A new Massachusetts proposition pushed by Uber and Lyft could mean some drivers only make $4.82 an hour, study says

• Uber and Lyft are backing a proposition that would classify drivers as contractors in Massachusetts.
• A USC-Berkeley study says loopholes could result in drivers making as little as $4.82 per hour.
• The group behind the proposal says it would guarantee drivers "at least 120% of minimum wage."

A Massachusetts proposition put forward by gig-economy companies including Uber, Lyft, and DoorDash could result in drivers and riders taking home just a quarter of the hourly minimum wage, a study from UC-Berkeley says.

The ballot proposition would count drivers and riders as contracted workers rather than employees, and could appear on the November 2022 ballot.

The proposition states it will guarantee workers for rideshare companies earn at least 120% of the minimum wage, which the researchers said would work out to $18 per hour - minimum wage in Massachusetts is set to increase to $15 per hour in 2023, from $13.50 per hour currently.

But analyzing data from Uber and Lyft, the researchers said five loopholes in the proposition would cut into workers' wages.

They estimated drivers and riders working a typical 15-hour work week would only make $4.82 per hour after costs, while those working a 40-hour work week would make $6.74 an hour. It did not analyze the consequences for DoorDash drivers.

The group behind the proposition, The Massachusetts Coalition for Independent Work, said the research was based on "questionable statistics."

In the study, researchers said one reason earnings would be so much lower than minimum wage is because the companies would only guarantee pay for "engaged time." This is the time drivers and riders spend traveling to jobs and transporting passengers or deliveries.

"Uber's own data indicate that engaged time amounts to only 67% of the drivers' actual working time. The companies would not pay for the approximately 33% of the time that drivers are waiting between passengers or returning from trips to outlying areas," the study said.

The researchers also said that reimbursements from Uber and Lyft would not cover drivers' operating costs, that a health stipend written into the proposition would only benefit a minority of drivers, and that as contractors, drivers and riders would have to pay both employer and employee shares of payroll taxes.

Drivers are guaranteed at least 26 cents per mile for vehicle upkeep and gas under the proposal, and companies would have to pay healthcare stipends to some drivers.

The Massachusetts Coalition for Independent Work, which is behind the proposition, said on its website that the proposal "explicitly states that drivers would earn at least 120% of minimum wage plus pay to cover mileage and vehicle expenses," plus tips, "which makes this a higher earnings floor than offered in countless other industries."

"Opponents of the Massachusetts ballot question, which would protect driver independence and flexibility while creating historic new benefits, have continued to push false and misleading information about the ballot question that are not only at odds with the facts, but don't stand up to scrutiny when compared with the success of Prop 22 in California," the statement said.

California's Proposition 22, which is similar to the Massachusetts proposition, passed in November 2020. Rideshare drivers told The Guardian in February 2021 they'd seen a fall in wages after it passed. A California judge ruled Proposition 22 to be unconstitutional in August.

The researchers said in their study that Uber and Lyft "have repeatedly refused to make their own data public."

"For a complete analysis, the state needs much more data from the companies, including detailed numbers on wait times, hours worked, and earnings, especially for the regular part- and full-time drivers who do most of the driving," they said.

Uber, Lyft, and DoorDash did not immediately respond when contacted by Insider for comment.