I hate tire punctures. Specifically, I hate inconsiderate morons who carelessly (or deliberately) leave behind nails and other sharp objects on the street. Thus, I found myself needing to use ride sharing service Uber to take me from Discount Tire to my office. And in this simple activity, the concept of the free market really came alive for me.
As you may know, California is waging a war on the free market and the broader economic incentive. With the passage of Assembly Bill 5 (AB 5), otherwise known as the “gig worker law,” the Golden State made no pretenses about their wider agenda.
Under AB 5, independent contractors who make an extensive living from their craft have two choices: hope that the companies for which they provide services will hire them as full-time employees or quit working.
Although the above characterization may sound melodramatic, it’s unfortunately the sad reality. The intent of AB 5 was to protect workers’ rights. If someone is an employee in fact, but is classified as an independent contractor, the hiring company can enjoy a tax break, along with skimping out on benefits typically due a full-time employee.
But what about those who choose the independent route? That’s where the importance of free market ethos comes into play.
Free Market and the Economy
Going back to my Uber story, I had a simple need: get from point A to point B in the most efficient manner possible. Without ride sharing companies like Uber or Lyft, I must take either public transportation (cheap but slow) or the taxi (faster but expensive).
On the other hand, Uber and Lyft offer a middle ground. And millions of Americans agree that this middle ground is the most effective based on time and cost.
The presence of this recent option bolsters the economy. How can it not? Ride sharing brings together people willing to provide a service with people who need it. Everyone wins. But with AB 5, that option quickly dies. Simply put, Uber and Lyft do not have the resources to make all their drivers full-time employees.
But it goes beyond that sticking point. What about the folks who deliberately, willfully use ride sharing as a side gig? AB 5 threatens this pathway, hurting their livelihood, and directly, the California economy. After all, everyone – except perhaps Amazon – pays taxes. A financially poor tax base does absolutely nothing to bolster the broader economy.
But common sense isn’t so common in the Golden State. Thus, we may be staring at an unnecessary decline in economic output.