by Tyler Durden
Thu, 09/03/2020 - 23:20 Authored by Gerard Scimeca via RealClearMarkets.com,
If
our current economy were a swimmer paddling furiously against a surging tide,
then California is determined to hand it an anchor. Millions
of Americans who work to make ends meet through freelance work in the ‘gig’
economy were recently handed virtual pink slips through AB5, legislation signed
into law last year by Governor Gavin Newsom forcing independent contractors to
be treated as employees.
With other states now looking to follow suit, it’s time Congress
address this atrocious assault on worker freedoms and economic innovation by
enacting federal standards on independent contract work. It
would be a shallow victory for our economy to rebound from Covid only to have
workers tossed out of their freelance jobs by clueless politicians seeking to
“protect” their rights.
It should surprise no one that AB5 set in motion a massive
economic wrecking ball that already has rideshare giants
Uber and Lyft packing their bags to leave the state. Requiring contract workers
to be treated as full-fledged employees in California or any state will of
course make dozens of similar gig platforms unprofitable, in effect deleting
apps right off our phones. A court’s temporary pause of AB5 last week is now
holding worker jobs by a thread, causing Uber and Lyft to temporarily suspend
plans to leave the state. If the ruling doesn’t hold,
over 200,000 freelance workers will be driven out of work and millions of
consumers will be left on the side of the road.
It is startling that in today’s modern economy California would
even attempt such a clampdown. The one-size-fits-all model
of employee-employer relationship is a relic of the distant past. More than a
third of the U.S. workforce is currently employed as either full or part-time
freelancers. This is no longer an employment niche but a pillar of our current
economy. Freelancers earn good money, often sizably more than their employee
counterparts. And despite the complaints of some interventionist lawmakers,
workers themselves are quite content with the freedom their work offers. In one
recent survey, 71 percent claimed increased work opportunities over the
previous year.
It
is concerning that other states, including New Jersey, New York, and Illinois
are considering similar legislation, which is why federal action is required, both
to protect part-time, contract workers and set a uniform standard for their
employment. The app-driven and freelance gig economy contributes $1.4 trillion
in annual value to our nation, and this critical economic engine, along with
the people who fuel it, require clear standards that will protect contract
workers’ rights as well as set clear terms for companies that employ them.
Consider that when a person loses a job at the loading dock, or
a company downsizes, there is at least some comfort that opportunity through
the freelance economy has never been greater. Regardless of education or skill
level, almost any person can earn income to pay the mortgage, keep the lights
on, or food on the table. Smartphone apps provide almost any service one can
imagine, with new offerings arising every day. The modern economy offers an
entirely new model of worker freedom that is highly correlated with
economic growth. In just over a decade technology has made
it possible for people to create a studio quality movie with just a phone, or
publish a book with just a computer. The obstacles and costly impediments to
free-enterprise such as overhead, equipment, physical location, labor, and
start-up capital are now gone. People are truly free to exchange their labor
and their talents on their terms, to the benefit not of just themselves and
their customers, but to our economic vital signs.
At
its heart the gig economy is a repudiation of government interventionism and a
corporate structure where companies held all the power. Turning
freelance workers into employees erases all the gains workers have made with
regard to their freedom to contract and puts them squarely back in the
proverbial corporate cubicle.
And
the economic harm of these ludicrous laws goes far beyond the gig economy
itself. Consider a young family contemplating a new auto purchase.
The car may be financially out of reach given their nine-to-five salaries, but
the payments quickly become affordable when the buyers supplement their income
through freelance rideshare work. Similar transactions multiplied throughout
the economy are critical to our recovery. Further, who will develop the “killer
apps” of tomorrow if developers know workers will be priced out of the market?
A hit to our tech sector is yet another broadside America cannot
afford.
Despite
what California or any state may claim, these laws don’t help the "little
guy," they hurt average workers, they hurt consumers, and they hurt our
economy when all of us can least afford it. A
tremendous engine of growth, the rapidly growing app and gig economy will be
taxed to its knees if these employee mandates spread throughout the country, a
fact that should concern us all. Who knows what apps that are now part of our
daily lives would never have seen the light of day had these crippling rules
been in place years ago? It’s time for federal
legislation to protect us from rogue lawmakers who will turn back the clock on
consumer freedoms and worker rights, and force America to hitchhike to economic
recovery.
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