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California Senate approves bill that requires gig economy workers to be reclassified as...

By Shawn Knight · 34 replies
Sep 11, 2019
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  1. The bill, dubbed Assembly Bill 5 or AB5 for short, was approved by a 29-11 vote along party lines and is destined for the state Assembly where it is expected to be given the green light. From there, it’ll find its way to the desk of Governor Gavin Newsom who openly supported the measure in a Labor Day op-ed. If passed, it'll go into law on January 1, 2020.

    Proponents of the bill claim that companies like Uber, Lyft, Postmates and Instacart classify workers as independent contractors in order to avoid paying minimum wage, overtime, workers’ compensation and unemployment insurance.

    State Senator Maria Elena Durazo, D-Los Angeles, said there’s nothing innovative about underpaying someone for their labor and basing an entire business model on misclassifying workers.

    Those opposed to the reclassification – both companies and workers – say they value the flexibility afforded by independent contractors. Some are also concerned that the added cost of doing business under the new classification – which could add 30 percent to labor costs – may result in poorer service and higher prices for customers.

    Several professions including dentists, insurance agents, lawyers, hairstylists and commercial fishermen were able to talk their way out of AB5 because they typically set their own prices and negotiate directly with customers (remember, most things are negotiable if you just ask). Lyft, Uber and other gig companies tried but failed to negotiate an exemption, the San Francisco Chronicle said.

    Masthead credit: Brittany Hosea-Small. Window stickers by David Tonelson

    Permalink to story.

  2. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,635   +1,232

    "Gig Economy" is basically a new term being used to define "Underemployment" where a worker is working "full time" at multiple jobs but isn't earning health benefits or vacation time or even sick days.

    Unscrupulous workers out there keep their employees working just short of being legally forced to provide these benefits (less than 40 hours for example).

    California, not surprisingly is forcing businesses to reclassify them so the business will be forced to pay those benefits.

    But that doesn't work.

    Many of these Gig businesses have red balance sheets already.

    Most of them absolutely can't afford - nor are constitutionally liable to pay benefits that weren't in the contract.

    This is a reason states like California are out of control welfare states and losing so many citizens - especially job creators - to other states without such laws
  3. Hexic

    Hexic TS Evangelist Posts: 546   +381

    ^ this
    QuantumPhysics likes this.
  4. Evernessince

    Evernessince TS Evangelist Posts: 4,183   +3,793

    This bill doesn't target companies that keep their employees under a certain number of hours. It's targeting companies like uber, that misclassify their main source of labor as contractors.
    mbrowne5061 likes this.
  5. kevbev89

    kevbev89 TS Maniac Posts: 204   +176

    Problem is Uber is losing money. Like a lot of money every quarter
  6. Lew Zealand

    Lew Zealand TS Guru Posts: 837   +730

    Or not.

    CA population is increasing.
    CA GDP is increasing (3%/yr).
    CA is the 5th largest economy in the world.
  7. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,635   +1,232

    "Population increasing " is due to the state being a sanctuary city and hosting residents known for having large families. .

    I'm talking about Working Californians who are leaving the state due to overtaxation. That state lost more than 12 million people within the last decade.
    TheBigT42 likes this.
  8. Bluescreendeath

    Bluescreendeath TS Guru Posts: 183   +267

    A better indicator is GDP per capita (average wealth per person), as GDP can increase but the average person can get poorer if population grows faster than the economy. It's increasing about 2% a year and is slightly higher than 2006 levels as it has recovered from the recession dip of 2008-2010.
    Last edited: Sep 11, 2019
    TheBigT42 likes this.
  9. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 3,164   +1,416

    I wouldn't have called it 'underemployment'. it's complete freedom for the workers. Work when you want, however much you want. there are no sick days because you can take EVERY day as a sick day if you want. It's perfect for a 2nd job that you do on Sat nights when rates are higher. I'd like to know how many Uber drivers have Uber as their full-time job (and aren't retired already). If you're trying to use Uber to make a living that's another whole problem in itself.

    I'm of the opinion that people should have the freedom to choose a job like Uber where you can work at your own pace.

    regardless - Uber rates in CA are about to go WAY up. And that means fewer riders, which means fewer drivers. Some drivers will get new benefits, some drivers will get laid off. Many people who used to drive for Uber as a 2nd job won't be able to anymore.

    Uber just had their largest ever loss last quarter at $5.24 BILLION. I'm not sure where CA expects them to find the money to pay benefits.
    Hexic likes this.
  10. Hexic

    Hexic TS Evangelist Posts: 546   +381

    CA is too worried about social issues to worry about economical ones. They’re the 5th largest economy in the world because their land is geologically fertile as hell, and it’s really hard to screw up farming. They have a vast amount of natural resources, and they have a large chunk of the technology industry.... yet as a state they are still unsustainable.

    The policies are what they’re failing at. If you don’t agree with that, then you must be a Californian.
    m3tavision likes this.
  11. Lew Zealand

    Lew Zealand TS Guru Posts: 837   +730

    What is the point of these numbers other than bias? If you're claiming that only poor people are left then why is the state's per capita income increasing?


    Here's Texas as a comparison:

  12. Todd Sauve

    Todd Sauve TS Rookie

    Since this is a technology website, what on earth does Uber, et al, have to do with it? This seems widely outside the purpose of Techspot.

    However, Uber and others like them, have destroyed the taxi business and their drivers who have many more legal and technical responsibilities to their cities. Uber basically does nothing to even vet their drivers or force maintenance standards. If Uber went belly up, it wouldn't bother me at all. They are financial sharks and parasites on the economy, exploiting working people and corrupting the political process.
    m3tavision and Indekkusu like this.
  13. bandit8623

    bandit8623 TS Addict Posts: 158   +58

    the taxi biz was so overpriced and even more crooked than what uber is now. its improved actually.
  14. Indekkusu

    Indekkusu TS Rookie Posts: 24   +13

    What a load utter crock! California is not losing citizens. When these companies that abuse their worker, exploit their community, and destroy peoples lives are actually called out, then people as whole are recognized to be more important than profits. If their business model is about losing money and buying market share so they can then apply monopoly powers later, these business needs to be stopped before it is too late. And this is a good start!
    Irata and CloudCatcher like this.
  15. Irata

    Irata TS Enthusiast Posts: 36   +36

    Problem is Uber & Co are replacing properly licensed benefit and tax paying "old" economy players.

    If they still cannot make money, then either they have a really bad business model or perhaps they have a more long term business model to raise their prices once they have managed to eliminate the existing players.

    Or the business model was simply to cash in on their IPO ?
  16. Todd Sauve

    Todd Sauve TS Rookie

    The taxi business, or more correctly the people and corporations who own it, and the politicians who do their bidding, are indeed corrupt in my experience. The drivers are basically enslaved to them and have no say in anything--especially pricing..
  17. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,635   +1,232

    Tell that to the growing number of homeless in their tent cities.
    m3tavision likes this.
  18. m3tavision

    m3tavision TS Evangelist Posts: 328   +213

    That is BECAUSE these companies business model is a falsehood & really don't work.

    These fake propped up companies are 100% about the stocks and the ticker, and they use their employee as the gold digger. If they pay these Taxi Drivers exactly what they are worth, the company would've have such a large revenues and billionaire executives. It would just be a normal business that struggles to provide exceptional service.

    Easy money for CEO when all the employees are not actually employees....

    BTW.... getting a lift should not be cheap, it should cost you. People should pay, if they don't want to own a car, or take public transportation. See Taxi..
    Indekkusu and rub900 like this.
  19. m3tavision

    m3tavision TS Evangelist Posts: 328   +213

    Sorry, but everyone knows that the middle-class is leaving costly California. It has gotten so expensive to live there (due to politics, taxes and house pricing), that there is a mass exodus of people leaving the state to live elsewhere. There are news stories about this every month.... Where have you been..?

    The logic is easy:
    Why live & work in a state, that takes in 500,000 illegals every year and wants to give them free everything, while you work hard, to provide it for them.
    Last edited: Sep 12, 2019
  20. Hexic

    Hexic TS Evangelist Posts: 546   +381

    My family resides in the Phoenix area - and all four quadrants surrounding the city itself (still technically PHX metro) are FLOODING with people from Illinois & California. People are escaping poor economies and horrible policy making (I.e. taxes, corruption) for AZ.

    I have heard this straight from the lips of the people living in my housing addition there. So yes, people ARE leaving CA due to the trainwreck the state is, in addition to one of it’s other delinquent brothers, Illinois.
    QuantumPhysics likes this.
  21. rub900

    rub900 TS Addict Posts: 121   +68

    Good. They need to go out of business. That is how the market should work. Bad companies losing money need to go.
    Indekkusu and bandit8623 like this.
  22. gamerk2

    gamerk2 TS Maniac Posts: 295   +185

    Which is a byproduct of rapid economic growth. More people with more money leads to higher prices. Seattle is going through much the same thing, as are most places that have growing tech sectors. And since building space is limited, there's limited ability to rapidly produce more places of living to drive down prices (and even then, there's no financial incentive for prices to drop while demand is steady).

    I'd argue this is a perfect example is why government should be more active in the economy then it is. In this instance, the government should provide at-cost housing for those who are priced out by rising inflation. This would also slightly (though not significantly) act as a damper on rising housing prices.

    What people need to learn is that rapid growth always leads to inflation; that's why (for example) the Fed *really* hates low interest rates. A good historical example of how rapid economic growth can cause significant economic problems would be the Spanish Empire after it expanded into the Americas; because of the inflation caused by the sudden influx of silver and gold, the Spanish Empire fell apart after barely a century of exploiting the America's.
    Indekkusu likes this.
  23. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,635   +1,232

    Low Inflation causes false economic growth. Trump's talking about negative interest rates as a way to sucker people into spending more money.
  24. gamerk2

    gamerk2 TS Maniac Posts: 295   +185

    Ideally, you want inflation to be slightly lower then wage growth, leading to a steady growing economy. That's the job that Congress created the Federal Reserve to do: Keep inflation stable.

    Also consider that low inflation is typically a sign of low consumer spending, so the fact inflation has been low for an extended period despite low interest rates indicates that wealth is not being spread around evenly. If you had an even distribution of wealth, you would expect inflation and consumer spending to roughly match.


    Note the zero, or even negative interest rates can be a good economic tool to jump start economic growth during/after a recession, but such actions can lead to out of control inflation if left low for too long.
  25. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 3,164   +1,416

    you have to be careful of how you say it. California is losing people who have lived there for a long time.
    They are very very slowly increasing population because of immigration. https://www.latimes.com/local/lanow/la-me-ln-population-growth-20190501-story.html
    Considering immigration and births, the only way to keep growth at about 0% (where it is now) is for many people to leave.

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