This Labor Day weekend, one of the biggest economic stories in the world is unfolding in San Francisco. The gig economy is headquartered here, and the fight for fair pay for its workers is playing out in courtrooms, elections and the streets.
Uber, Lyft and DoorDash are clustered on the eastern side of The City, like tech workers awaiting a ride-share home after a night at the bars of SoMa. The tech founders and workers at those booming companies have been a big part of San Francisco’s most recent tech explosion.
But that is only one reason why this is where the fight over gig economy wages is unfolding, says Paul Oyer, a Stanford economics professor who has studied the industry at the National Bureau of Economic Research, and as the editor in chief of the Journal of Labor Economics.
Here are the others. San Francisco is a tech-happy city where people who don’t have cars flocked to ride-sharing apps. The City has become a poster child for disparity of wealth, with tech founders and investors contrasted by service workers being forced out. Yet San Francisco is a city that, culturally, prides itself on social justice. And this cauldron of combustible elements is being overseen by a progressive city government during a pandemic that has heated the whole mixture up.
“San Francisco is a poster child for this inequality,” Oyer told The Examiner.
The debate flared up last week at a street protest in the swanky Pacific Heights neighborhood. Labor organizers pulled together a caravan of DoorDash food delivery drivers who clogged Washington Street on Thursday, honking their horns and cheering bullhorn speeches.
The protest was intended to bring the drivers’ demand for better pay to the doorstep of DoorDash CEO Tony Xu. So divided are the two sides, however, that they even argued over whether Xu had ever actually lived at the site.
At the heart of the conflict is wages: How much and how gig workers, who set their own hours as drivers, are paid. The two sides cannot even agree on how much that currently is.
DoorDash claims in a lawsuit against The City (San Franciscso is also suing DoorDash) that Bay Area drivers earn $36 an hour, including tips. Organizers of Thursday’s rally and drivers told The Examiner that they end up making less than minimum wage, which is $16.32 in San Francisco.
“The only way I survive is by cheap rent and living in a crowded situation,” driver Rondu Gantt told The Examiner. “Tony Xu is making hundreds of millions of dollars. That discrepancy is egregious.”
Xu is the perfect embodiment of the wage discrepancy, if you ask labor organizers. The New York Times reported Xu was the second-highest-paid CEO last year (behind only Alexander Karp, the chief executive of Palantir), with compensation of $414 million. DoorDash says Xu actually made less than one-tenth that. The CEO’s annual salary is $300,000, the company says, and the remainder? “Tony doesn’t get paid this full award unless DoorDash significantly outperforms the market,” the company said in a statement. Oyer, the Stanford economist said that is true, but added, “He still makes a ton of money, and the little guy is not.”
That disparity – the crux of this historic labor battle – was personfied at the Pacific Heights protest. “He made over $400 million last year, while I made a few dollars a delivery,” driver Saori Okawa told the crowd, speaking of Xu. Asked his opinion of that, a well-dressed, middle-aged man replied, stepping into a luxury SUV: “My opinion is you’re all a bunch of commies.” (Pacific Heights was the only neighborhood in San Francisco that voted for Proposition 22 in November, The City’s ABC7 News found.)
The street protest in a ritzy neighborhood evoked Google bus protests of 2013-18. At the time, media around the world captured protesters surrounding tech companies’ commuter buses. The protests railed against gentrification and wage disparity.
But Ted Egan, the chief economist for the city of San Francisco, says the gig economy wage struggle is much more. “This clearly is a major labor debate that has become a very hot topic,” Egan told The Examiner. “And San Francisco is a center of it.”
The main battlefield is the ballot initiative Prop. 22, which was heavily supported by DoorDash, Xu and other gig economy companies like Uber. The ballot initiative allowed drivers to remain independent contractors with some work flexibility and a set wage – but let companies off the hook of providing them with health benefits, sick leave or unemployment insurance. And drivers, who would not be able to collectively bargain under Prop. 22, say with expenses the wage ends up being much lower than the law stipulates.
Prop. 22 won in November 2020, but was ruled unconstitutional by an Alameda County Superior Court judge last month. The judge, Frank Roesch, wrote that the ballot measure “appears only to protect the economic interests of the network companies in having a divided, un-unionized workforce.”
DoorDash holds that Prop. 22 is still the law. The company believes Roesch’s ruling will be appealed, and the law will be upheld.
San Francisco Supervisor Gordon Mar believes the opposite, and says The City stands with the workers in the courts and in the streets. A former labor organizer, Mar spoke at Thursday’s protest, later telling The Examiner that the gathering showed “the extreme inequality that these new industries are creating.”
“We are Ground Zero for the gig economy,” Mar said. “Many of the key players in these industries started in The City and are still here. They were able to thrive and grow in part due to incentives and tax breaks, and it’s important for us to engage in this important debate about fairness for the workers.”
Dozens of drivers cheered Mar when he spoke on the street at the protest. But others, like Jacqueline Cancino, who lives in the Crocker-Amazon neighborhood in the southern part of The City, voted for Prop. 22. She believes it would help her ability to keep a flexible schedule and work around caring for her young son. “Living in San Francisco is very expensive,” she says. But she and her husband both drive for gig economy companies, and are able to make ends meet “if we put time and effort into working.”
Without a doubt, the success of tech and the sweat of the gig economy workers are clashing across The City this Labor Day weekend. But sometimes, they connect.
Yonten Kimshul drives for Uber, Lyft and DoorDash – but only part-time, as he tries to break into the technology industry. Unaware of Thursday’s protest, he was driving for Uber nearby. “I’ve read Prop. 22, and there are so many legal aspects to it, that I’m not sure I understand it,” he told The Examiner. Kimshul now lives in Brisbane, because he says it’s more affordable, and is doing data-input jobs part-time, hoping to join a tech company full-time. Describing himself as “pretty even-keel,” he says he doesn’t get too caught up in politics.
“But I do feel bad for the people who are driving in The City full-time. You can’t survive just doing this. Not here.”