In 2020, California voters approved Proposition 22, a law that app-based companies including Uber, Lyft, and DoorDash said would improve worker conditions while keeping rides and deliveries cheap and abundant for consumers. But a report published today suggests that rideshare drivers in the state have instead seen their effective hourly wage decline compared to what it would have been before the law took force.
The study by PolicyLink, a progressive research and advocacy organization, and Rideshare Drivers United, a California driver advocacy group, found that after rideshare drivers in the state pay for costs associated with doing business—including gas and vehicle wear and tear—they make a hourly wage of $6.20, well below California’s minimum wage of $15 an hour. The researchers calculate that if drivers were made employees rather than independent contractors, they could make an additional $11 per hour.
“Driving has only gotten more difficult since Proposition 22 passed,” says Vitali Konstantinov, who started driving for rideshare companies in the San Diego area in 2018 and is a member of Rideshare Drivers United. “Although we are called independent contractors, we have no ability to negotiate our contracts, and the companies can change our terms at any time. We need labor rights extended to app-deployed workers.”
Uber spokesperson Zahid Arab wrote in a statement that the study was “deeply flawed,” saying the company’s own data shows that tens of thousands of California drivers earned $30 per hour on the dates studied by the research team, although Uber’s figure does not account for driver expenses. Lyft spokesperson Shadawn Reddick-Smith said the report was “untethered to the experience of drivers in California.”
In 2020, Uber, Lyft, and other app-based delivery companies promoted Proposition 22 as a way for California consumers and workers to have their cake and eat it, too. At the time, a new state law targeted at the gig economy, AB5, sought to transform app-based workers from independent contractors into employees, with all the workers’ rights attached to that status—health care, workers’ compensation, unemployment insurance. The law was premised on the idea that the companies had too much control over workers, their wages, and their relationships with customers for them to be considered independent contractors.
But for the Big Gig companies, that change would have come at the cost of hundreds of millions dollars annually, per one estimate. The companies argued they would struggle to keep operating if forced to treat drivers as employees, that drivers would lose the ability to set their own schedules, and that rides would become scarce and expensive. The companies, including Uber, Lyft, Instacart, and DoorDash, launched Prop 22 in an attempt to carve out an exemption for workers driving and delivering on app-based platforms.
Under Proposition 22, which took force in 2021, rideshare drivers continue to be independent contractors. They receive a guaranteed rate of 30 cents per mile, and at least 120 percent of the local minimum wage, not including time and miles driven between rides as drivers wait for their next fares, which Uber has said account for 30 percent of drivers’ miles while on the app. Drivers receive some accident insurance and workers’ compensation, and they can also qualify for a health care subsidy, although previous research by PolicyLink suggests just 10 percent of California drivers have used the subsidy, in some cases because they don’t work enough hours to qualify.
In the early hours of Thursday morning, major US freight railroad companies reached a tentative agreement with unions, narrowly averting a nationwide rail shutdown less than 24 hours before a strike deadline. A work stoppage would have heaped devastating consequences on the nation’s economy and supply chain, nearly 30 percent of which relies on rail. Even a near miss had some impact. Long-distance Amtrak passenger services, which use freight tracks, and hazardous materials shipments are now being restored after railroads suspended them to prevent people or cargo becoming stranded by a strike.
The tentative agreement, to be voted on by union members, came through talks brokered by the Biden administration. It scrambled this week to avoid a shutdown that would have caused major disruption and worsened inflation by restricting the supply of crucial goods and driving up shipping costs. Rail unions and the railroad industry association released statements Thursday welcoming the deal. But freight rail service has been unreliable since long before this week’s standoff, and trade groups representing rail customers say much work remains to restore it to acceptable levels.
Just two-thirds of trains were arriving within 24 hours of their scheduled time this spring, down from 85 percent pre-pandemic, forcing rail customers to suspend business or—grimly—consider euthanizing their starving chickens. Scott Jensen, a spokesperson for the American Chemistry Council, whose members depend on rail to ship chemicals, called the latest shutdown threat “another ugly chapter in this long saga of freight rail issues.”
Although Thursday’s agreement was lauded by companies dependent on rail freight, the ACC, the National Grain and Feed Association, and other trade groups also argue that further reforms to the rail industry are needed. Competition has dwindled as service concentrated among a handful of big railroads, which slashed their combined workforce by 29 percent over the past six years. Rail customers have asked lawmakers and rail regulators to intervene. Suggestions include federal minimum service standards, including penalties for leaving loaded cars sitting in rail yards for long periods, and a rule that would allow customers to move cargo to another service provider at certain interchanges, to work around the fact that many customers are captive to a single carrier.
Major US freight railroads made deep staff cuts in recent years as part of an effort to implement a leaner, more profitable operating model called Precision Scheduled Railroading. Profits have indeed soared—two of the largest freight carriers, Union Pacific and BNSF, owned by Warren Buffett, broke records last year. But after many workers decided not to return to the rail industry after pandemic furloughs, a staffing shortage tipped the network into crisis. At federal hearings this spring, rail customers complained about suffering their worst ever service levels from a network that had been stripped of its resiliency.
Many freight rail jobs have always involved erratic schedules and long stretches away from home, but workers complained that the leaner operations saddled them with still longer hours, higher injury rates, and less predictable schedules. Many workers received no sick leave and were penalized for taking time off outside of their vacation time, which averaged three weeks a year, or holiday and personal time, which reached 14 days a year for the most senior employees.
Rumors of an Apple electric car project have long excited investors and iPhone enthusiasts. Almost a decade after details of the project leaked, the Cupertino-mobile remains mythical—but that hasn’t stopped other consumer electronics companies from surging ahead. On the other side of the world, people will soon be able to order a vehicle from the Taiwanese company that mastered manufacturing Apple’s gadgets in China. Welcome to the era of the Foxconn-mobile.
In October 2021, Hon Hai Technology Group, better known internationally as Foxconn, announced plans to produce three of its own electric vehicles in collaboration with Yulon, a Taiwanese automaker, under the name Foxtron. Foxconn, which is best known for assembling 70 percent of iPhones, has similar ambitions for the auto industry: to become the manufacturer of choice for a totally new kind of car. To date it has signed deals to make cars for two US-based EV startups, Lordstown Motors and Fisker.
Foxconn’s own vehicles—a hatchback, a sedan, and a bus—don’t especially ooze Apple-chic, but they represent a big leap for the consumer electronics manufacturer. Foxconn’s ambitious expansion plan also reflects a bigger shift across the auto world, in terms of technology and geography. The US, Europe, and Japan have defined what cars are for the last 100 years. Now the changing nature of the automobile, with increased electrification, computerization, and autonomy, means that China may increasingly decide what car making is.
If Foxconn succeeds in building a major auto-making business, it would contribute to China becoming an automotive epicenter capable of eclipsing the conventional powerhouses of the US, Germany, Japan and South Korea. Foxconn did not respond to requests for an interview.
The automobile industry is expected to undergo big transformations in the coming years. An October 2020 report from McKinsey concluded that carmakers will dream up new ways of selling vehicles and generating revenues through apps and subscription services. In some ways, the car of the future sounds an awful lot like a smartphone on wheels.
That’s partly why there’s no better moment than now for an electronics manufacturer to try car making, says Marc Sachon, a professor at IESE Business School in Barcelona, who studies the automotive industry. Electric vehicle powertrains are simpler than internal combustion ones, with fewer components and fewer steps involved in assembly. The EV supply chain is simpler to manage than the conventional supply chain, which is one of the core competencies of established carmakers. China, Sachon adds, has a strong EV ecosystem, from batteries to software, and even the manufacturing of components.
China is especially well positioned to lead the charge towards electrification. The country already has some of the world’s most advanced battery manufacturers, including CATL and BYD, the latter of which also produces cars. Carmakers in the region may gain an edge in terms of understanding and harnessing new battery technologies simply by virtue of proximity—much in the same way as software companies benefit from being close to chip design firms.
This week, a US Department of Transportation report detailed the crashes that advanced driver-assistance systems have been involved in over the past year or so. Tesla’s advanced features, including Autopilot and Full Self-Driving, accounted for 70 percent of the nearly 400 incidents—many more than previously known. But the report may raise more questions about this safety tech than it answers, researchers say, because of blind spots in the data.
The report examined systems that promise to take some of the tedious or dangerous bits out of driving by automatically changing lanes, staying within lane lines, braking before collisions, slowing down before big curves in the road, and, in some cases, operating on highways without driver intervention. The systems include Autopilot, Ford’s BlueCruise, General Motors’ Super Cruise, and Nissan’s ProPilot Assist. While it does show that these systems aren’t perfect, there’s still plenty to learn about how a new breed of safety features actually work on the road.
That’s largely because automakers have wildly different ways of submitting their crash data to the federal government. Some, like Tesla, BMW, and GM, can pull detailed data from their cars wirelessly after a crash has occurred. That allows them to quickly comply with the government’s 24-hour reporting requirement. But others, like Toyota and Honda, don’t have these capabilities. Chris Martin, a spokesperson for American Honda, said in a statement that the carmaker’s reports to the DOT are based on “unverified customer statements” about whether their advanced driver-assistance systems were on when the crash occurred. The carmaker can later pull “black box” data from its vehicles, but only with customer permission or at law enforcement request, and only with specialized wired equipment.
Of the 426 crash reports detailed in the government report’s data, just 60 percent came through cars’ telematics systems. The other 40 percent were through customer reports and claims—sometimes trickled up through diffuse dealership networks—media reports, and law enforcement. As a result, the report doesn’t allow anyone to make “apples-to-apples” comparisons between safety features, says Bryan Reimer, who studies automation and vehicle safety at MIT’s AgeLab.
Even the data the government does collect isn’t placed in full context. The government, for example, doesn’t know how often a car using an advanced assistance feature crashes per miles it drives. The National Highway Traffic Safety Administration, which released the report, warned that some incidents could appear more than once in the data set. And automakers with high market share and good reporting systems in place—especially Tesla—are likely overrepresented in crash reports simply because they have more cars on the road.
It’s important that the NHTSA report doesn’t disincentivize automakers from providing more comprehensive data, says Jennifer Homendy, chair of the federal watchdog National Transportation Safety Board. “The last thing we want is to penalize manufacturers that collect robust safety data,” she said in a statement. “What we do want is data that tells us what safety improvements need to be made.”
Without that transparency, it can be hard for drivers to make sense of, compare, and even use the features that come with their car—and for regulators to keep track of who’s doing what. “As we gather more data, NHTSA will be able to better identify any emerging risks or trends and learn more about how these technologies are performing in the real world,” Steven Cliff, the agency’s administrator, said in a statement.
Few people love car dealerships. They’re stressful and sprawling, and it’s hard to shake the feeling that someone is getting a raw deal. But as the auto industry increasingly goes electric and moves online, companies like Honda are rethinking every aspect of the purchase process—including the spaces in which it happens.
Honda announced today that it’s rolling out a new dealership design, one that takes up less square footage and is modular and flexible; what was once showroom space, for example, can be transformed into offices for employees. It’ll also have electric vehicle chargers, as the company aims to sell half a million EVs in the US by 2030. “Our dealers are looking at ways to modernize and digitalize their business,” Mamadou Diallo, the vice president of auto sales at American Honda, told reporters last week. Recent experiences, he says, have taught the automaker that selling cars “will not require as much space.” And they’re not the only ones looking to shed square footage.
Like so many recent transformations, the shift is in part a reflection of the pandemic. Automakers have struggled through a shortage of semiconductor chips, a serious issue for vehicles that need hundreds and sometimes a thousand or more of them to work. The supply chain bottleneck means new car dealers have fewer vehicles on hand to show off to customers. Meanwhile, inspired by a new breed of electrified direct sales companies, like Tesla and Rivian, big automakers started experimenting with letting customers reserve and even buy their cars online. Ford made its first sales for its electrified sports car, the Mustang Mach-E, on the internet and took online reservations for its electric pickup truck. Volvo said last year that its electric vehicles—which the automaker says will account for 100 percent of sales by 2030—will be sold exclusively online.
That could make buying cars more convenient, but it makes selling them easier, too. Building cars to fulfill customers’ online orders takes some guesswork out of vehicle production, meaning fewer unexpectedly unpopular models end up languishing—and eventually selling at a discount—on showroom floors. “We have learned that, yes, operating with fewer vehicles on lots is not only possible, but it’s better for customers, dealers, and Ford,” Jim Farley, Ford’s CEO, told investors last summer. “But we’re also driving a significant increase in the number of customers configuring and ordering their vehicles online, so we have better visibility to real demand.”
This pandemic-era adjustment has not always worked out in car buyers’ favor. Dealers report that the combination of a tight car market and limited inventory means they can offer fewer discounts to customers hoping to drive their new purchases off the lot. Buyers pay more, and dealers make higher margins per sale. But industry experts are divided over whether those conditions will last beyond the public health emergency and related supply chain struggles.
Still, the era of the rows and rows of makes and models and colors may be over for good. “The dealership doesn’t need to be some Taj Mahal on the highway somewhere,” says Mike Anderson, the president of the Rikess Group, an automotive consultancy. Dealerships that Anderson advises have started to bring vehicles to potential customers for test drives, and then back to their homes or offices when they close the deal. Automakers like Tesla, Ford, Mercedes-Benz, and BMW are also experimenting with mobile servicing, or having technicians travel to customers’ vehicles. In some places, “many of the guests won’t see the dealership at all,” Anderson says.
It could take years or even decades for dealerships to change physically because it takes time and money to retrofit a building. Diallo, the Honda executive, says the automakers’ new dealership design “is not a program we are forcing dealers to adopt,” but a direction Honda wants its dealers to follow as they renovate and make updates. Volkswagen of America network operation vice president Brian Kelly says the automaker is considering similar adaptations. “We recognize that increased EV adoption, the growing preference of consumers to purchase vehicles through digital retailing solutions, and the proliferation of mobile servicing and vehicle delivery—amongst a host of industrywide changes—will have a forward impact on common size and layout of traditional dealership facilities,” he said in a statement.