As many are aware, when California’s disastrous anti-freelancing law, AB5, was being discussed and negotiated in Sacramento in 2018 and 2019, it was characterized as a law that would protect Uber and Lyft drivers from being exploited by greedy Silicon Valley billionaires by making them employees and guaranteeing they receive minimum wage, sick days, etc. Uber and Lyft contended that it would tank their entire business model and made a few changes to their platforms, but focused their energy on creating and qualifying a ballot proposition that would exempt their companies from AB5.
The gig economy giants succeeded in qualifying a proposition for the November ballot; Proposition 22 classifies app-based drivers as independent contractors and, importantly, addresses many of the criticisms of the industry. Even though Prop 22 doesn’t provide relief for hundreds of other freelance professions still covered by AB5 (more than 100 professions are currently exempted after one clean-up bill passed the legislature in 2020), it will gut the heart of the bill and will make it easier to repeal the remaining portions of AB5. For that reason, I urge all Californians to vote yes on Proposition 22.
Critics on both the left and the right who hold a negative view of the Silicon Valley culture say that as a matter of principle they must vote no on Proposition 22. Those on the left believe the CEO’s and executives of Uber, Lyft, et al, are getting rich by exploiting low-wage workers, and that they need to be held accountable. Those on the right feel that Uber, Lyft, et al, are reaping the consequences of supporting the state’s super progressive Democrats and are only now fighting back because it hurts their bottom line. Then there are those who say they’re voting no on Proposition 22 because it’s a feel-good Trojan horse and that we should instead be fighting for a full repeal of AB5.
I understand all of those arguments and agree with them to an extent. However, I live in the land of reality, and here’s the reality of what will happen if Proposition 22 is defeated.
First of all, the CEO’s and executives aren’t going to let their own pay suffer. That’s a laughable and naive notion.
Second, the companies themselves won’t absorb the hit of making drivers employees. None of them are profitable at this time, so that’s not even in the realm of possibility. If they don’t abandon California altogether, they’ll pass along the increased costs to customers. That will have a number of basic economic effects. Once the price charged to the customer increases, the number and location of potential customers shrinks. The net result would be fewer drivers, longer wait times, and a decreased service area.
Third, the overwhelming majority of current drivers will not be hired as employees (one study estimates less than 1/4 of current drivers would be offered a “job” with Uber or Lyft) if the app-based companies remain in California at all – which is probably why more than 80% of drivers are against Prop 22. Those who are hired would lose scheduling/location flexibility, and most likely would lose the ability to earn bonuses or otherwise increase their income by doing an exceptional job.
Fourth, any legislative attempts to repeal AB5 would again be ignored by the Democrat supermajority in Sacramento. The bill’s author, Asm. Lorena Gonzalez (D-UnionsForAll) stopped any repeal/reform efforts initiated by Republicans during the 2020 session. Their bills weren’t even afforded a committee hearing. Prop 22’s defeat would show the Dems in Sacramento that there are consequences to ignoring their constituents.
Fifth, organized labor and their puppets in Congress and in state legislatures across the fruited plain will take Prop 22’s defeat as validation that people want AB5 to go national, that we’re ready to give up our right to be our own bosses. As regular readers know, the PRO Act (AB5 on steroids) passed the House this year and Joe Biden has promised to sign it if elected. More than 20 states use some form of AB5’s ABC test to determine if someone is an independent contractor or an employee and if Prop 22 fails you can bet your bottom dollar that legislatures across the country will move in that direction.
In fact, Virginia’s legislature is poised to follow California’s lead on AB5, though they’re being warned to not copycat California’s failed law.
Sixth, the nearly one million Californians who drive for these companies, and for whom traditional employment isn’t an option, will suddenly be unable to earn a living through no fault of their own and at the worst possible time. These drivers are parents who work while their kids are in school, family members who need the flexibility to care for aging parents or loved ones, students who earn income around class schedules, working families, people with disabilities that prevent them from working traditional jobs, or retirees who need to supplement income.
Seventh, as app-based gig companies leave California or severely curtail their service areas and increase prices, minorities and people living in low-income neighborhoods will be hardest hit. Studies show that the presence of Uber and Lyft in a market positively increases mobility in poor neighborhoods, and that “for those who can’t own vehicles due to financial limitations…ride-hailing is indeed a lifeline – a lifeline that would be snatched away if Prop 22 loses.
And lastly, California’s streets will become even more dangerous, as the most widely-available and affordable option for getting home from the bar will no longer exist. Multiple studies conducted in states across the country show that the presence of Uber and Lyft in a market decreases drunk driving. This is why Mothers Against Drunk Driving supports Proposition 22.
Let’s also take a look at what drivers would GAIN under Proposition 22:
- Guaranteed hourly earnings and per-mile compensation toward expenses
- Funding for new health benefits for drivers who work at least 15 hours a week
- Medical and disability coverage for injuries and illnesses on the job
- Protection against discrimination and sexual harassment
Hmmm, that kinda sounds like what the drivers are saying they want? Sounds like what Lorena Gonzalez claims they’d get as employees – while she conveniently leaves out the fact that a slim number of current drivers would be offered a W-2 job if Prop 22 fails?
To sum it up, according to the Yes on 22 campaign, a yes vote “would allow these companies to continue providing vital services to California residents and to continue providing hundreds of thousands of Californians the ability to earn a living on their terms.”