The Washington PostDemocracy Dies in Darkness

Opinion The gig economy has costs. We can no longer ignore them.

An Uber logo on a car on April 24, 2018. (Salwan Georges/The Washington Post)

Lorena Gonzalez, a Democrat, is a California state assemblywoman who represents San Diego.

The night before Lyft went public as a company back in March, I used an app to hail a ride in San Jose. I asked the driver, Joseph, about his job. He was a single dad with four kids. He started driving five or six years ago to supplement a part-time job and, at first, he was making good money.

Back then, Joseph figured, if he quit his job and instead drove 60 hours a week, he could make almost $2,000 before expenses and taxes. So, he started driving full time.

But eventually, he said, the companies he drove for paid him less and revised their bonus programs. His expenses stayed the same, but the hours he worked were inconsistent, at best. Joseph had no health insurance, no workers’ compensation and no unemployment insurance. If he got hurt while driving, he would likely wind up in the emergency room, on the public’s dime.

The next morning, I watched as Lyft went public and the company pegged its initial valuation at more than $20 billion. Its top executives and venture investors witnessed a financial windfall in the value of their shares, which reached hundreds of millions — even billions — of dollars. Meanwhile, working the same 60-hour week, Joseph estimated he was earning less than $1,000 a week. That’s just slightly more than the minimum wage of $15 an hour in California.

California is home to more millionaires and billionaires than anywhere else in the United States. But we also have the highest poverty rate in the country. One contributing factor is we have allowed a great many companies — including “gig” companies such as Uber, Lyft, DoorDash, Handy and others — to rely on a contract workforce, which enables them to skirt labor laws, exploit working people and leave taxpayers holding the bag.

By some estimates, more than 4 million Californians are part- or full-time “gig” workers. Typically, they are not paid a minimum wage or overtime. They don’t have employer-provided health insurance. They do not earn workers’ compensation, unemployment insurance or paid sick days. And without the employer contribution to Social Security and Medicare, these workers represent a ticking time bomb that will make California’s unfunded public pensions look like a small problem. I believe society must defuse this economic time bomb; otherwise, we will live with the consequences.

California taxpayers already fund a number of programs — Medi-Cal, CalWorks, CalFresh, subsidized housing, free lunch programs and even the earned-income tax credit — to help those left behind by society. But the gig economy — and the absence of worker protections that come with it — is nothing short of a modern-day sharecropping business. And the model costs California $7 billion annually in lost tax revenue. It puts businesses that abide by the law at a competitive disadvantage.

In 2018, the California Supreme Court in a bipartisan, unanimous ruling tried to draw a clear line. In the case Dynamex Operations West v. Superior Court of Los Angeles County, the court said if you are a worker doing work that is central to the company’s business model and are under its control, you are an employee.

My measure known as Assembly Bill 5, which passed the California Senate on Tuesday, enshrines this decision into state law and thus guarantees to those workers the normal rights and privileges — and benefits — enjoyed by most employees. The measure will protect the rights of millions of workers and save California taxpayers billions of dollars annually. The exceptions we have included will ensure that independent contractors in professions where people have the ability to negotiate for themselves — such as doctors, lawyers, insurance agents, real estate agents, accountants, hairstylists and freelance journalists — are protected.

If workers want to go into business for themselves as independent contractors, they will continue to have that choice after AB5 is signed into law. There will always be a place in the California economy for those who want to be their own boss and contract their services to law-abiding businesses. But the time is up for unscrupulous employers who claim their workers are “independent” in order to cut corners on costs.

A number of well-known gig economy companies spent $90 million to kill my measure. When that failed, they worked behind the scenes to water it down. They have claimed the measure will eliminate the flexibility in workers’ lives. To be clear: There is nothing preventing these companies from offering flexible scheduling to employees. Flexibility is and will always be at the employer’s discretion.

But it is time to stand up for the rights of workers like my driver Joseph. They deserve better, and we can no longer afford to look the other way.

Read more:

The Post’s View: Want to help poorer Americans? Tax Uber.

Amber Petrovich: I’m a gig worker. I understand why you don’t give me benefits. But please do.

Robert J. Samuelson: Is the gig economy a myth?

Megan McArdle: Uber and Lyft are losing money. At some point, we’ll pay for it.

Megan McArdle: Uber and Lyft are everything we love about capitalism — and everything we hate