California

Voters Will Have a Chance To Save Ride-Sharing and Delivery Services From California's Regulators

In November, California voters will decide on Proposition 22, a measure would carve out a contracting exemption for independent drivers.

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Uber and Lyft, we hardly knew you.

As the California attorney general pursues its lawsuit against these ride-sharing companies, to force them to comply immediately with the state's virtual ban on using contractors as workers, the firms had announced last week that they would temporarily leave the state as they retool into smaller operations.

The courts gave them a last-minute reprieve, but their long-term plans here remain uncertain. Sadly, state officials had been intent on punishing these companies—even before voters have a say. At the very least, the state should have waited until the public decides on the matter in the Nov. 3 election via Proposition 22. That measure would carve out a contracting exemption for independent drivers and provide them with health-care and other benefits.

If voters reject Proposition 22, these groundbreaking services might really go away. Their crime? They've been too successful at serving consumers and providing flexible employment opportunities for hundreds of thousands of California workers. That has provoked the state's politically muscular unions, which see a threat to their preferred work model—an antiquated system of inflexible 9-to-5 schedules, factories, offices and union shop stewards.

The unions can't compete, so they must destroy what others have freely chosen. It reminds me of economist Walter Williams' well-known quotation: "Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man." These companies serve us, but the Legislature prefers looting and plunder.

I'm a slow adapter to technology, so I still recall my amazement when a friend introduced me to a cool alternative to slow, grimy, and pricey taxicabs. We were waiting to go to dinner while at a convention. Within minutes, an Uber driver showed up in a comfortable, clean, and late-model car, and inexpensively took us to our destination.

No big deal, right? But this simple system, which we now take for granted, is the result of amazing creativity, private investments, and voluntary arrangements. That's how free markets work. Someone comes up with a better mousetrap and, as long as the government stays out of the way, the companies rise or fall based on their success attracting customers.

Think of how transportation services have improved lives. Elderly people have newfound mobility. They can easily get to doctors' appointments and whatnot. Drivers deliver almost everything to our front door, from groceries to auto parts. After Austin, Texas, banned Uber and Lyft, drunken-driving arrests reportedly increased. As Williams noted, companies succeed by serving us.

I talk to drivers all the time—and they express satisfaction with their work arrangements. By the way, no one has forced them to take these jobs. The vast majority work limited hours, as they earn extra cash between other opportunities. Many independent workers of all types earn more piecing together various gigs than working only for one company.

We know what's best for ourselves, even if Assemblywoman Lorena Gonzalez, the San Diego Democrat who authored the contracting-ban legislation (Assembly Bill 5), thinks she knows better. Her Twitter jabs at freelancers who have lost their jobs – they're "not good jobs to begin with"—display an almost comical caricature of a "let them eat cake" legislator. Yet think about what happens if—or when—these services go away. Since January, when the law went into effect, companies have been eliminating bushel-loads of freelance jobs or shifting them to workers in other states.

Sorry, but one can't create high-paid jobs by legislative fiat. The market does a remarkably good job of improving the lot of workers. It obviously has a better track record at doing this than the California Legislature. In the market economy, consumers come first—but workers' fortunes rise in the process.

Look at Gonzalez's home city of San Diego. As I've reported here before, prior to ride-sharing, residents were dependent on taxis. A 2013 report from the Center on Policy Initiatives found that "taxi drivers earn a median of less than $5 an hour" and "virtually no drivers have job-related health coverage or workers' compensation insurance."

Drivers spent their time paying off cab owners' inflated permit fees—and had little chance of becoming owner-operators because government only issued a restricted number of "medallions." By contrast, a recent study about ride-sharing in Seattle from Cornell University found Uber drivers earned an average of $23.25 an hour, which is close to the city's median wage and is nearly 50 percent more than taxi-driver earnings.

Killing ride-sharing will not improve the plight of drivers. Still, the fundamental issue doesn't center on worker benefits. It's about the freedom to pioneer technologies and the ability of consumers to benefit from them. I don't believe the future of any industry ought to be dependent on a popular vote, but at least California voters still have a chance to save these services.

This column was first published in the Orange County Register.

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  1. In November, California voters will decide on Proposition 22, a measure would carve out a contracting exemption for independent drivers.

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  2. So the end result is that big, entrenched companies that can afford to bankroll campaigns for ballot propositions will get a carve-out while everyone else gets screwed. Inequality will increase, giving the Central Planners more “problems” to “solve”.

    1. .0000000023/10

    2. Because we all know that the overriding objective of everyone’s lives is to stamp out inequality.

  3. I wonder what goes through the mind of someone who likes to destroy livelihoods and control so much of what people can and cannot do. Is it the feeling of power? Or answering to some special interest group? Or trying to overcompensate insecurities?

    1. They genuinely think they are doing the right thing and helping people. That is why they are so dangerous.

      1. No, they don’t.
        They are paying back the unions, and deliberately destroying any possibility of individual freedom in generating revenue.

        1. Can’t it be both?

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    2. Because they know what kind of job is good for us, and want to force it on us. John Stuart Mill responds:

      “(T)he only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinions of others, to do so would be wise, or even right.”

      1. Hmm, what would Mills say about pandemic lock downs?

    3. She is the president of the local AFL-CIO. So by her logic extortion is completely legal so long as she gets the money

  4. I would have more sympathy if the initiative was intended to repeal AB5 entirely, rather than just carve out two more special interest exceptions. Or even remove the exception for lawyers; now that would b fun to watch.

  5. So the solution we are stuck with is a carve out for two California businesses but fuck everyone else.

    Yeah that is liberal left wing California. Fuck the left, fuck the commies, fuck blm and antifa, and vote for Trump.

    1. The legislature has been carving out exceptions to the ban on “gig” work for a lot of businesses/industries since almost as soon as AB5 took effect. A lot of the entertainment business, especially live music performers, had been operating on a “gig” basis for decades before the tech existed for ride-sharing operations like uber and lyft; those businesses got legislated carve-outs because the generic wording of the language in the text of AB5 was always a smokescreen for the fact that the law was intended specifically to target those two rideshare companies in particular.

      1. So a whole bunch of Californians are going to get fucked by a bill passed to target two companies that then had exceptions for them carved out. Wow. Truly government is a thing of beauty and grace.

        1. Nailed it 100%.

          Don’t forget, Uber & Lift offered to pay CA drivers $21/hr while driving or going to a pickup. The offer was rejected by the state.

  6. I’m not sure I have much faith in California voters to provide a reprieve from onerous regulation… it’s kind of their thing.

    1. “Prop. 65 WARNING: This attempt to provide a reprive from onerous regulation contains a concept known to the State of California to cause cancer.”

      1. Can feelings get cancer?

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  8. Dear California,

    Pass a carve out and I will sue your fucking faces into the dirt.

    Sincerely,

    All of the Other Contractors

    1. Pfff. As if any of them have any money left after being put out of work!

  9. We know what’s best for ourselves, even if Assemblywoman Lorena Gonzalez, the San Diego Democrat who authored the contracting-ban legislation (Assembly Bill 5), thinks she knows better. Her Twitter jabs at freelancers who have lost their jobs – they’re “not good jobs to begin with”—display an almost comical caricature of a “let them eat cake” legislator.

    And yet it’s probably safe to assume that this cunt will be reelected, and probably by a wide margin.

    1. Well of course she will… she knows what’s best for others. And since Californians know what’s best for themselves, they know to vote for those politicians who are going to make them do what’s in their own best interest. I mean, what kind of a careless idiot would vote for someone who is just going to leave them alone and let people do harmful things to themselves and society.

  10. I don’t understand how these types of carve outs do not violate the 14th? Isn’t the law supposed to apply equally to all? If it would not apply to Uber should it not also apply to any other business that uses the same model? Would like to hear Eugene V’s take on this.

    1. It does some are more equal than others. Also (D) legs good other legs bad

    2. To the best of my knowledge, the 14th Amendment applies only to natural persons, not to organizations. I’d be happy to be corrected if someone knows of a counter-example, though.

      But even if the 14th clearly applied to corporations, carve outs are legal because they depend on legislative determinations that the two situations are not actually equal. Consider that the law allows all citizens to vote but we still deny the vote to 3 year olds (and not just because they can’t reach the levers).

      For a less silly example, progressive taxation where people with higher incomes pay more than the poor. Or more on point, professional licensing where a medical doctor has to be board-certified but a hair stylist does not.

  11. I moved out of California a couple of years ago. I worked in management for IT and cloud services. Even then, the lengths we had to go to to satisfy hiring a contractor as opposed to an employee were ludicrous, and that is not hyperbole.

    To go with this was that most contractors in IT/Ops WANTED to be contractors. They liked the freedom to move from job to job, and to try out new things.

    I’m so glad I’m out of that shithole.

  12. Anyone have an actual source for the Walter Williams quote? Linking a quote which is just the quote without proper sourcing is, well, useless. Especially given how frequently many of those sourceless attributions are wrong.

    1. Williams has used that phrase frequently in interviews and in his columns for many years.
      Here is one occasion from 2003

      https://www.capitalismmagazine.com/2003/10/capitalism-and-the-common-man/

      Of course that doesn’t mean he was the originator of the phrase.

  13. Californians like Uber and Lyft. Many young people don’t even bother buying cars now. They live in the City, take a shiny new Google bus to work, and call an Uber when they want to go out (they’re going to get drunk anyway).

    So they probably will vote an exception to the stupid law for the service they like, and keep the stupid law for all the contractor services they don’t think about.

  14. So, the very entities that the legislation was targeted at in the first place will get a carve out leaving us to wonder what exactly the purpose of the law is going forward.

    Yup, sounds like California.

    1. Trump should out CA under martial law. They would have more freedom than how it works now.

  15. In the interests of a free society, they should carve out an exception for everyone.

  16. It would serve Californians right to have to go back to smelly cabs driven by surly drivers.

  17. A 2013 report from the Center on Policy Initiatives found that “taxi drivers earn a median of less than $5 an hour”

    found Uber drivers earned an average of $23.25 an hour, which is close to the city’s median wage and is nearly 50 percent more than taxi-driver earnings.

    Does not compute. I realize different cities and up to 7 years apart, but 50% more than $5 is still only $7.50, 1/3 of the other.

  18. And the final endgame is apparent: Only those who are connected enough to get exemptions are allowed to work as they wish.

    I wonder who this will fuck over, again? Certainly it won’t be the working-class poor, because the Ds are the champion of such people!

  19. Bureaucrats cannot for the life of them imagine how a person could survive in this world working as an Independent Contractor. What with their government-paid steady paycheck, healthcare, retirement plan, bureaucrats are scared out of their wits imaging a subsistence strategy that doesn’t rely directly on “big brother”.

    Apparently, such constant government teet-suckling strips them of their independence, which they project on others, and naturally respond by trying to “protect” others from such a horrible fate.

    Thanks but no thanks.

    Jim in Colorado
    Self-employed, Independent Contractor since 2005
    Giver-of-the-Finger to my last boss, in a government job that was crushing my soul and stripping me of my sense of identity.

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  21. Politicians have hated Uber and Lyft from the very beginning. A lot of that probably has to do with the plummeting value of taxi medallions. Likely Uber has cut off other cash flows to city governments and they want it back. That people like Uber is irrelevant as far the pols are concerned, unless it really looks like they might get voted out.

  22. The steps of this disaster:

    1) Unions eye Lyft and Uber riders and want them unionized
    2) They push for and get AB5 passed
    3) AB5 applies to thousands and thousands more independent contractors than just Lyft and Uber drivers
    4) All those contractors are out their income (often high-skilled women looking to keep their feet in the workplace while raising kids)
    5) Uber and Lyft get Prop 22 on the ballot to get just them and other rideshares exempted from the law
    6) Prop 22 passes (hopefully) and ONLY the unintended contractors are out of work as rideshare workers head back to their cars.

    CA is doomed.

  23. Are they successful, though? Word on twitter is that they’re bleeding money.

    Public transportation is a muted affair in So Cal. You hardly see Taxis outside of airports. I think Uber and airbnb meets a certain short term need for the middle class, but if they all went out of business and hotels and taxis reclaimed their territory, the only real losers are people who made money on those endeavor.

    Uber is a shining example of liberal hypocrisy. They were founded by Obama team players who knew the contract model would thrive in the ACA economy. They just got bit by their friends who perennially resent the wealthy and powerful.

    1. Both companies are bleeding money, but some of that is to be expected when you’re dealing with bullshit like this across the country. If they can’t beat you with competition, they’ll drown you in red tape.

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