A California law went into effect January 1 that hurts the very people it was supposed to “protect.” Assembly Bill 5 severely limits independent contracting by placing heavy restrictions on the amount of work freelancers can do before being considered full-time workers.
The Daily Signal’s Jarrett Stepman explains that “The law was passed to reduce the negative impact of the ‘gig economy,’ where workers do various jobs on their own time but don’t get the benefits or long-term employment guarantees of a traditional full-time job.”
Not everyone wants or needs these benefits. The flexibility of a contract job is appealing to all kinds of folks. According to the US Bureau of Labor Statistics, “Fewer than 1 in 10 independent contractors would prefer a traditional work arrangement.” But California is removing that choice for lots of its workers.
No surprise — companies are already replacing freelancers and independent contractors with fewer full-time workers.
Why would California lawmakers want to kill the gig economy? Doing this will only exacerbate California’s homelessness problem. The Wall Street Journal explains that AB5 will benefit labor unions and plaintiff attorneys, major financiers of leftist politicians. But it imposes enormous new labor costs on businesses that rely heavily on contractors.
Every Uber driver will have to be an employee, costing the company an estimated $21,000 per worker and necessitating 30-50-% fare increases.
Every writer or blogger who contributes a weekly column to a website now must be a full- time employee of the company running the site. Publishers will cope by simply staying away from California workers.
The Journal reports that “Several trucking companies are ending contracting relationships with California drivers and offering them relocation packages to move to other states.”
The paternalistic left acts as if everyone needs a boss. The state should adopt legislation allowing gig economy workers to pool together to get lower-cost insurance. That would preserve their autonomy and flexibility and help them thrive.