Unions Lost a Major Battle in Their War on the Gig Economy

Nearly 60 percent of Californians approved a proposition to exempt Uber and Lyft from most of Assembly Bill 5.
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Should Americans be allowed to freelance? Progressive Democrats have been pushing legislation at the state and federal level that would force gig economy companies like Uber and Lyft to make all of their independent contractors full-time employees.

But that movement had a major setback in the 2020 election when California voters came out in favor of Proposition 22, which severely limits the impact of a 2019 law that, as it was originally written, could have wiped out the state's freelance economy.

The law, Assembly Bill 5, had already been weakened by several carve-outs. But Prop 22 deals a massive blow to A.B. 5's original intent because it means that Uber and Lyft drivers will be mostly exempt from its requirements.

Back in May, Democratic presidential contender and former Vice President Joe Biden called attempts "to gut" A.B. 5 "unacceptable," urging Californians to vote no. Nevertheless, in this overwhelmingly blue state, almost 60 percent approved Prop 22 at the ballot box.

When Reason covered A.B. 5 earlier this year, its most vocal opponents turned out to be freelance writers.

Randy Dotinga, a left-leaning San Diego-based freelance journalist, said at the time that "this is a really unusual position for people in creative fields like freelance journalism to be in…By nature, most of us are liberal, progressive Democrats. We're also pro-union for the most part. And here we are saying this goes too far."

Conservative journalist Kassy Dillon agreed, calling A.B. 5's supporters "people who don't get it…They're activists. They're cutting people off from opportunity."

It didn't occur to California lawmakers that many freelancers prefer the flexibility that comes with being an independent contractor.

Like many other companies, Vox, which supported A.B. 5, ended up cutting its staff of independent contractors because it couldn't afford to bring them on full-time.

Labor activists and progressive lawmakers were, in effect, deciding on behalf of workers that if they couldn't have a full-time job with benefits, they would be better off having no job at all.

"For us, this is about focusing on ensuring that jobs are good jobs," Coral Itzcalli, a spokesperson for Mobile Workers Alliance, which is trying to unionize the industry, told Reason. "If we have one or 100 jobs that are paying less than minimum wage, there is absolutely no benefit. I would rather have 50 good jobs than 100 bad paying jobs."

Although the law applied to freelance writers, its real targets were gig economy startups like Uber, Lyft, and DoorDash. Uber and Lyft said that if A.B. 5 were enforced as originally written, it would cause hundreds of thousands of drivers their jobs, and may have even forced the companies to shut down operations in California.

Williamson M. Evers, a political scientist and senior fellow at the Independent Institute, a libertarian think tank, sees A.B. 5 as a trial run for national legislation with the same aim. "Basically this is a unions versus independent workers struggle. The unions are declining, except public employee unions. And so they're desperately thrashing around for people that they could organize."

The ridesharing companies spent over $200 million on Prop 22, trying to convince California voters to exclude them from A.B. 5, while the law's opponents spent roughly $20 million. Proponents of A.B. 5 attribute their defeat to the fact that they were outspent, but Evers is skeptical.

"I don't think money determines political outcomes. In 2016, Hillary Clinton vastly outspent Donald Trump and she lost anyway. It's not really determinative. The Prop 22 people had the better argument, and they took advantage of what they had to make their case to the people."

"I hope that there's some way that the labor movement can look at freelancers of all types, and say this is a valid, honorable profession," Dotinga said. "We are workers, too. And many of us choose this field. We are not exploited. We don't exploit others. We're not scabs. We're small businesses and we deserve to be treated that way."

"The real exploitation is the thing that forces people to work hours they don't want to work and in ways they don't want to work," says Evers.

Produced and narrated by John Osterhoudt.

Photos: Rick Wilking/REUTERS/Newscom; Sam Hodgson/ZUMA Press/Newscom; MIKE BLAKE/REUTERS/Newscom; LUCY NICHOLSON/REUTERS/Newscom; Deccio Serrano/ZUMA Press/Newscom;