Ride-hailing, food and package delivery, and personal services are ways that Americans are earning money while maintaining flexible schedules.
That is at risk in California now, after the legislature passed a new bill that requires gig economy workers–or contract workers–be reclassified as full-time employees of tech companies. It builds on legal cases in California that have established tests for classifying drivers.
This will hurt workers – especially women – who value flexibility over set schedules.
Ride-hailing companies like Uber and Lyft argue that they are technology platforms that facilitate different services, first and foremost. That Uber has, for example, expanded into food delivery through Uber Eats is a great example of this. To suddenly reclassify all of their drivers, who are not just full-time taxi drivers but regular people driving a few hours each day or week, will have negative implications.
Here’s what could happen because of AB5:
Ride-hailing companies may institute shifts — eliminating schedule control and flexibility. That’s exactly what drivers do not want. They don’t want to be told when to start accepting rides or prohibited from driving because it’s not their shift.
Getting a ride may get harder and more expensive. Ride-hailing operates like a free market in that it rapidly responds to the changing needs of the market. When many people need a ride at once (such as during bad weather or late nights/early mornings), surge pricing kicks in to attract more drivers onto the roads. The increase in supply drives the price per ride down eventually. However, if there are a limited number of drivers at any time, the cost per ride will remain high and there will likely be fewer drivers to serve the needs of customers overall.
Drivers may only be allowed to work for one ride-hailing service at a time. That’s what Uber and Lyft told drivers in a notice.
More fare hikes and price increases. To guarantee a basic minimum wage and benefits to workers as AB5 does, employers will pass those costs onto customers by hiking fees.
Other states will follow. California is a leader in driving forward such types of legislation. Other left-leaning states are likely to pass similar measures. The irony is that the gig economy is popular in major, urban areas in left-leaning states, so it’s those workers and customers who will suffer most.
Women are especially likely to suffer from these changes because of how involved they are in the gig economy.
Freelance work is very popular today. The gig economy is just one facet of freelance workers. One in four Americans–according to Pew Research–has earned money through an online platform. Another study estimates that nearly 44 percent of women now have a side gig and 54 percent of moms with children under age five have more than one side hustle. They make their own hours, work as much or as little as they want, earn as much as they want, and pay taxes to Uncle Sam themselves. They may not get the benefits that a traditional 9-5 job carry, but they are just fine with that.
Think about a woman driving for Lyft while her kids are in school or a college student delivering food for DoorDash on campus.
Flexibility, schedule control, and unlimited earning potential are benefits to women. These are direct threats to unions.
That’s why dwindling unions have teamed up with advocacy groups and left-leaning lawmakers to push for labor regulations to redefine contractual work relations. They want to apply outdated labor regulations to the changing workforce.
I can only imagine that cab drivers are celebrating over AB5.
Although the bill is passed, the fight is not over. A compromise may be worked out and tech companies may push for a ballot initiative to overturn it.
We will keep you posted on how California’s efforts unfolds as it is sure to be a major state and national issue in the future.