Last year, California passed a very bad law, known as Assembly Bill 5. To be fair, you can make an argument it had a noble purpose, which was to provi
Last year, California passed a very bad law, known as Assembly Bill 5. To be fair, you can make an argument it had a noble purpose, which was to provide workers in the so-called “gig economy” with protections they don’t receive as independent contractors. In reality, though, it was a blunt hammer that broke far more than it fixed.
California’s law redefined the test for whether a worker is classified as an employee. That’s important because companies like Uber have built their entire business on the idea that they use independent contractors who provide services to customers on their platform.
On Tuesday, Californians passed Proposition 22, which amends that law to exclude “app-based drivers.” The ballot initiative was funded by $200 million from Uber and its ride-sharing competitor Lyft, which isn’t a surprise since AB 5 posed an existential threat to their companies. Voters overwhelmingly supported the proposition, passing it 58 to 42 percent.
Ben Thompson, who writes the Stratechery newsletter, correctly summarizes why the bill passed so convincingly. People in California like Uber, (with the exception of those in the San Francisco Bay Area, which have feelings towards Uber the company, not the idea). Thompson writes:
“Once voters were in the metaphorical booth, the fact that Uber is, well, pretty great for end users and, critically, has a direct channel to make their case to those users, made it an easy win.
What I suspect made the Bay Area different was the deep familiarity with Uber’s history of questionable tactics and scandals. This wasn’t about voting for a service you love to use, but rather supporting a company that you might feel has put your entire industry in a poor light. More succinctly, most of California voted on a service, while the Bay Area voted on a company.”
I wrote about this a year ago when California passed AB 5:
In order to understand why California’s new Assembly Bill 5, (AB 5) which has now passed both houses of the state legislature, is such a bad idea, you have to separate Uber the idea from Uber the company. That’s because Uber the idea is one of the most innovative transformations in the workforce since maybe labor unions.
To understand why, go back to the idea for a minute. The gig-economy has provided opportunities for millions of Americans to make money. That’s not the same as having a “job” but that’s the point. Many gig workers have other jobs, and many of the ones who don’t are in school or want to work part time to make a little extra cash.
That’s important context for why this is an important win for Prop 22, and for the gig economy in general. While this only applies to “app-based delivery” workers, it isn’t hard to see how this could expand to other industries and states.
That’s good news.
Right now, the gig economy is more important than it has ever been. I really hate that phrase, but in this case, it couldn’t be more true. Millions of people who couldn’t go to their day job as the world shut down over the last seven months were able to work and earn money. No, it’s not the same as having a job, but that’s not entirely a bad thing.
The gig economy provides a different type of opportunity. It isn’t for everyone. Some people want to go to work, punch a clock, do their thing, and go home at the end of the day. That’s perfectly honorable, but it’s not the only way–and it shouldn’t be.
For many people, especially the increasing number of young workers or people trying to balance other circumstances like raising a family or pursuing a degree, the gig economy provides flexibility, a chance to control your own schedule, and even earn a living.
Of course, there are trade-offs. Gig workers don’t have benefits like employer-sponsored healthcare or vacation time. That matters considering that a 2018 study found that “a core group of Uber drivers work full time (35 hours a week or more) and provide about half the rides offered by Uber.” Those employees aren’t just working a side-hustle, this is their career. Yet, they’re missing out on the benefits they would get if they were employees of Uber.
Of course, I think it’s fair to say that’s factored into the decision, and like every decision, you balance the benefits and trade-offs and decide for yourself which is best for your situation. Regardless, that’s far better than having your state pass a law that makes the decision for you, or taking it away entirely.
If anything, it might be time for a third option that provides the flexibility of being an independent contractor, with some of the benefits of being an employee. Perhaps a company could provide options for purchasing benefits based on an individual’s level of work, but at a lower cost than they could get on their own. I’m not sure what that looks like exactly, but I do know that the more control people have over the type of work they want to do, the better off they are.
This article is from Inc.com