California Governor Gavin Newsom is nothing if not inconsistent. He recently passed a bill making it illegal to suspend disruptive students from kindergarten to eighth grade, thereby ensuring disruption keeps putting the state in the lower ranks in terms of overall education.
Now comes the news that Newsom is poised to end disruption when it comes to the gig economy that has produced millions of jobs. According to the L.A, Times: "The 6,700-word bill is one of the most controversial of the year. It could upend the relationship between workers and bosses across businesses as varied as ride-hailing tech giants, construction, healthcare, trucking, janitorial services, nail salons, adult entertainment, commercial fishing and newspapers."
While advertising is not specifically mentioned here, I know for a fact similar measures are already impacting freelancers in California. Some of my freelance friends are now being offered "benefits," they don't want such as a 401K after a few months of employment as well as health care and worker's comp. (Has anyone in advertising ever used worker's comp?) These and other such benefits come with a price: a much lower day rate. And I suspect although I don't know for certain, shorter contracts that prevent one from taking advantage of most of the benefits that don't kick in right away.
I can't say whether this is happening around the country or if it's only in California, but some friends who used to make 1500-1800 a day as senior-level and above freelancers now make closer to 1000 a day. Is it worth the chance to throw a portion of your paycheck into a 401K for one or two months? Or is it worth paying 1,000 a month for "adequate," healthcare for a job that might not last that long?
The bill is being touted by supporters as standing up for employers rights, and ensuring contractor and employer alike get the same benefits such as sick time, paid leave, workers comp and unemployment, others see this move as destroying the gig economy and California's entrepreneurial spirit. Many of these companies are pumping millions of dollars into lobbying against the bill.
As the Times points out, “...enforcing the law against multibillion-dollar app-based technology behemoths, with a California workforce estimated at some 400,000 full- and part-timers, could involve protracted battles."
Even the employees have mixed reactions. Some are concerned that by becoming employees as opposed to contractors, they'll have to commit to one company (Uber over Lyft) rather than having the option and the freedom to work for both.
Discard the heartfelt speeches and what this is really a battle between three corporations, each pretending to care about the employees, who all have a financial interest at stake. The government wants more taxes, the unions want more union members (and their dues) and the corporations want to keep as much money as possible.
Like everything the government of California does, the law is messy, ineffective and already corrupt. There are plenty of exemptions to this law, which one assemblywoman said apply to “the trade groups with the best lobbyists."
It is too soon to say how much this will affect California's economy, or whether the result will be positive or calamitous. When Seattle raised its minimum wage to $15 an hour, the number of new people entering the workforce dropped. Wages went up, but the number of people entering the workforce dropped and hours were cut, ..so much so that low-wage workers ended up poorer to the equivalent of about $74 per person, per month. A follow-up study found this pain was mainly shouldered by workers without prior experience, who found it harder to get hired," according to a study reported by NPR.
The number of low-wage workers in Seattle is small, and a minimum wage hike is not the same thing is changing the employment status of a million people in California. But Seattle has still affected whether most people noticed or not. It would be foolish to think California won't feel seismic repercussions across the state. Whether they will be good for workers remains to be seen. But generally, whether it’s a traditional corporation, a government wanting more taxes or unions wanting more dues, it's a safe bet the ones who will get screwed will be the employer, or contractor or whatever their designation will be.