Truckers have blockaded the eighth-busiest container seaport, crippling imports and exports in protest of California’s anti-gig law.
According to Reuters, some 2,100 trucks are blocking the Port of Oakland terminal gates to protest the AB5 law. The blockade is choking the movement of beef, pork, green coffee, electronics, construction materials, dairy products, nuts, and more.
“Due to the strike, we have not been able to move cargoes from the port,” the director of one of the largest coffee importers in the United States told Reuters.
At the heart of the issue is California’s attempt to outlaw gig workers, similar to the measure Congress has tried to pass. The state passed a law making it nearly impossible for employers to classify workers as contractors. Lawmakers touted the bill as something that would protect workers and prevent employers from taking advantage of them, but as the trucker blockade demonstrates, not all gig workers are in favor of the law.
Many contract truckers would have to pay rental fees and other equipment costs if they were classified as employees, costs that are currently covered by the companies that contract them.
“AB5 would shut me down. I don’t have the resources to pay that kind of money,” said Carlos Flores, 42, adding that the new rental fees would cost him an additional $30,000 per month under AB5.
“I’ve invested too much into my business to go to a company and work for hourly wages,” he said.
The truckers are hoping Governor Newsom exempts them from the law, much like the exemption Uber and Lyft secured. Both companies were on the verge of having to reclassify their drivers as employees when they successfully managed to get Proposition 22 passed, allowing them to continue operating as they always have.
Should the truckers fail to secure an exemption, the future looks bleak for their prospects of remaining independent. Uber and Lyft lost in court before securing their own exemption, and the US Supreme Court declined to hear the truckers’ case.
Not many sectors of the economy can claim 2020 was a good year for them. The global pandemic and its resulting lockdowns led to desperate conditions topped only by the Great Depression. Official unemployment reached 14% in the US, and most formal jobs were too uncertain about the future to hire new workers. Unable to find traditional work, many relied on savings and unemployment benefits to survive. Still other unemployed Americans took their situation into their own hands and tried gig work for the first time.
2 million Americans tried gig work for the first time in 2020, some temporarily. While the rest of the economy struggled, gig work continued its rise in prevalence at an astonishing rate. The gig economy grew 33% in 2020, 8.25 times faster than the national economy as a whole. Perhaps the largest propellant of the gig economy’s growth was an expanded reliance on delivery service. Apps like DoorDash and TaskRabbit used people’s unwillingness to leave the house to popularize their services. These apps rely on gig workers to set their own hours and fulfill local orders at will. While lockdowns are receding, new habits have been formed by these services, and the industry is expected to reach a total value of $200 billion by 2025.
Yet gig work is not confined to delivery service. Gig work takes place in a variety of industries, each of which was affected differently by the pandemic. Gig workers can be babysitters, hair stylists, photographers, movers, or landscapers. They can hold almost any kind of skill set, and their freelance approach to employment will play an enormous role in post-pandemic recovery.
Getting a Living Wage With Gig Work
Gig work made it possible for people to weather harsh economic times, but can it provide a decent living in other situations as well? The answer is usually yes. Full time delivery drivers make almost $50,000 a year; not a glamorous wage, but not a shabby one either. Gig work offers flexible employment based on project completion. Unlike most traditionally employed persons, 58% of gig workers work fewer than 30 hours a week. Depending on the nature of the job and terms with a client, gig workers can be paid more than traditionally-employed peers are at a 9 to 5. Another part of gig work’s appeal is its relatively low barriers to entry. In many gig jobs, experience and reputation matter more than educational attainment. High school grads can earn just as much as college degree holders. It is also worth remembering that gig work and traditional employment are not exclusive; someone can hold a formal job and take gigs on the side.
Companies are embracing gig work at a growing rate. Pandemic uncertainty about the future revealed the flaws of years-long contracts with employees. When companies hire gig workers, their commitment does not extend beyond their current project. As a result, 4 in 5 US companies are planning to increase their reliance on gig workers going forward. Freelancers who develop their clientele early benefit most.
Congress, in a political payoff to unions, have again introduced legislation to effectively make gig economy jobs like Uber, Lyft, DoorDash, etc. illegal. The difference this time is that since they now control the House, Senate, and the Presidency it could very well pass. The legislation is modeled after the gig killing bill that was passed in California and that was later overturned via initiative by the people. Unfortunately, at the national level there is no initiative process to overturn Congress.
Despite the job-killing nature of the bill the Democrat’s press release sings its praises:
“Top Democrats Introduce Bill to Protect Workers’ Right to Organize and Make our Economy Work for Everyone. Legislation addresses growing income inequality by protecting workers’ right to join a union and negotiate for higher wages and better benefits.”
The House bill was introduced by House Committee on Education and Labor Chairman Robert C. “Bobby” Scott (VA-03), Congresswoman Frederica Wilson (FL-24), Congressman Andy Levin (MI-09), Congresswoman Pramila Jayapal (WA-07), and Congressman Brendan Boyle (PA-02).
The Senate bill was introduced by Senate Committee on Health, Education, Labor, and Pensions (HELP) Chair Patty Murray (D-WA) and Majority Leader Chuck Schumer (D-NY).
The bill mimics the California bill which Uber CEO Dara Khosrowshahi said would effectively end Uber as we know it in California. The company is already losing money and it would be impossible for it to pay a minimum wage of $15 an hour plus benefits to all of its 1 million drivers. It also begs the question, does the Democrat party not realize that the very people who love Uber and who are independent contractors for Uber probably are also majority Democrat voters? After all, the gig economy was popularized by liberal San Francisco based Uber itself.
Without an initiative process at the national level, the only way to keep the millions of gig jobs alive and to keep rideshare and food delivery readily available would be for their voters to vote the majority party out of office. There really is no middle ground here. In the meantime, if this bill passes Congress and is signed by Biden the gig economy will become illegal.
The Federal Trade Commission (FTC) has announced Amazon is settling to the tune of $61.7 million for tips it withheld from drivers.
As part fo the Amazon Flex program, drivers were promised $18–25 per hour for making deliveries. In addition, ads recruiting Flex drivers routinely said: “You will receive 100% of the tips you earn while delivering with Amazon Flex.”
Amazon also assured customers that any tips they gave would go straight to drivers. There’s only one problem: Amazon didn’t pay its drivers the tips from customers, pocketing nearly $62 million.
“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”
“This theft did not go unnoticed by Amazon’s drivers, many of whom expressed anger and confusion to the company,” said FTC Commissioner Rohit Chopra. “But, rather than coming clean, Amazon took elaborate steps to mislead its drivers and conceal its theft, sending them canned responses that repeated the company’s lies. The complaint charges that Amazon executives chose not to alter the practice, instead viewing drivers’ complaints as a ‘PR risk,’ which they sought to contain through deception.”
To make matters worse, in 2016, Amazon lowered the hourly rate they were paying drivers without notifying them. Instead, Amazon used the tips it had been withholding as a fund to maintain the $18-25 per hour rate, making drivers think they were receiving the same hourly rate.
In essence, Amazon was ‘robbing Peter to pay Paul,’ stealing from drivers tips to cover for the fact that it had lowered drivers hourly rates without telling them. Amazon only stopped this behavior after it became aware of the FTC’s investigation in 2019.
The $61.7 million settlement will be used by the FTC to compensate those drivers who were impacted. Amazon is also “prohibited from making any changes to how a driver’s tips are used as compensation without first obtaining the driver’s express informed consent.”
For a company already accused of illegally firing workers for trying to organize unions, and using Pinkerton detectives to monitor workers and thwart unionization efforts, it’s little wonder that Amazon employees continue working to unionize.
Amazon’s behavior in this matter is reprehensible, and represents a new low for corporate/worker relations.
California’s Proposition 22 is poised to pass, securing the current business model for gig economy companies.
California has tried to reclassify gig economy companies, such as Uber, Lyft and Doordash. The state previously passed legislation requiring the companies to classify their workers as employees, rather than independent contracts. Changing how their employees are classified would have a profound impact on the companies’ and their bottom line, as they would have be required to withhold taxes and provide benefits.
The companies tried fighting the legislation in court, but were unsuccessful. This left Proposition 22 as their best chance to continue operating in the state under their current business model.
The ballot, which had the most expensive campaign of any ballot measure in California history, is poised to pass by a comfortable margin. The fight over gig workers has been closely watched across the country, and will likely help set a precedent for how these companies will continue to operate.
Uber and Lyft have been dealt a major blow, as an appellate court has ruled the injunction against them was appropriate.
Uber and Lyft have been locked in a battle with California over the status of their drivers. California is trying to force the two companies, and other similar gig economy businesses, to treat their workers as employees, rather than independent contractors. This would provide them with benefits which, in turn, would significantly raise the cost of doing business.
In August a judge issued an injunction against the two companies, prohibiting them from operating until they had complied with the new regulation. The companies used the 10-day window they were granted to appeal, but the First Appellate District Court in San Francisco has ruled the injunction was appropriate.
“Not only is this a victory for the tens of thousands of Uber and Lyft drivers working to put a roof over their heads and food on the table, this ruling is about fairness, making it clear that these companies must stop shifting their costs onto the taxpayers while their CEO’s profit,” said Mike Feuer, Los Angeles City Attorney, according to Business Insider.
This makes the Proposition 22 ballot the best hope for the companies to continue doing business as they have. It’s a safe bet that should Proposition 22 fail, other states may look to follow California’s example.
California Assembly Bill 5, which has been upheld in a recent court ruling, literally bans the right of an individual to work for themself according to California Assemblyman Kevin Kiley (R). The law will ban hundreds of different professions and especially the hundreds of thousands of jobs created by the gig economy over the last decade.
Here is how California Assemblyman Kevin Kiley describes the laws impact:
This law, California Assembly Bill 5, has made it impractical for Uber and Lyft to operate here. Everyone saw this coming. We’ve known this whole year that this law has been devastating for people. It’s actually devastating not just for Uber and Lyft but for hundreds of professions in California.
This law, AB-5, has basically banned being an independent contractor or an independent worker. It says you have to be in the employ of someone else. They are shutting down Uber and Lyft and that will leave 100,000 of their drivers out of work. We have millions of Californians who also rely on their services. It’s going to be yet another blow to our economy which is already doing about as bad as any state in the country.
California Law Kills Uber and Lyft And The Entire Gig Economy
In an effort to comply with a new California law that would make “gig-economy” workers employees, Uber is experimenting with letting drivers raise prices, according to The Wall Street Journal.
California’s gig-economy law, Assembly Bill 5 (AB5), went into effect on January 1 and has had profound impacts on Uber, Postmates, Lyft and others. Workers who were previously classified as contractors are now considered employees, requiring companies to provide them with benefits.
The pricing change is just the latest Uber is making in an effort to comply with AB5 and keeps its workers classified as employees. For a worker to be an independent contractor, they need a measure of independence, including the freedom to set their own prices rather than have them dictated by the company they work for.
According to the WSJ, “starting Tuesday morning, drivers who ferry passengers from airports in Santa Barbara, Palm Springs and Sacramento can charge up to five times the fare Uber sets on a ride.”
The move is not without challenges, however, as it could lead to price extremes. On the one hand, drivers may raise prices too high and hurt business. On the other hand, with freedom to change prices, drivers may engage in price wars with each other, driving the price down to the point that no one profits.
Whatever the outcome, Uber will no doubt do whatever is necessary to keep its drivers as contractors. Otherwise, especially if other states follow suit with similar laws, it could forever change the ride-sharing business.
Reuters is reporting that Uber and Postmates have filed a lawsuit in an attempt to block a California law that would have severe ramifications for both companies.
California’s Governor Gavin Newsom signed a law that makes it more difficult for companies to classify gig workers as independent contractors. Keeping workers classified as contractors saves companies money in both taxes and benefits. Labor groups, however, have argued the law was necessary to properly protect workers’ rights.
Uber and Postmates’ lawsuit alleges that the law “compromises the flexibility prized by their workforce, and that fewer workers would be hired were they considered employees.” They also argue that the law violates the equal protection guaranteed by the U.S. and California constitutions, by singling out app-based workers.
“It irreparably harms network companies and app-based independent service providers by denying their constitutional rights to be treated the same as others to whom they are similarly situated,” the lawsuit alleges.
Given the size of California’s economy, other states with similar concerns will be closely watching to see if the law holds up or is ultimately overturned.
“If it’s a streaming war we’d like to be an arms dealer,” says IAC CEO Joey Levin. “We want to send the product and services to people who are making video. Video is relevant not just to people building streaming services, which there are now endless amounts of that and endless amounts of capital, but also every small business and every event. Everywhere people interact they’re expecting video now. It used to be text, then it was images, and now it’s video.”
Joey Levin, CEO of IAC, discusses their position as the “arms dealer” in the streaming wars in an interview on CNBC at The Allen & Company Sun Valley Conference:
If It’s a Streaming War We’d Like To Be an Arms Dealer
If it’s a streaming war we’d like to be an arms dealer. We want to send the product and services to people who are making video. Video is relevant not just to people building streaming services, which there are now endless amounts of that and endless amounts of capital, but also every small business and every event. Everywhere people interact they’re expecting video now. It used to be text, then it was images, and now it’s video. People need the tools to make that and our goal is to provide them.
I’m thrilled (we pivoted away from being a platform for streaming) now that everyone’s jumping into that space. I think between the time we announced that we were going to get into the streaming wars and the time we backed out there was another several billion dollars within a few months that entered the category. We were not competing with weapons that size and thought we’d be better off being a service provider.
It’s Possible To Compete With Google But They Have To Play Fairly
I don’t know what the right answer is (regarding breaking up big tech companies such as Google and Facebook) but I do know that we need an answer. Regulations are very hard to get right. I think frequently regulations in areas like that end up helping the incumbents. Those companies have already built huge data stores and they know what to do with those. It’ll just make it harder for the next people that come in to gather the data they need to compete. I don’t know how the regulations would work. I’d love to see that happen. I’d love to see regulations allow for more competition and protect competition, but it’s hard to see how that’s going to work. I don’t think GDPR did that really and I don’t know what would. They may need other solutions.
I think it’s possible (to compete with Google) but they have to play fairly. They have a significant position in search and they have a significant position in other areas too and that’s where a lot of people start their behavior. If Google starts favoring its own products or continues favoring its own products that is not going to leave room for others. I think that’s not necessarily great for the country.
In Deciding To Take a Company Public We Take a Long-Term Perspective
We don’t think a lot about a particular market state when we’re taking a company publicly. We think about what’s right for the company at the time. Does the company need access to capital? Does the company need a currency? Could a company benefit in some way by being public and having a public currency? It’s kind of independent of what market we’re in at that moment (when we decide it’s the right) time to take a company public. Just because the market might be hot or valuations might be high doesn’t mean we need to hit that window because we take a much longer-term perspective.
The (recent IPOs) are all different and they all have their own story. There are fantastic companies going public. I think it’ll be good for investors and they have opportunities to invest in them. It’s better that their public in a lot of cases than being private where a limited number of people can invest in them.
We Now Match 100 Percent of Employee 401k Contributions
I think there are different answers for different businesses (regarding potential regulations that could shut down the gig economy). We have businesses that have gig economy workers, 1099 workers, and we have businesses that are very big on W2 workers. The question is are the employees or the people doing the work getting the benefits that they want and getting the benefits that they need? Many of them prefer to be independent contractors and many of them prefer some of the benefits of independent contractors. Others like BlueCrew, which is all W2 workers, want benefits and need the things that come with being a W2 worker. Each business has its own needs on that.
One of the other things that we’re doing at IAC right now that’s really important for our 8,000 employees is we just announced a big change to our 401k plan to address the income inequality gap, to get more people investing in the market, to get more people participating in the economy and in capitalism. We are now matching a hundred percent of people’s 401k contributions up to 10% of their salary which is I think relatively unheard of among our competitors and other companies. I’m hoping other people follow that.
If It’s a Streaming War We’d Like To Be an Arms Dealer, Says IAC CEO Joey Levin
