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In record-breaking $200 million fight to preserve the gig economy, messaging doesn’t always need money

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If you live in California, Proposition 22 is impossible to ignore because of the work that gig companies have done to spread the word.

The most expensive ballot initiative in the state’s history is about to top $200 million in funding, mostly from gig-economy companies Uber Technologies Inc., Lyft Inc., Instacart, DoorDash Inc. and Postmates, which are seeking to exempt themselves from treating their workers as employees in accordance with state law. The money is being spent in ways that would feel familiar to most voters: Relentless ads on TV, radio and streaming services such as Google’s YouTube
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; campaign mailers that arrive in mailboxes nearly every day; and calls to vote for the measure following Californians around the web and on Facebook
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and Instagram. 

More on Prop. 22: How Uber and Lyft’s business model could be changed on Election Day

Beyond those channels, though, Uber
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and other gig companies are bombarding Californians with pro-22 messages by leveraging power that doesn’t involve money changing hands: By urging customers and workers to vote for the measure when they open their apps or use their services. This is a legal gray area that prompted a lawsuit against Uber last week, which included accusations that the company violated sections of the state labor code and the Unfair Competition Law, and have raised other questions related to free speech and data privacy.

The companies are deploying their engineers and other employees to help distribute or design hard-to-avoid, pro-initiative messages including DoorDash delivery bags emblazoned with support for Proposition 22, Uber requiring drivers and users to click “Yes on 22” before they are able to connect on a ride, and banner ads within the Instacart and DoorDash apps. Because the companies use employees’ time — effectively leveraging full-time employees in an effort to avoid adding to their ranks — the companies have had to quantify how much they have spent on these kinds of activities, in what are described as non-monetary donations. 

The gig companies have claimed $9.9 million in these types of expenditures as of Monday, according to campaign-finance records. They are categorized as non-monetary costs that are described as employee time, consulting and expenses, advertisements and more. The DoorDash bags were identified as campaign paraphernalia with an estimated fair market value of $100,500. Another expense listed as non-monetary, with a $48,350 value: DoorDash is paying people to place Yes on 22 ads on their vehicles. The company and the campaign say that’s being done via Wrapify, which pays any drivers, not just delivery workers, to drive around with ads on their cars.

Non-monetary charges are just roughly 5% of the $199.4 million collected by the campaign through Oct. 23, all but $100,000 of the total amount coming from the gig companies. In total, that is almost exactly the combined money raised by the top two U.S. Senate campaigns in this nationwide election cycle, according to filings through Sunday —Democrats Jaime Harrison of South Carolina ($109 million) and Amy McGrath of Kentucky ($90 million) — and the most ever raised in a California proposition campaign.

The Yes on 22 campaign has spent the biggest amount of its haul, $95 million, on TV, radio and online advertising airtime — almost five times the opposition’s entire campaign war chest of $19.2 million. About $55 million of that was spent in less than a month, between Sept. 20 and Oct. 17, during the run-up to and the early days of California’s early-voting period, which began Oct. 5.

Proposition 22 could go a long way toward protecting the gig economy, whose business model depends on minimizing the costs of on-demand labor and operations. The measure would exempt app-based platforms from a state law that went into effect in January, and instead offers new wage guarantees and benefits for workers while keeping them as independent contractors with fewer protections than employees.

The state of California has repeatedly told Uber and Lyft that they must live up to Assembly Bill 5, the law that was passed to formalize a new standard for employment that was set in a 2018 state Supreme Court ruling. The fate of the measure could affect lawsuits in California — in which the companies have repeatedly lost, most recently on Thursday — plus possible measures and legislation outside the state.

See: Uber and Lyft told to classify drivers as employees less than two weeks before California votes on the issue

Beyond breaking out their checkbooks, the companies have shown just how forceful they will be in these types of campaigns, which could spread to other parts of the U.S. as gig companies seek to protect their business models and avoid paying for benefits, unemployment insurance and other costs of employing workers. 

The in-app, pro-Prop. 22 messaging gives the companies an inherent advantage because they have a captive audience of workers and customers. In fact, after news reports about Uber drivers having to click on a Yes on 22 button before they could accept rides in the app, the company made adjustments to allow drivers to exit out of the pop-up.

As for how the campaign is accounting for those messages, campaign spokesman Geoff Vetter said, “Yes on 22 has disclosed these in-app ads as non-monetary contributions to the extent required by law.”

The time the companies’ employees have spent to get out those messages also raises legal questions, although the companies say they are properly accounting for that time in accordance with campaign disclosure laws.

A couple of ride-hailing drivers and nonprofits sued over that messaging Thursday in San Francisco Superior Court, saying “Uber has taken advantage of its raw economic power and its exclusive control over communications through its driver-scheduling app by wrongfully pressuring its drivers to actively support Proposition 22.” The company said the lawsuit is “absurd” and “without merit.”

According to Fair Political Practices Commission records, three complaints about Yes on 22 messaging are open and pending investigations. Three similar anonymous complaints were rejected. While the commission would not comment on the complaints, a spokesman for the FPPC said any political advertising must be reported and have the required disclosure about who paid for it.

Catherine Fisk, a professor at UC Berkeley, points to two sections of California labor code that say “no employer shall make, adopt, or enforce any rule, regulation, or policy… controlling or directing, or tending to control or direct the political activities or affiliations of employees” and “no employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.” 

Fisk, who teaches labor and employment law, added: “Of course, the line between a company using staff to communicate the company’s own message and the company trying to control the staff’s own politics is fuzzy.”

Beyond the in-app ads supported by its own employees, the companies paid out plenty of money to spread their message everywhere else, through advertising. The Yes on 22 ads feature people talking about the flexibility the companies offer their workers and poll numbers that claim most gig workers want to remain independent contractors. 

As of Oct. 17, the most recent date for which expenditures are publicly available, the Yes on 22 campaign spent just shy of $66 million on TV ads since April, when it began airing them around the state.

Production costs for those commercials, including for camera operators, wardrobe stylists and set designers, total $11.7 million. Several people who appeared in both video and print ads were paid from $500 to more than $2,000. 

The campaign has spent $27.5 million on online ads on Facebook, Google, LinkedIn
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and mainstream publications such as the Los Angeles Times, San Francisco Chronicle, Sacramento Bee, San Diego Union Tribune, Southern California Newspaper Group and Politico. It has also spent $853,000 on radio ads.

By contrast, the opposition has spent about $10.2 million on overall advertising, including $8 million on TV commercials.

Meanwhile, the Yes on 22 campaign has also paid $6.8 million for polling and survey research, including $411,000 for polling and more to Berkeley Research Group, a consulting firm that is behind some of the “independent studies” the companies cite when they say most drivers want to remain independent contractors or mostly work part-time. 

The opposition points to research from the labor studies departments of universities such as UC Berkeley and UC Santa Cruz, which disputes the polls and studies often quoted by the Yes on 22 campaign. For example, gig companies say most of their drivers work part time, but researchers say the company’s services rely heavily on those who are working full time. 

See: Uber CEO says prices could double if drivers become employees, but this economist isn’t buying it

“You get a polling company to ask the right questions, you can get to whatever you want,” said Larry Gerston, political science professor emeritus at San Jose State University. “You have to take these things with a grain of salt.”

Another notable expenditure: The Yes on 22 campaign paid nearly $100,000 to the public relations firm of Alice Huffman, president of the state NAACP. The high-profile statewide civil-rights organization is a prominent supporter of Prop. 22, although some local NAACP branches do not agree with that stance. Endorsements by racial-justice groups could be significant because a majority of gig workers are minorities and immigrants.

The campaign has also placed advertising in smaller publications for certain groups, including Black Voice News, the Central Valley Voice, a publication that defines itself as a “minority publication,” the Los Angeles Sentinel, the Oakland Post and Our Weekly.

See: Race has played a large role in Uber and Lyft’s fight to preserve their business models

The campaign spent at least $877,000 on slate mailers, which are lists of propositions and candidates to support that are distributed by for-profit groups that have been paid by campaigns. One such mailer that had fine print saying it was prepared by “Feel the Bern, Progressive Voter Guide” drew a rebuke from Sen. Bernie Sanders, who tweeted on Oct. 12 that the mailer was a “lie” and called on Californians to vote no on Prop. 22 if they opposed “corporate greed.” 

Other big-ticket items listed as expenditures: About $4.7 million to campaign consultants, including Huffman’s PR firm; more than $2 million to the California Republican Party and the Republican parties of Ventura, Sacramento, Santa Clara and San Diego counties; more than $2 million for legal and accounting services; and a little over $1.2 million for phone banks.

One gig worker who spoke with MarketWatch could barely contain his anger about the campaign. “I’m sick of the lies on TV, all the money they’re spending,” said Denny, a gig worker in Los Angeles who asked that his last name not be used. “I know the truth. I’ve done Instacart for over three years. Sure, flexibility and independence are great. The only problem: It’s not worth it.”

Denny, who said he is semi-retired, said people have to consider that gig workers have expenses that should be factored into any examination of their pay. “We have taxes, gas, car insurance… commercial insurance is very expensive. There’s a whole laundry list.”

Denny said he made about $1,000 a week when the shelter-in-place orders began in March. “Two or three months later, Instacart added a lot of new shoppers, now you can’t make jack.” He is barely working now and is lucky if he makes $200 a week delivering groceries, he said.

Here are the total campaign contributions made by each of the biggest gig companies, most of which are still struggling to turn a profit: Uber gave more than $57 million, including non-monetary contributions and loans; Lyft was second with about $49 million; DoorDash followed with $48 million; Instacart gave nearly $32 million; and Postmates contributed more than $13 million. 

“Wish I ran a company that was ‘not profitable’ yet had eight-figure amounts of money to throw around,” said Tyler Breisacher of San Francisco, who delivers for DoorDash and Postmates. “It’s a ridiculous amount of money just to get out of giving workers the same rights and benefits that every other company has to give.”

Despite all the money it is spending, the campaign is also being accused of improperly cutting costs. The opposition has complained to the U.S. Postal Service about the Yes on 22 campaign using nonprofit postage rates for its mailers. In a letter to the U.S. Postmaster General, attorneys for the No on 22 campaign said the Yes side, which spent $3.5 million on postage through Sept. 19, appeared to have saved at least $1.5 million. In total, the campaign spent more than $9 million on postage, according to MarketWatch’s analysis.

Vetter, the spokesman for the Yes on 22 campaign, said: “As a 501(c)(4) organization, Yes on 22 is eligible for the appropriate non-profit postage rates with the USPS, which we applied for and were granted by the U.S. Postmaster.”



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Egypt wants to register millions of gig workers for state insurance, aid

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CAIRO: Egypt will start registering millions of gig workers in order to offer them health insurance and emergency state aid during the coronavirus pandemic, which has taken a particularly heavy toll on the nation’s ad-hoc employees, officials said.

There are at least 14 million gig workers in Egypt, and while some workers and campaigners welcomed the government’s drive, others warned that many workers could be reluctant to sign up – fearing tax and social security payment demands.

The government said it plans to identify and support two million gig workers in the country of 100 million people by the end of this year, labour ministry spokesman Haitham Saad El-Din said on Saturday.

“It is part of a government plan to give assistance to this segment of the society which has been majorly affected by the pandemic,” he said, adding that officials were focusing first on identifying casual construction labourers.

Gig workers who have their employment status registered on their national identity cards under a new “irregular employment” category will be given free social security insurance and be eligible for state welfare programmes.

Egypt’s state-run insurance plan includes life insurance and disability cover, as well as covering healthcare costs.

The announcement is the latest in a series of government measures aimed at shielding vulnerable groups from the economic fallout of the pandemic.

Soon after the coronavirus outbreak began, it launched a programme that supports irregular workers with monthly aid, and Egyptian President Abdel Fattah el-Sisi called for financial support to be boosted when a second virus wave took hold.

State welfare spending surged 36% in the first half of the current fiscal year, Finance Minister Mohamed Maait said recently.

On the books

Some daily labourers hailed the registration drive as a positive step, saying it would help bring them into the formal economy and recognise their economic contribution.

“Millions of Egyptians have been affected by this pandemic but it’s really good that the government is not leaving us behind,” said Farouk Mahmoud, 35, a temporary worker from the city of Sohag.

Still, while the latest data puts the number of gig workers at 14 million, the real number may be much higher – making registering them a daunting administrative task, said Bassant Fahmi, a member of parliament’s economic affairs committee.

Some workers may also be wary about being on the books.

“Many of them may fear being asked afterwards to pay taxes or insurance. That could mean a lot of gig workers avoiding being identified by the government,” she told the Thomson Reuters Foundation.

But besides any misgivings about being under the government’s radar, many gig workers in Egypt are more concerned about the dearth of permanent job opportunities – especially for young people – and the health of the wider economy.

“It isn’t crucial for me to have a job on my ID,” said Abanoub Lotfi, a 26-year-old driver for ride-hailing service Uber, who has a degree in commerce.

“What really matters is that the government offers me a stable job that suits my academic background and helps me afford my needs and those of my family.” – Thomson Reuters Foundation



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Self-employed, gig workers still waiting on PPP rules for bigger loans

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Virojt Changyencham | Moment | Getty Images

The self-employed and gig workers are anxiously waiting for the Small Business Association to update guidelines to its Paycheck Protection Program, which could mean bigger loans for the group.

The Biden administration announced last week changes to how the SBA will calculate forgivable loans for sole proprietors and other small businesses without any employees. The updated formula — which will likely lead to larger loan amounts for non-employer firms, including sole proprietors and independent contractors — will be announced this week.

It’s still unclear when in the week the SBA will update its guidelines, meaning that those who would benefit from the change should still wait to submit their applications for the program.

More from Invest in You:
Smallest businesses getting extra PPP help. What to know before applying
Black small-business owners are being left behind in pandemic, survey finds
Black leaders offer several key steps to help close racial wealth gap

“Loans submitted prior to the official rule changes are subject to the rules in effect at the time of application,” said Carol Wilkerson, an SBA spokesperson.

That’s led to frustration for some who want to take advantage of the two-week priority application window for the smallest businesses that went into effect on Feb. 24 and ends the second week of March. Of course, sole proprietors will still be able to apply for PPP loans until the program deadline at the end of the month; they just won’t get priority treatment once the 14-day exclusivity window closes.

For now, lenders are working to help borrowers prepare what they can to be ready for the updated guidelines.

“We’ve always taken the approach of, ‘Hey, we don’t have all the answers, but let’s proceed as far as we can without the answers,'” said Ed Barry, CEO of Capital Bank, based in Rockville, Maryland.

Barry added that the bank is also working to build awareness among small businesses that may not realize that they’re now eligible for a PPP loan.

What is known about the formula change so far

For firms with employees, maximum PPP loans are 2.5 times average monthly payroll costs, per the SBA. As a stand-in for payroll costs for solo workers, the SBA used net profit information from tax returns, even though payroll and profit are different measures.

In addition, the net profit line includes deductions, which reduced or eliminated profit numbers for some, yielding small loans or making them ineligible for the program.

The updated formula will instead use gross income as a stand-in for payroll costs, a larger number than net income, meaning many firms will get more money in forgivable loans.

Loans submitted prior to the official rule changes are subject to the rules in effect at the time of application.

Carol Wilkerson

SBA spokesperson

“It’s a tremendous change,” said Keith Hall, president and CEO of the National Association for the Self-Employed.

The change is important, as sole proprietorships are the most common business structure in the U.S. The IRS says there are some 41 million self-employed people in the country and, in 2018, more than 27 million had filed a return with an IRS 1040 Schedule C form for sole proprietors, according the agency.

Many of these businesses have been particularly hard hit by the coronavirus pandemic. About 70% of such firms with no employees are owned by women and people of color, and 95% of Black-owned and 91% of Latino-owned firms are sole proprietorships, according to SBA data.

But so far, very little forgivable funding from the SBA has gone to sole proprietorships — according to a recent survey from NASE, nearly two-thirds of its members said they didn’t get any money from the program.

Much of that was due to confusion in the early days of the program around eligibility and forgiveness, which are hopefully clearer today, Hall said.

“Many of the reasons that those small-business owners did not either apply or get approved for a PPP loan — I think many of those barriers have been removed,” he said.

Questions remain

To be sure, other changes to the PPP program that the Biden administration announced last week do go into effect today, March 1 — some student loan borrowers, legal non-residents and those with certain criminal records are now eligible to apply for forgivable loans.

Still, there are further questions for sole proprietors around the timing of applications, especially for those who already got a loan approved but would get more under the new formula. So far, there isn’t a process for amending a dispersed loan, or holding back an application that’s currently pending.

“All unknowns right now,” said Alex Cohen, CEO of Liberty SBF.

If you’re a small business with a story to share about PPP, email Carmen Reinicke at carmen.reinicke@nbcuni.com

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Dream realised in compelling live gig

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MATT KEEGAN
Mary’s Underground, February 28

★★★★

In another bid to reach beyond the musical horizon, Matt Keegan composed Vienna Dreaming as a tribute to his great grandfather, Heini Portnoj, an Austrian Jew forced to abandon his musical career in Vienna to escape the rising tide of Nazism. Three years after releasing a recording of the suite, Keegan finally presented this ambitious music in concert.

Matt Keegan and Veronique Serret. Shane Rozario

Matt Keegan and Veronique Serret. Shane RozarioCredit:Shane Rozario

Its strength lies not only in the imagination brought to bear, but in Keegan’s empathy for his subject, his intent being to slide inside the mind of his great grandfather, both as events unfolded in 1930s and in the aftermath, with Portnoj looking back after settling in Australia.

The concert’s instrumentation and personnel differed from the album, with only Keegan (clarinet, saxophone) and drummer Miles Thomas being shared. The album’s cello now became Veronique Serret’s violin and the double bass became Brendan Clark’s electric bass, with Ben Hauptmann (electric guitar) and Freyja Garbett (keyboards) completing the cast. These changes were much more than cosmetic, with the improvisational aspect of the work expanded, allowing for some startling individual contributions, most notably from Serret.

As consistently strong as the suite was, the opening Vienna Overture was especially compelling, with the main waltz-time theme materialising from skimming fragments of sound, dissolving back into those fragments and reassembling itself yet again – an evocation of an elderly Portnoj musing on an impossibly different time and place, long, long ago.

As with the album, the sound was carefully calibrated to shift between the familiar – the bruising intensity of Keegan’s baritone saxophone, for instance – and an extreme use of electronic treatments, including occasionally radical reverb and delay on the drums, amplifying the work’s prevailing oneiric quality and intentionally blurring clarity of outline. Ghosts of Johann Strauss, Frank Zappa and Miles Davis all seemed to materialise and dematerialise at various points, but without any sense of appropriation.

Providing an instantly engaging opening set was Yulugi, with Gumaroy Newman’s arresting voice and yidaki leading us deep into his ancestral culture, in dialogue with Keyna Wilkins’ piano and luminous flutes.

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