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Protecting Gig Workers the Right Way
Labor laws that try to fit a square peg into a round hole are not the answer
🌭🍔 As we approach another Labor Day holiday in the U.S. (most of the world celebrates it on May 1st each year), it is a good time to look into the gig workers' current state of affairs and think about which direction it should go.
Just a quick qualifier: gig work has been around forever. I am explicitly analyzing the gig work movement of the last 15-years.
Conscious of the risk of oversimplifying this topic, we can say that gig workers:
Benefit from flexibility, so much so that recent surveys show this a highly popular feature among gig workers (positive for gig workers)
Lack employment benefits and any safety net, the current COVID events are very telling (negative for gig workers)
Do not make nearly enough for a reasonable standard of living (negative for gig workers)
The question becomes: how could we balance things out, keeping the positive while addressing the negatives? The answer is progressive legislation.
Part of the problem is that left alone, oligopolies that depend massively on gig workers have no incentive to address the last two bullets and will leverage the first bullet to justify keeping things the way they are. For them, addressing the second bullet would increase labor costs by more than 30%, to account for payroll taxes and employee benefits. Addressing the third bullet would cost the oligopolies even more. It would be hard to pass those costs to customers; demand would suffer.
Despite its good intentions and being one of the first legislative pieces to attempt to address these negatives, California's AB5 law* fails to recognize the reality of gig workers. It tries to fit a square peg into a round hole: gig workers do not fit regular employees' profiles. The majority of gig workers enjoy the new arrangement's flexibility and would appreciate making a "living wage" and having some safety net (e.g., paid sick days, health insurance benefits, unemployment benefits).
Progressive legislation is not meant to make everybody happy. It is intended to improve the current state of affairs in a balanced way, providing immediate relief while setting the ground for further progress down the road.
The gig economy absorbed millions of workers since the great recession of 2008. We are collectively better off because of it, but time showed that it was not as good as it seemed. It needs to be improved.
Legislators need to do the challenging and nuanced job of accommodating for the gig economy. Legislative pieces like AB5 are likely to cause more harm than good. Gig workers will, for one, lose the valuable flexibility. And they also run the risk of losing the "gigs", as higher costs passed to customers will impact demand downwards, requiring fewer gig workers.
The time is now for lawmakers to act with urgency. Ride-railing gig workers, now in the millions, are a few years away from being massively replaced by autonomous solutions, to nobody’s fault. That is just the way it is. Robots will not need labor law protection.
*Assembly Number 5, passed in September of last year and effective since last January.