Labor

California's 'Workers Rights' Bill Does No Favors to Drivers or Consumers

California lawmakers have approved Assembly Bill 5, which poses an existential threat to the gig economy in the state.

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Let's think back to ancient history—to, say, five or more years ago when the process of getting a ride in a big city involved standing on a corner and trying to wave down one of the taxicabs that zoomed by. Cabs usually were drab and smelled like air freshener. In bad weather, your chances of hailing one—without getting cold or soaked—was in the ballpark-zero range.

Drivers were reluctant to take credit cards, or fumbled with one of those sliding card readers from the Pleistocene Era. I recall standing in an outlying neighborhood in San Francisco late at night for nearly an hour as I repeatedly called an 800 taxi number to get a ride. Good times.

Think about that process now, thanks to Uber and Lyft. Getting an easy, comfortable and affordable ride might not match the eradication of polio, but this innovation has made our lives better. My 84-year-old mom, who no longer drives, regained her mobility thanks to Uber. Other app-based companies have been a boon. Companies deliver Mom's groceries to her door. I order almost everything that way, from auto parts to cat litter to clothing.

This all is at risk now thanks to the union-driven efforts of California lawmakers, whose visions of the workplace are shaped by factories and cubicles. The Legislature has approved Assembly Bill 5 which, as virtually everyone has noted, poses an existential threat to the new economy (and to some old-economy businesses such as newspapers, too, despite a last-minute amendment to delay implementation for newspapers). The governor has indicated his support for the bill.

The bill would codify the disastrous 2018 California Supreme Court's Dynamex decision that makes it nearly impossible for these companies to use independent contractors as their workforce. The measure would require them to treat workers as permanent employees, subjecting the companies to the state's laundry list of costly labor rules and driving up wage rates by 20 percent or more. It would eradicate the flexibility that's at the heart of these firms' business model.

The supposed goal is to improve the lot of drivers. The bill's author, Assemblywoman Lorena Gonzalez (D–San Diego), pointed to "story after story of Uber and Lyft drivers living out of their car, homeless, barely hanging on." There no doubt are some hard-luck stories, but the tales of woe that Gonzalez shared are at odds with my experience.

I've talked to a lot of these drivers, and they enjoy being free to work whenever they choose while they pursue other educational and business opportunities. I've yet to meet a driver who wants to be a 9-5 drone. And it's hard to see how a measure that could devastate these employers would help the people that work for them.

A new study regarding Lyft by highly respected Beacon Economics finds that "increases in the cost of providing the service coupled with the introduction of formal work schedule arrangements, would likely lead to considerably fewer drivers working on the platform." It found that Lyft alone would need 300,673 fewer drivers in California under some scenarios.

The study confirms what other studies have pointed out: The overwhelming number of drivers (95 percent, in this survey) say their flexible work schedules are "extremely important" or "very important." Most drivers work less than four hours a week. "Drivers who use the service to supplement their primary source of income account for the largest share of workers in the service," the study added.

In response to AB 5, these companies offered a compromise that guarantees drivers a minimum hourly income, a benefits fund that could offer paid leave and a bargaining process for them to resolve disputes. That's reasonable, but supporters plowed ahead with a bill that exempts many professions, but not drivers, from the ABC test. The ride-hailing companies have vowed to sponsor a referendum to overturn it if it becomes law.

I've detailed what life was like for consumers when we relied on cabs. But let's not forget what life was like for drivers. In 2013, San Diego State University and the Center on Policy Initiatives published a report called "Driven to Despair." The city's taxi drivers generally earned less than $5 an hour. Almost none had health insurance or workers' compensation. The system "encourages taxi drivers to drive when tired or sick, and allows lax vehicle maintenance."

Ironically, the lightly regulated ride-sharing companies have provided better working conditions and safety than the government-controlled taxi market, which forced drivers to pay off cab owners' medallions—those limited, city-issued permits that cost tens of thousands of dollars. San Diego lifted its caps on medallions, but most cities still use the old system.

Nothing's perfect in this world, but the ride-hailing platforms are far better for drivers and consumers than the previous models, even if that obvious point is lost on Sacramento's legislative vandals. Now just wait for the sob stories from drivers who can't get work and from the rest of us who can't get rides.

This column was first published in the Orange County Register.

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  1. There are a lot of metrics in this article but none that really matter. At the end of the day, there may be 300,000 fewer Lyft drivers in LA, but there will be 100,000 Lyft drivers ripe for unionization. And that is the point of this initiative.

    Go to sites like LA Times, Vox, and others and you will see them positively gushing with joy about this. FINALLY a win for Labor- finally something to drive back the trend of de-unionization.

    2 years from now we will hear about how bad off those remaining 100,000 Lyft drivers have it- how they need a living wage to live in CA’s expensive houses and how unionizing is the only way to help them. Then flip forward through your LA Times broadsheet and read as they lament about the rough times that nearly 300,000 immigrants have experienced since losing “their job” (not, since being kicked out of the gig economy by stupid regs).

    1. If Lyft and Uber were smart, they’d just withdraw the service from California, right now, before the law goes into effect. The uproar would be massive and the weak knees in Sacramento would quickly wobble. Instead, I think they’ll try and muddle through, which will encourage other union-driven jurisdictions such as NY and Illinois to do the same dumb thing.

      1. It’s too late to do that. They’ve already done their IPO and California’s population and transit nightmares are too profitable to back off of. Measures like this are making that result more likely though, but they still have the entire rest of the United States to make up the difference. That’s what keeps California business solvent, now that I think about it.

  2. Not that many people in So Cal rides taxis. The only time I see a good amount of taxis are at the airport. I hardly see any on the local freeways, and I’ve never called for a taxi on the streets of LA or OC in the 20 years that I lived here. I’m almost certain that not a small number of Californians who use ride share services have never used a Taxi service in the state.

    So who exactly is this measure supposed to protect? The drivers, who mostly seem to enjoy the flexibility? What does this mean for tech, who often hire foreign guest workers?

  3. Uber and Lyft drivers, and the rest of the gig workers, are actually independent businesses, and the socialists will never allow independence at any level.
    Oh, yes; and it is easier to get payroll taxes collected than business taxes filed by competent accountants.

  4. Author incorrectly attributes advances in Taxi shuttling industry to Lyft and Uber instead of where it belongs: advances in tech, payment systems, and device communication since the advent of the internet. It’s as if he can’t discern the difference between industry specific disruption and ever-evolving tech.

    1. advances in tech, payment systems, and device communication since the advent of the internet
      The tech was available before Uber and Lyft came along. Legacy city-protected cab companies, mired in outdated methods reinforced by government regulation, weren’t even thinking about converting to take advantage of the advances.
      From what I hear, in many cities they still aren’t; they just want Uber and Lyft to go away and leave them their very profitable for city-approved cab companies 1900s business model.

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