The most recent numbers for the people on unemployment insurance are out and they are about as grim as anyone could expect, with the California having it by far the worst with 27.7 percent of its eligible workers on the dole. That’s well above the national rate of 15.7 percent and yet more proof that the state’s anti-“worker misclassification” law, AB5, is resulting more people not working at all.
AB5 isn’t the sole reason that the state workers are seeking unemployment, of course, but it sure isn’t helping. The law was passed last year mainly at the urging of unions that wanted to organize ridesharing companies like Lyft and Uber. These and other so-called “gig economy” companies hire people as contractors, rather than regular employees. This allows the workers to do as much or as little work as they want in a given week. If the drivers were regular employees the companies would have to set their hours, among other requirements. This flexibility is a key element of most “gig economy” jobs.
Critics have slammed that as a convenient excuse for the companies to get out of having to pay their workers overtime or provide other benefits. AB5 was meant to end this by forcing the companies to classify the drivers as employees and abide by all employment-related state and federal regulations. To do this, the law strictly limited what contract work could be done in the state.
This had the unintended effect of preventing all sorts of people who choose to do contract work from being able to earn a living. These people include actors, filmmakers, artisans, translators, photographers, musicians, and freelance writers and journalists, among many others. That number has only swelled since the COVID-19 virus put the state in lockdown and forced many people to try to work online.
Meanwhile, the ridesharing companies that AB5 was meant to punish have seen their business drop off drastically anyway as people stay home, so the drivers aren’t benefiting much either.
Contract workers have turned to social media sites like Twitter to beg the state to rollback AB5 for the time being and the law’s supporters have felt some pressure as a result. California Assemblywoman Lorena Gonzalez, the law’s main sponsor, has scrambled to add carveouts for groups like musicians. But Governor Gavin Newsom has refused to formally roll back AB5 and the state has instead pushed ahead with plans to take Uber and Lyft to court for noncompliance.
So instead of easing back, the state is doubling down. It would be funny if there weren’t so many actual people in the Golden State struggling to find work.
*by Sean Higgins via CEI.org*