California On Verge Of Passing Enormous Job-Killing Bill

California legislators are close to voting on a bill that would reclassify hundreds of thousands of independent contractors as employees. If passed, this bill will destroy many very productive economic opportunities, and substantially restrict free choice for individuals.

The only potential net beneficiary is the state government, which would receive a new source of unemployment insurance and disability insurance tax revenue.  Not surprisingly, California Governor Gavin Newsom has supported the bill, even though there is no economically justifiable reason to require these businesses to pay these taxes.

The bill is intended to regulate labor relations in the gig economy, including rideshare companies such as Uber and Lyft. These businesses succeed because they efficiently match drivers with riders using remarkably innovative software.  Forcing worker reclassification on innovative businesses that have created new self-employment opportunities will significantly increase the fees paid by consumers of the gig economy, reduce demand for these services, and reduce take-home pay for those working in these industries.

In a Labor Day Op-Ed, Newsom wrote “Employers shirk responsibility to safety net programs like workers’ compensation and unemployment insurance. Taxpayers are left to foot the bill.”   

This statement is unfair to the businesses that Newsom criticizes, and also is flawed economic analysis. One reason is unemployment insurance, which should be essentially irrelevant for independent contractors. The purpose of unemployment insurance is to provide benefits to a worker who is laid off by their employer through no fault of the worker. But unemployment pertains to almost no gig workers or other independent contractors. This is because those workers choose how much they will work, and when to work. A “layoff” simply doesn’t exist. An Uber driver may be fired for cause, but they are not laid off. There is no incentive whatsoever for Uber or Lyft, within their current business models, to tell a qualified driver that they no longer can drive for them.

Disability insurance is a different issue, though in principle addressing this issue this does not require reclassifying independent contractors as employees. If the state really wants all workers to be covered by the state’s disability fund, then all they need to do is require workers to buy into the disability. From the perspective of the worker, it is irrelevant whether the company deducts that amount and pays for it, or provides it to the worker as salary, and the worker pays for it.

Interestingly, the state never seemed to care much about worker safety for independent contractors in the past. Rather, this is simply the case of the state government seeing a new, untapped revenue source that is theirs for the taking, and wrapping it up in a package of worker safety and private sector responsibility to increase the likelihood of it passing.

But even revenue-hungry governments must worry about killing the goose that lays the golden egg. Understanding economics means understanding incentives, and if this bill passes, you will see the incentive to replace workers with machines skyrocket. read more

h/t Dan Bongino

25 Comments on California On Verge Of Passing Enormous Job-Killing Bill

  1. It’s the Amityville Horror of the left coast. Conservatives, please “Get out!” to Texas. Libs, you can have Colorado and please also avoid Arizona.

    You want to import illegals and export tax payers? Keep the liberals out of our low/no-tax states. And that goes for Florida as well.

  2. …do what ya gotta do, Jefe. I’m good with it.

    …but I’m a robot programmer. This just MASSIVELY increases MY job prospects, once you make automated solutions more cost-effective than human ones…

  3. Liberals can NEVER get enough of your money.

    PHUCK liberals….everywhere.

    You CANNOT be liberal and fair minded at the same time.

  4. All we have to do is sit back and watch California implode. And we don’t have to do anything at all. It’s awesome.

  5. @ jellybean,
    Not just progressives but GOVERNMENT (writ any size) can never have enough of your money. The leviathan (whether city, county, state or fed) has an enormous appetite and MUST be fed (under threat of violence).
    “Speaking the truth in times of universal deceit is a revolutionary act.” Geo. Orwell

  6. It seems as though the Golden State will be a text book study of socialist infection of a republic for years to come. What happened? Well children, let’s just look at the west coast of the United States. Lesson one, what made us United?
    No, Bobby, it was not the left projecting half the nation as loser cucks in Hollywood films.

  7. “Employers shirk responsibility to safety net programs like workers’ compensation and unemployment insurance. Taxpayers are left to foot the bill.”

    Who the feck do they think the taxpayers are?! Every employer I know IS a taxpayer -twice over: corporately and individually– and we don’t shirk responsibility to WC and unemployment insurance. Plus, every employer I know offers direct and efficient assistance to good employees and subcontractors who encounter financial/health/family difficulties.

    You want to see this economy open up and roar? Don’t tax workers or employers on the employee’s hours worked in excess of of 40 per week. Never happen: if the government isn’t getting a cut, they’re not going to encourage it, they’re going to restrict it. Thieves.

  8. It’s all about continuously increasing the amount of resources that they loot from the economy, and that’s all that it’s about.

  9. A thousand years ago or so when I was herding CATV junkies… er I mean subcontractors, each was required to have $2,000,000 liability insurance as well as worker’s compensation insurance… as well as pay quarterly taxes. That stated, these guys and gals were otherwise unemployable.
    “Speaking the truth in times of universal deceit is a revolutionary act.” Geo. Orwell

  10. By the time California implodes, which it must, there will be another leftist in the White House who will indeed bail them out by executive order.

  11. Supernightshade, have no doubt that California will outlaw the use of robots where humans can or have traditionally been used. Bet on it.

  12. “If the state really wants all workers to be covered by the state’s disability fund, then all they need to do is require workers to buy into the disability.”

    How is this different from what conservatives wailed about with the Obamacare Mandate? This is the government mandating a citizen purchase a product. I don’t think ANY government has that power.

  13. I am getting ready to move out. Worse than this is the new law saying that teachers can’t do a thing about students who disrupt their class. That’s how the Parkland shooting happened, we will see a lot more crime of all sorts in CA as a result of the current legislators’ new laws.

  14. @anonymous first poster and @Billy Fuster. Bingo, the idea is to force more libs out of the state and like cancer cells, they will metastasize to the financially stable red states and turn them Blue because no matter what happens to 95% them they can never be converted to being a conservative. They will keep voting progressive-liberal-dem even beyond the grave.

  15. If this jobs killing bill passes, a ballot measure, already approved and circulating, requires one million and a few hundred thousand, signatures to qualify for the voters over turn the law. Similar to how the ballot measure banning gay marriage in California was passed by California voters. Nice, until a judge overturned the law passed by the voters.

    California is just a few steps away from going over a financial cliff. Newsom’s obvious money grab shows how desperate the situation, created by Democrats, is. Closer to the edge with every insane law coming out the corrupt capital. As companies go out of business because of this, and stop paying wages or anything else to the now unemployed workers, where will the state steal the funds to pay those former workers unemployment benefits?

    Left Coast Dan – Same thoughts as you. I’ve been in the capital city more than four decades. The state is out of control, and without a Republican majority in one of the two legislative bodies, and/or a Republican governor, there are no brakes on this insanity.

  16. *** ATTENTION ***

    For Californians thinking of moving, don’t come to the State of Washington. Forget it. We already had your mass migration 40 years ago and we’ve never been the same since.

    Plus, we’re already covered in tent cities, feces and syringes and the people are Zombies! Besides, the weather SUCKS! Rainy, snowy, foggy, cold, wind storms, volcanoes, earthquakes, tsunamis, dogs and cats living together… Wait..

    On second thought, never mind. I’ve got to find a new State. Come on up!

  17. Before, I knew they wanted illegals because they could get votes out of them. Years went by and now I have no idea what the hell California is thinking. I mean, what’s going on? This is now year 30 of, “We’re so hot I bet they’ll stay even if we do____ to them!”

    The funniest part, CA is blaming TRUMP! Trump wasn’t president when their problems really got going. LOL!

  18. “Supernightshade, have no doubt that California will outlaw the use of robots where humans can or have traditionally been used. Bet on it.”
    You’d be dead wrong. Following the Communist Manifesto, Tax all robots and redistribute that money to the surfs. They are provided an 20 by 20 cubicle to live in, and can spend there allowance freely, after Government rent is paid. You need to try and keep up.

  19. Sick, isn’t it? Designed to destroy free market jobs, and create economic chaos and government dependency.


  20. Let’s see…destroy the largest economy in the nation, and the rest is likely to crash soon after. And with the 2020 election 13 months away. Interesting timing.


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