There seem to be another one of these stories cropping up every week. The state of California has been waging a war on the gig economy for quite a while now and they may wind up winning, assuming they can drive the companies involved (along with most of their workers) out of the state. Uber, Lyft and Airbnb are the state government’s favorite targets, but there are other, smaller services feeling the pinch as well. Also, writers are being shut out by these recent actions.
At Forbes, Paco Freire takes a deep dive into the impact this is having on the economy and the affected workers. What Governor Gavin Newsom is really doing is driving California’s share of a national “freelancing” boom (adding up to nearly a trillion dollars) out of the state’s economy with few discernable benefits to anyone. And all of this activity centers on the recently passed Assembly Bill 5 (AB5).
According to the Freelancing in America survey, there is a reported 57 million American freelancers contributing an excess of $1 trillion dollars to the economy each year. Recent data shows more than 75% of freelancers are working independently by choice. Due to the accessibility of apps and sites like Upwork, Instacart and Uber, to name a few, people can work on terms they prefer and accept opportunities that feel right for them.
If freelancers are reclassified as employees, they’ll have to trade in their freedom for structure, potentially losing their ability to set their own hours. Of course, that’s only if the company chooses to continue the relationship and convert them into an employee. Lorena Gonzalez, author of Assembly Bill 5, insists the goal of this law is “to create new good jobs and a livable, sustainable wage job.” Supporters emphasize the benefits and protections gig workers will receive such as health care subsidies and a guaranteed $12 state minimum hourly wage, but fail to address the consequences of the new law.
Most of our focus when dealing with this subject in the past has been on car services like Uber and Lyft or Airbnb. But Forbes highlights another sector of the economy that’s taking a hit. Freelance writers (a subject I personally should have been more in touch with) are falling into the same trap as drivers and people renting out spare rooms. The new law only allows freelance writers to submit 35 items for publication per year before they must be classified as an “employee” of the publishing outlet and receive full benefits.
For any of you who have worked as freelance writers, you know that the cap is incredibly low here. Those with full-time writing jobs may occasionally pump out a couple of articles per month for other outlets to make some extra cash and they won’t be affected. (I do that myself.) But there are many writers who do nothing but freelance work, either because they can’t find a full-time gig or they simply prefer the freedom that life offers. Those folks may be sending out 35 submissions every month in the hope of getting a decent amount of them accepted.
Under these new rules and the “ABC Test” they impose, publishers will either cut back significantly on the number of pieces they accept from freelancers or do away with them altogether, perhaps in favor of hiring one more full-time writer. And what will the freelancers do at that point? If they’re smart, they’ll give up on California, pull up stakes and head to a new location offering more freedom to structure their work schedule as they please. And considering how many writers are fighting for jobs writing in Hollywood, that could make for a significant exodus of talent and the taxes they pay.
The L.A. Times was sounding the alarm earlier this year in terms of this exodus. The state is currently experiencing its slowest population growth in history. The only reason they’re not technically losing population is the high numbers of “international migrants” flooding into the state. The net migration of people moving in from or out to other American states has been negative for the past five years, as more and more middle-class workers simply can’t afford the cost of living there.
Well done, Governor Newsom. You’re well on your way to gutting your own state and refilling it with people who are the least likely to drive the economy upward.