Uber and Lyft Are Letting Drivers Unionize Because They Already Won the Bigger Fight

More than 50,000 California drivers have joined the California Gig Workers Union, a drivers organization that just won formal recognition from the state. Their aim is to press for a larger cut of what passengers pay for each ride.

The companies have not opposed it. Economics reporter Paul Kiernan says that is because they have already secured the policy outcome that mattered most to them, that drivers remain contractors and not employees under the law.

That distinction controls costs. In the United States, staff employees receive legal guarantees that include pay floors, coverage if hurt at work, and other protections. Workers hired task by task as contractors do not. For businesses built on matching riders with people driving their own cars, staying on the contractor side of that line holds down costs and preserves the model.

The organizing drive reflects pressure on drivers. Pay has flattened, while fuel, coverage for cars, and the price of vehicles themselves have climbed. Drivers also face competition from autonomous taxis, cars without human drivers that operate ride services in some California cities.

What the union seeks is bargaining power inside that contractor system. It does not yet have established leaders or specific requests, but recognition would help drivers push for perks, higher earnings, and a way to challenge being shut out of the apps. Such a shutdown, known as a deactivation, can cut a driver off from Uber or Lyft without a clear explanation.

So the companies can tolerate the union because it does not undo the contractor arrangement. Drivers may gain influence over pay and working rules, but as long as they remain contractors, Uber and Lyft do not owe them the wages and protections that come with employment.