Are Lyft and Pepsi Playing the Same Game?

Leora Smith

Leora Smith is a student at Harvard Law School.

Recently, following swift and widespread backlash, Pepsi pulled an advertisement that was accused of co-opting imagery from Black Lives Matter protests and other social movements. The advertisement’s storyline centered on model Kendall Jenner abandoning a photo shoot to join a parade of ethnically diverse models carrying ambiguous posters painted with peace signs, love written backward in Arabic, and vague invitations to “join the conversation.” At the end of the commercial Jenner, a white woman, pushes past the protesters-of-color who invited her to the demonstration, and offers a police officer a Pepsi. The officer opens the can and the crowd erupts in triumphant hugging. Responses to the ad included a tweet from Martin Luther King’s daughter that read “If only Daddy would have known about the power of #Pepsi.” After initially defending the commercial, Pepsi issued a statement saying, “Clearly, we missed the mark, and we apologize. We did not intend to make light of any serious issue.”

Pepsi’s advertisement is just the most recent in a series of corporate attempts to capitalize on the current political moment. While Pepsi did “miss the mark,” other companies have better managed to brand themselves members of the #Resistance.

Lyft has arguably done this most successfully. After years of competing with Uber, and lagging significantly behind in both valuation ($5.5 billion to Uber’s $60 billion), and market share (20% to Uber’s 80%), Lyft has profited off of recent political events, and Uber’s missteps. Lyft’s first move came in response to the #deleteUber campaign which was sparked by Uber’s actions during the airport protests against President Trump’s first executive order on immigration. About 200,000 people deleted Uber following the protests. Sensing an opportunity to distinguish themselves, Lyft made a $1 million donation to the ACLU, the very organization who had come to symbolize opposition to Trump’s executive order. In the wake of #deleteUber, Lyft downloads increased by 40% and they gained around 5% of Uber’s market share.

Two weeks ago, Lyft took out a full-page ad in the New York Times to announce a program that will round up fares to the nearest dollar, and donate the extra money to charity. Notably, Lyft will not be donating any money itself, just facilitating passenger donations. Still, it is clear that Lyft is working hard to present themselves as an ethical alternative to Uber. While their competitor tries to recover after weeks of bad news, Lyft would like consumers to see them, in their own words, as a “better boyfriend.”

Lyft’s actions beg some questions – are they actually a more ethical company? Are passengers who choose to ride with them helping to encourage more responsible corporate behaviour? Or is Lyft’s campaign just a more sophisticated version of Pepsi’s – superficially using the adornments and language of a budding protest movement to push a product? Most relevant to readers of this blog, is Lyft any better, or more ethical, than its biggest competitor when it comes to its workers?

Does Lyft treat its drivers better than Uber?

Worker (Mis)Classification

Like Uber, Lyft classifies its drivers as independent contractors, rather than employees. Writers on this blog have covered extensively the courtroom battles waged over this alleged misclassification. Lyft has fought just as hard as Uber to prevent any change in their drivers’ status. Recently the company settled a lawsuit, agreeing to pay drivers $27 million rather than risk an unfavorable court decision

Drivers’ Take-home Pay

By keeping their drivers classified as independent contractors, Lyft avoids expensive obligations like complying with minimum wage and overtime laws, and paying into social security programs. Both Uber and Lyft claim that drivers working for them regularly make more than the minimum wage, and a recent study suggests that claim might have some truth to it. A former Uber driver who now runs a blog and podcast called The Rideshare Guy, conducted a (non-scientific) survey of over 1000 rideshare drivers. According to the survey, Lyft drivers reported average earnings of $17.50 per hour compared to $15.58 by Uber drivers. The difference is likely impacted by Lyft’s platform allowing tipping, which Uber’s does not. Additionally, or possibly as a result, a higher percentage of Lyft drivers report being “satisfied with their experience” than those who work for Uber – by a margin of over 25%. If satisfaction and per hour income is a proper measure of ethics, then Lyft might have some claim to running a more ethical business than their competitors.

The average incomes reported through this survey are somewhat misleading because neither account for drivers’ expenses such as gasoline and wear and tear on their vehicles. These expenses might be covered if drivers were classified as employees, but as independent contractors, drivers must instead subtract the expenses from their earnings. In 2015, AAA reported that the average car owner, who drives 15,000 miles per year spends about $8600 on maintenance and gas. That translates to $4/hour in a 40-hour work week. Uber and Lyft drivers likely drive significantly more miles, increasing their expenses and further reducing their takehome pay. Just like with their top-up donation plan, Lyft permits passengers to help ease this burden slightly through tipping, but the company itself has not spent any money to reduce drivers’ costs.

Discrimination at Work

So far, Lyft has not said which charities will benefit from their round-up program. Yet their advertisement in the New York Times referenced “issues impacting everyone everywhere, from climate change to the pursuit of equality.” The reference to equality is notable. Rideshare Guy’s driver survey found Lyft drivers, on average, make more than Uber drivers. Yet respondents from both companies reveal that women, African-American drivers, and drivers aged over 61 all make less than average hourly rates.

Lyft has not taken any action to address this discrimination, though there are options available.  Airbnb, for example, recently changed their platform to address users’ complaints that hosts were more likely to turn down requests from guests-of-color. This included increasing opportunities to “instantly book” rooms, so that hosts do not get a chance to look at who is booking, publishing a new non-discrimination policy, and making guest pictures less prominent. Noah Zatz, writing for this blog last year, suggested some other ideas that Uber and Lyft could take to counteract customer bias.

Notably, so long as Lyft continues to classify drivers as contractors rather than employees, drivers cannot pursue Title VII claims of discrimination (though Zatz points out that there are other anti-discrimination protections available to drivers). Overall, in the area of discrimination, it seems that Lyft is no more ethical than its competitors.

An Opportunity for Uber

The response to Pepsi’s Aluminum-Cans-Matter advertisement revealed customers’ desire for authenticity, even from large corporations. It also confirmed that young people are savvy to misrepresentation and co-optation of their movements, and with social media they are able to make their displeasure widely known. Lyft is currently treading a delicate line – by putting so much focus on their “social justice” narrative, they are begging customers to challenge them for evidence that it is genuine. Their greatest weak point is that it is not: On the one hand, Lyft donated to the ACLU in protest of President Trump’s discrimination toward Muslims. On the other, Lyft obstructs its own drivers from accessing the protection of Title VII’s anti-discrimination laws. Ironically enough, the ACLU’s first-ever campaign was one for workers’ rights to unionize, the very issue against which Lyft is fighting tooth and nail throughout the country.

At this particular moment, nothing would give Uber a better boost than beating Lyft at its own game–by actually treating drivers better. If neither company is willing to take that step, then Lyft’s new charitable feature might give app-users a chance to hold their feet to the fire – given the opportunity to choose where their donations go, perhaps customers can select a charity that supports drivers’ battles for their own rights.

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