way companies sometimes skirt responsibility and lower pay.
Such workarounds are a reversal of the decades spent by workers fighting for labor protections and rights.
“In that long historical arc, we created that system [of labor rights] to avoid the rampant types of precarity and abuses and instability that went along with informal economies, where lots of work across all sectors was often, ‘gig work’ or ‘piece work’, or ‘day labor’, or whatever you want to call it,” she said.
But workers are pushing back, hoping to claw back some of those standards. Negrau hopes that once Chicago passes an ordinance establishing pay, disciplinary due process and safety standards, they can try to expand those wins to the state.
“That’s what happened in Minneapolis. That’s what happened in Boston and Massachusetts. And so we’re expecting that to be the next fight,” he said.
