California’s new AB5 law went into effect on the first of January, and it has already backfired in ways that were predicted by anyone with even a shred of economic knowledge. The law, which was intended to give workers more protections in the gig economy, forced employers to refigure who it is they consider an independent contractor.
The Democrats in Sacramento set this bar incredibly low in an effort to give workers who were fulltime employees in all-but-name the same medical benefits and retirement plans that they would have been provided had they been directly hired by the company. The intention: To force these companies to abandon their “independent contractor” models and hire all of these freelancers as employees instead.
But like nearly everything Democrats do, it achieved exactly the opposite.
In a bit of delicious irony, the leftists at Vox Media were some of the law’s early proponents, declaring AB5 a “victory” for California’s gig workers, including truck drivers, rideshare workers, and freelance writers. Not long after that declaration, the company’s SB Nation sports subsidiary announced they would be cutting ties with most of their California writers.
“In the early weeks and months of 2020, we will end our contracts with most contractors at California brands,” SB Nation Executive Director John Ness said in December. “This shift is part of a business and staffing strategy that we have been exploring over the past two years, but one that is also necessary in light of California’s new independent contractor law, which goes into effect January 1, 2020.”
Way to go, Democrats!
What proponents of this law overlooked (among other things) is that many freelance workers are not just lingering in the gig economy, hoping for their big break when they’ll be hired on full time by their clients. Quite the contrary – they enjoy the flexibility and control that comes with being your own boss and setting your own hours. The elites like to look down their noses at the gig economy and assume that it’s just a sea of workers getting taken advantage of by the Ubers and Lyfts of the world. But while we’re sure there’s plenty of that (just as there is in the fulltime employment sector), there are also millions of freelancers who wouldn’t want it any other way.
Unsurprisingly, the author of AB5 is not yet ready to admit that this law is a disaster for California.
From CBS 8 in California:
News 8 sat down with the author of the bill, Lorena Gonzalez. When talking about the controversial law Gonzalez said, “we have to have rules. Uber and Lyft have operated with zero rules.” However, Gonzalez has acknowledged that her issue isn’t with ride-sharing companies alone.
The California Trucking Association was just granted a temporary restraining order which stops AB5 from applying to thousands of independent truckers. News 8 spoke with a trucker who was driving through San Diego who said, “we’re out here working hard and now they want to take our money away too.”
In addition, the American Society of Journalists has also asked a federal judge to grant the same injunction.
Gonzalez responded to these suits saying, “you have to go by the rules as well. You can’t just be opening yourself up to exploitation.” She said she wrote the law to protect employees. The changing of the classification from independent contractors to employees forces companies to pay benefits from overtime to sick pay.
In reality, of course, it hasn’t forced anyone to do anything. The companies that could afford to run a business model dependent on fulltime help had already structured their businesses that way. The ones that can’t abide by California’s new law will either restructure in a way that requires fewer hours (meaning less money for workers) or cease to exist.
Or they’ll leave California behind altogether and ply their trade in a state that actually wants their business. At a time where California’s population is shrinking dramatically because of these regulations and ones like them, that’s the last thing the state needs.