More politicians have their sights on restricting and regulating gig work, and they are coming for it during the worst possible economic times.
May 18, 2020
By: Bobby Casey, Managing Director GWP
I’m reminded of an old fable of the oak and the willow. A storm comes and the willow loses its leaves, but all its branches stay intact. The oak is toppled. As the story goes, there is virtue to how the oak staunchly resisted the storm, despite ultimately meeting his fate; and likewise the willow is merely preserved by its cowardice yielding to every force brought by the wind.
Certainly there is a time for obstinacy. There is also a time for optimization.
The unions are desperately fighting for the current template of 40 hour weeks, paid salaries, higher minimum wages. Governments are also fighting for that as they stand to gain a lot more in taxes from full-time workers versus contract workers.
There are some very powerful people who are incentivized NOT to let this evolution of labor happen.
They are the oaks.
On January 1st of 2020, California passed AB5 which basically placed arbitrary restrictions on gig workers of 35 jobs per client. It’s arbitrary in the sense that the bill originally drew the line at 26 gigs, and then was benevolently lifted to 35. There’s no science or statistics behind why that limit was chosen, just that a cap was needed.
A freelance reporter, for example, can submit 35 articles to each publication. This lead to a lot of gig workers losing their contracts altogether.
The author of this piece of legislation is an assemblywoman out of San Diego by the name of Lorena Gonzalez.
She called publishers like Vox, who incidentally laid off several freelancers after this law passed, “vultures” and said, “These [gig jobs] were never good jobs”.
If you don’t know her for this, you might recognize her as the one who cursed Elon Musk on Twitter for wanting to reopen his factory in Alameda County and threatened to leave California altogether if California didn’t reel in their shut down policies.
Whomever she’s fighting for, it certainly isn’t the little guy! Fast-forward to now, and AB5 is hurting people. With unemployment at 36 million and climbing, people are looking to gig work to bridge the gap.
On Thursday, May 14th, in a state Senate Labor, Public Employment and Retirement meeting, the matter of AB5 came up:
“…[O]fficials heard arguments for and against pushing forward SB 806 and SB990. The bills — put forth by Republican senators John Moorlach (R-Costa Mesa) and Shannon Grove (R-Bakersfield) — aimed to immediately suspend and amend the disastrous AB5 legislation that killed independent contracting/freelance jobs across the state.”
Senator Hannah-Beth Jackson, a representative out of the Santa Barbara area, stands shoulder to shoulder with Lorena Gonzalez, had this to say about AB5:
“I appreciate that some independent contractors are upset. AB5 took away their lollipop.”
This brought on bipartisan ire on social media. Basically trivializing gig work as if it were just a treat, but not a real meal ticket. But what do these two know about value? They certainly have never brought any to the California economy, yet they feel they are in a position to decide what is valuable to workers and businesses?
What if the flexible hours and write-offs are more valuable to gig workers? What if they have a medical condition or a family situation that makes the W2 life impossible?
What if the creative folks in that space value their intellectual property rights to their work? Did the legislators even consider the fact that these individuals relinquish their copyright ownership to their employers when they switch to W2 employees? Or is that not a consideration?
Bad policies such as they are, of course the hope is that it stays contained in California. Nope. Our girl Elizabeth Warren is here to bring this piece of legislation to the entire country! Once again, a rally cry to end the “oppression” of gig work.
No doubt it is in the financial best interests of many businesses with limited means to hire contractors. They don’t compensate them the same way. But they don’t control them the same way either. A contractor’s scope is far more clearly defined, unlike a W2 employee who not only has to defend their relevance but also take on work they never signed up for to prove they are “team players”.
While in some cases, gig work might not be ideal, it does serve as a launch pad into new careers or a stopgap during difficult times. Regardless the circumstances, they are not for politicians to determine which are valid and which are not.
It’s clear they didn’t even bother consulting the workers themselves:
“A 2019 study by Edelman Intelligence, Upwork, and the Freelancers Union found that 8 out of 10 independent contractors prefer to work independently. Contrary to Warren’s characterizations, over 80% of independent contractors have health insurance; 1 in 5 of us make $100,000 annually or more. “
“Warren looks at app-based drivers, shoppers, and other independent contractors and sees exploitation. The truth is that many freelance workers are refugees from W2 employment that didn’t provide the flexibility they needed. Nearly half of us can’t work traditional office hours because of health issues or family caregiving duties; a similar number said they wouldn’t switch to traditional, ‘full-time’ employment for any amount of money.”
Gig work weathers economic storms like the one the world is currently seeing in response to COVID-19. In fact, it’s where businesses turn when they can’t afford a full-time employee. It might be the way forward for many, to keep risk and overhead low, businesses keep a core group of managers, but outsource the shop work to freelancers.
To survive shutdowns and other catastrophes, they businesses and workers alike will need a more modular model. There is nothing noble about losing your business to political whims and populist fear. That is nothing short of tragic.
In April, it was estimated that as many as 7.5 million businesses are set to close their doors permanently. I’m not sure what the small business loans in the “stimulus package” offset, but in many small restaurants a “COVID-19 surcharge” is added, because the stipulations to reopen are expensive to achieve.
It’s bad enough businesses were forced to shut down. But to then take the only recourse some people might have and issue this devastating ultimatum is either ignorant or malicious.
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