Guess How Much Uber and Lyft Would Owe California If Drivers Were Employees? Try $413 Million
If Lyft and Uber had classified their drivers as employees rather than independent contractors as the companies currently do (and would very much like to continue doing), what would they have hypothetically owed to California in unemployment insurance tax? According to an estimate from the UC Berkeley Labor Center, the two companies would have had to pay hundreds of millions of dollars to the state’s Unemployment Insurance Fund over a five-year period had their workers been employees.
The data brief, published last week, cited available datasets—including company-provided data obtained by the California Air Resources Board, analysis from JP Morgan Chase, and available data from Uber’s Chief Economist Jonathan Hall and former Department of Labor Chief Economist Alan Krueger on drivers’ weekly work hours—to draw up estimates for the number of workers at each company, as well as how many of these workers at Lyft and Uber made more than the $7,000 taxable wage limit in California.
The team estimated that workers’ aggregate taxable base earnings were roughly $3.38 billion in 2018 and that the companies would have owed $114.8 million in unemployment insurance tax. Because no data about the two companies’ growth in California between 2014 and 2018 was available to the team, they instead simulated Uber and Lyft’s growth in the Golden State using data from King County, Washington, to identify an estimate for what Lyft and Uber would have owed in unemployment insurance taxes for the period between 2014 to 2019.