Don’t let California export bad ideas
Unfortunately, the drawback to this system is that states also attempt a host of half-baked ideas that risk metastasizing elsewhere. Take California for example. While the state isn’t all bad, at times, it looks like a veritable bad idea factory. In fact, late last year, California enacted the misguided Assembly Bill 5, which was purportedly intended to aid workers, but it is really a job killer. What’s more, this policy stands poised to spread unless policymakers take note.
When California Governor Gavin Newsom signed into law AB 5, he codified a state supreme court decision on worker classification. The measure requires that contractors be treated as permanent employees. Of course, some of the more powerful and well-funded lobby groups were able to have their industries excluded from the measure.
Nevertheless, the law effectively makes contractors and the gig economy, including ridesharing as we know it, illegal. Rather than giving companies and contractors the freedom to work in this manner, businesses must instead consider all workers employees, which means they must follow a host of additional costly regulations and rules. As we are seeing in California already, this hurts companies and workers alike.
So, what does this have to do with Georgia? With November elections approaching, we don’t really know what the General Assembly will look like. Many prospective lawmakers are likely sympathetic to AB 5-styled legislation and may attempt to introduce it in the legislature. Of course, Gov. Brian Kemp would likely oppose it, but he won’t be governor forever.
What’s more, there’s chatter at the national level in support of AB 5. Indeed, former Vice President Joe Biden even tweeted, “I support #AB5 in California, which will give workers the dignity they deserve in the workplace.” The problem is that support for AB 5 is grossly misguided.
Since AB 5 virtually bans contracting in the gig economy, under such a paradigm, companies must drastically reorient their business models. By relying solely on permanent employees instead of contractors, they will have to raise prices on consumers and hire fewer workers, given that permanent employee status brings with it many new costs. Companies simply cannot keep prices low when these expenses rise, which is one way that AB 5 burdens businesses.
But it impacts workers too. First, fewer gig economy workers will be able to engage in contract work due to fewer being hired as permanent employees. Second, many gig workers already have full-time jobs. Their contracting role in the gig economy is merely part-time, supplemental work. However, with AB 5-type laws, fewer will be able to join this workforce.
One of the benefits of the gig economy is that workers enjoy work schedule flexibility. In the case of ridesharing, college students can pick up a fare or two between classes to earn extra cash; parents can drive a couple customers before and after their work day or while their children are at school; and others could hit the road for ridesharing companies at the last minute if they lose a shift at their day job.
Yet with AB 5 legislation, none of this would be possible. That’s because gig economy workers would have to adhere to permanent employee regulations and follow set hours, but this is the opposite of what most rideshare drivers want. In fact, Uber recently polled its California drivers to learn how they feel about AB 5, and what they learned was revealing. Eighty four percent of drivers have another job, 68 percent would quit driving if their flexible schedules were compromised, and 72 percent of their drivers want AB 5 repealed.
The truth is that workers enjoy the flexibility that cannot be achieved as permanent employees. All AB 5 does is make it more difficult for these individuals to earn supplemental income and companies to operate. To promote such a model—especially during a recession—is absolutely unwise. Rather than letting California’s bad ideas proliferate, Georgia—and the rest of the country—ought to permit the flexibility that gig economy workers demand.