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Grocery delivery company Instacart recently announced their service fees in California would be going up from 5% to 8%, making it the last major gig economy company to raise its prices in response to Prop 22. Before the ballot measure’s passage back in Nov. 2020, the ridesharing and food delivery companies promised to provide their workers with certain benefits if they continued to classify them as independent contractors instead of employees. Now, they want the consumer to foot the bill – all while not paying their drivers and couriers more.
Instacart reportedly said the increased service fee will help cover the cost of driver benefits enshrined in Prop. 22, including 120% the state’s minimum wage, a healthcare stipend, 30 cent per mile vehicle expenses, and occupational accident insurance. The increase will not apply to customers who have Instacart’s monthly or annual subscription service. An Instacart spokesperson said these are “historic new offerings” for gig workers who get to maintain “their independence and flexibility.”
However, even before Prop 22’s passage, labor groups have argued these perks are inferior compared to the benefits of full employment. Moreover, there’s no evidence conditions for gig workers are actually improving under Prop. 22. In fact, drivers for Uber are reportedly saying that working conditions remain poor after voters passed the ballot measure. These workers claim that not only have poor working conditions persisted, but pay has decreased despite prices for the consumer going up. Moreover, labor groups have also said the promised benefits are inadequate. For example, they said Prop. 22’s minimum wage and vehicle expenses are much less than advertised because it only accounts for time actually driving and excludes time spent between riders or orders.
In addition to Instacart, Postmates, Uber, Lyft, and Doordash have all introduced small fees they claim are necessary to pay for Prop 22 benefits in the state. Postmates is reportedly charging between 50 cents and $2.50 per order; Uber has increased their food delivery prices in Los Angeles by 99 cents and 75 cents for rides; Lyft’s fees are 30 cents to $1.50 based on location; and Doordash is overall charging higher service fees.
Labor advocates have called this move a “corporate bait and switch.” Gig companies argued as they campaigned for Prop 22’s passage that making drivers employees would raise prices, but fees are still going up anyway. In a statement, Gig Workers Rising said: “Now that Prop. 22 has passed, Uber is announcing that riders will have to shoulder increased costs after all so that the company can continue to skirt its responsibilities to workers.”
Veena Dubal, a professor at the University of California, Hastings College of the Law, argued that gig companies are using driver benefits as a pretext to raise prices in order to make a profit. “Customers have been experiencing artificially low prices because of venture capital subsidies,” she told Forbes. “We’ve known for a long time that service fees were going to have to go up because the entire business model is based on capturing the market, addicting consumers to the service and then raising fees.”
However, Uber drivers across the pond in the UK had better luck than those in California. The UK Supreme Court unanimously voted in favor of forcing Uber to classify its drivers as employees rather than independent contractors. This means that thousands of people earning income from the app are now slated to potentially receive vacation pay and hourly minimum wages.