New regulation, higher costs, more taxes — that’s how you foster innovation and encourage economic growth, right? Oh right, that’s how you do that other, “killing it off” thing. Well, California’s legislators have embraced the first view, and in their wisdom passed AB5, which would force companies like Uber and Lyft to classify their drivers as full-time employees, rather than freelancers, entitling them to benefits and putting the companies on the hook for huge tax bills. This brilliant idea, supposedly intended to help drivers out, will instead make their services so expensive the ride-hailing apps would probably just go out of business in the state. Maybe the whole thing is a sly strategy to prop up legacy taxi companies, highly regulated monopolies that are still somehow unable to put a single cab on the streets of San Francisco (per anecdotal evidence)? The Pacific Research Institute’s Kerry Jackson takes apart this ripe piece of idiocy in a commentary for CalMatters.
- Jackson points out one of the main impossibilities, a provision of the law defining the “freelance” designation as referring solely to someone who “Performs work that is outside the usual course of the hiring entity’s business.”
- Say what? the gentle reader may be forgiven for wondering. As Jackson notes: “Under that requirement, janitors could work as independent contractors only when they have contracts with companies not in the business of cleaning. Or a rideshare driver could work under a contract with Uber or Lyft only if those companies were primarily in the business of, say, selling vacuum cleaners.”
- What’s more, California governor Gavin Newsom has stated that AB5 is laying the groundwork to usher gig economy workers into unions, which will predictably demand higher wages and benefits, driving up prices for the companies even more and thus guaranteeing they will close up shop.
- So a law ostensibly intended to protect workers will probably cause them to become unemployed, or if they’re lucky enough to remain employed, force them to pad the rolls of declining unions which are already hemorrhaging members, a sure measure of their basic usefulness. Makes sense!