How AB 5 threatens the job security of California workers

Should the government decide how many stories a freelance journalist can write?

Of course not. But a California law known as Assembly Bill 5 that went into effect earlier this month does exactly that – and more. It is a sweeping effort by the government to control the future of work by denying freelancers and gig economy workers the flexibility that allows them to earn a living in the modern economy.

While union leaders cheered the legislation, working Californians are paying the price. Hundreds have already lost their jobs and thousands more are now at risk. So job one for California’s legislature as it convenes this month should be to repeal AB 5 and restore the freedom to work.

California passed AB 5 to address what it calls “worker misclassification.” Its backers argued that gig economy companies like Uber and Lyft were denying employment benefits to employees, such as drivers, by classifying them as independent contractors. So it put a thumb on the scale in favor of treating all freelance workers – from drivers to writers – as employees.

The approach fails Econ 101.

Take freelance journalists. AB 5 makes it illegal for them to write more than 35 articles a year for any one publisher. Once a writer hits that cap, will a publisher hire them on as a full-time employee to obtain story number 36, as AB 5 envisions? I don’t think so.

In fact, AB 5 is already a job killer. Just before Christmas, one publisher, Vox Media, terminated hundreds of freelance writers due to AB 5.

Thankfully, Californians are fighting back. Freelance journalists, truckers, and other gig economy workers all filed suits challenging the law. Their allies have introduced a ballot measure to overturn AB 5 while Uber, Lyft, and other app-based companies will spend over $100 million on that effort in 2020. This represents just a small fraction of the dollars and resources, the time and energy, that AB 5 is siphoning away from efforts to grow the economy and create jobs.

For its part, AB 5 cites “the rise in income inequality” as a justification for the law. But our country has a strong labor market that has only strengthened the bargaining power of workers, further undermining the case for AB 5. For example, wages for rank-and-file workers are on the rise, according to a U.S. Census Bureau report released in September, and the unemployment rate has fallen to a half-century low. And in any event, preventing Californians from working does nothing to advance an interest in income equality.

Gig economy jobs allow workers to lift their families up into the middle class. These workers are people for which 9-5 jobs simply don’t work – whether those workers are stay-at-home parents, primary care givers, students, or others that need greater flexibility to make ends meet.

At bottom, AB 5 is a product of a government that is out of step with the realities of the 21st century economy – an economy that values the flexibility, innovation, and creativity that American workers are known for. AB 5 restrains that entrepreneurial spirit and forces workers into the government’s outdated view of employment.

Not everyone is learning from California’s mistake. Other states are considering legislation similar to AB 5. In Congress, the Protecting the Right to Organize Act (HR 2474), would take aspects of AB 5 nationwide.

Policymakers that want to see paychecks grow and the economy expand should reject these misguided efforts to constrain America’s workforce. We should embrace the flexibility and opportunity that the gig economy creates.

This story was originally published January 24, 2020 at 7:00 AM.