California Gig Workers Struggle to Earn a Living Wage, Study Says

For years, delivery workers and rideshare drivers have been trying to navigate the complex laws of California’s gig economy. Over 1.4 million people across the state are gig workers for app-based companies like DoorDash, Uber, and Lyft, yet many struggle with low wages and unpredictable earnings. Despite the promises of flexibility and independence touted by gig companies, the reality for many workers often falls short of expectations.

At the heart of this struggle lies Proposition 22, a controversial ballot measure that passed in 2020. Prop 22 reclassified gig workers as independent contractors rather than employees. Gig companies are exempt from providing traditional employee benefits such as minimum wage, overtime, sick pay, and unemployment insurance. Proponents of Prop 22 argue that the measure protects workers’ flexibility while ensuring they receive some benefits and increased earnings, but critics have questioned whether it delivers on these promises.

In 2021, a California judge ruled that parts of the measure were unconstitutional, raising questions about its long-term viability. However, the California Supreme Court upheld Prop 22 in July 2024, ensuring that gig workers remain independent contractors. 

Prop 22 consists of a system whereby gig workers receive some benefits without being entitled to full worker protections. Only time spent actively completing rides or deliveries guarantees earnings. Time spent waiting for assignments is not compensated. Additionally, there are restrictions on which workers qualify for health care stipends, which means only a small share of drivers receive benefits.

Many gig workers report that their total earnings, after factoring in expenses like gas, vehicle maintenance and insurance, often fall below California’s minimum wage. For those who rely on gig economy jobs as their primary source of income, the financial strain can be overwhelming.

Recent studies shed light on the challenges gig workers face under Prop 22. A report from the University of California, Berkeley, found that when accounting for expenses, many gig workers earn less than the state’s minimum wage of $16 an hour. The analysis was the first of its kind, using data from more than 1,100 drivers.

Researchers found that a California rideshare driver’s median wage was $7.63 per hour, including tips, and around $5.97 without tips. For delivery drivers, the amounts were $11.43 and $4.98 an hour, respectively. The findings have fueled ongoing debates about whether Prop 22 adequately safeguards workers’ financial well-being or prioritizes corporate profits at their expense.

Advocates have long argued that gig workers deserve the same protections and benefits as traditional employees. They highlight that the flexibility touted by gig companies often comes at a high cost, with workers shouldering financial risks that employers typically bear. The absence of paid sick leave, employer-sponsored health insurance, and retirement benefits leaves many workers vulnerable to unexpected expenses and long-term financial instability.

While gig companies have introduced initiatives to address worker concerns, these measures often fail to provide comprehensive support. For instance, Prop 22 offers health care subsidies to workers who meet specific thresholds for time spent working. However, these thresholds are difficult for many workers to reach consistently.

The lack of transparency around earnings and expenses further complicates matters for gig workers. Many workers report difficulty understanding how their pay is calculated, leading to frustration and distrust. Some have called for greater accountability from gig companies, urging them to provide clearer breakdowns of pay structures.

App-based workers across California are calling for better working conditions and fair compensation. Grassroots movements and worker-led organizations have drawn attention to the inequities within the gig economy. Their efforts have spurred conversations about the future of gig work and the need for policies that balance flexibility and worker protections.

If you are a gig worker who believes your rights have been violated, consulting with an employment attorney can help you understand your legal options. There are also many situations in which workers are misclassified as independent contractors when they are employees. An experienced San Francisco employment lawyer at McCormack Law Firm can determine whether you have been misclassified and help you secure the compensation you deserve.  Contact us today for a free initial case evaluation.