In One Day, Uber Will Leave CA; Here's What "Compliance" Would Cost

AP Photo/Rich Pedroncelli

 

As promised, Uber will cease rideshare operations in California “by Thursday night” as a result of the state’s anti-independent contractor law, AB5. (Uber and Lyft were ordered by a state judge to change the status of their 200,000+ drivers in the state from independent contractor to employee by August 20, in accordance with the provisions of AB5.)

Los Angeles City Councilmember Mike Bonin tweeted the news, characterizing the move as “cruel and petulant.”

No, Councilmember Bonin, what’s “cruel and petulant” is the refusal of Asm. Lorena Gonzalez-Fletcher (D-Teamster) to negotiate a positive outcome to avoid the loss of hundreds of thousands of jobs and the loss of a vital transportation option for essential employees, senior citizens, people needing non-emergency medical transportation, and people who’ve had too much to drink. As I covered in an earlier piece, in spite of whatever negative feelings one has toward Uber or Lyft, their service is “essential” for the segments of society Democrats claim to be fighting for.

What’s cruel and petulant are the actions of the cadre of clowns who proposed and passed this law under shady circumstances and who use Uber and Lyft drivers as pawns in their power play, and who laugh off the harm their law has done to millions of Californians whose lives and businesses were upended January 1, 2020.

Even today, instead of looking for common ground with the rideshare giants, Gonzalez-Fletcher, Berkeley law professor Veena Dubal, and California Labor Federation Communications Director Steve Smith are all over Twitter blaming Uber and Lyft, calling them greedy, and tearing down any potential solutions Uber or Lyft float. The 200,000+ drivers who will see their income completely stop in one day are simply collateral damage in their “Unions for All” campaign.

Unfortunately for the Clown Cadre, normal Californians are now seeing AB5 for the clusterf**k it is. Coronavirus shutdowns have thus far kept the damage out of the sight of most Californians since bars and other entertainment venues are closed, there are no music festivals or summer camps happening this year, and most youth sports activities are canceled. All of those industries would have been massively and visibly impacted if not for coronavirus.

With Uber pulling out of the state – especially when it won’t be long until bars are open again – everyday Californians are extremely upset and asking, “Why?”

Of course, the Clown Cadre’s main talking point is about eeeevil corporations and billionaires refusing to pay their fair share or a “living wage.” As I mentioned in a radio appearance on Los Angeles talk radio station KFI, it’s doubtful that any of them have looked at Uber or Lyft’s financials, because if they did they would know that the companies really can’t afford to comply with AB5. The Foundation for Economic Education put out a great piece outlining the financial costs of compliance. From that piece:

Neither Uber nor Lyft actually make a profit, and converting their workforce to full-time employees would cost approximately $3,625 per driver in California. As reported by Quartz, “that’s enough to boost Uber’s annual operating loss by more than $500 million and Lyft’s by $290 million.”

Uber employs approximately 140,000 drivers in California and Lyft employs roughly 80,000. These 220,000 working Californians will now lose their source of income in the middle of a pandemic and recession, all thanks to the naive intervention of Sacramento regulators who thought they could plan the market. Moreover, the millions of Californians who benefit from and rely on cheap, accessible ride-sharing services will be out of luck.

So, the Clown Cadre believes companies that are already operating at a loss should just increase the loss because they say so? Nope. That’s called “going bankrupt,” and it’s not a great economic practice.

In addition to the financial cost, making the drivers employees isn’t an easy logistical effort. Most people in the app-based gig economy contract with multiple companies; it’s not unusual for one person to be signed up with Uber, Lyft, Doordash, and Instacart. They switch apps depending on demand at the time they’re working and even throughout a shift. So are they supposed to be part-time employees of four different companies? What happens if they’re injured on the job and they’ve taken trips from all four apps that day? Who’s responsible for that? How are health insurance costs divvied up? Don’t ask the Clown Cadre; they have no answers.