AB 5, Proposition 22 and the Future of Employment

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Over the weekend, the Wall Street Journal published an interview with Uber CEO Dara Khosrowshahi conducted by editorial board member Allysia Finley centering on California’s AB 5 and Uber’s response, Proposition 22. Toward the end of the interview Khosrowshahi talked about self-driving cars role in the debate and this look into the future raised additional questions about the attempts to use traditional labor law methods, as AB 5 proposes to do, in a future work world. 

By now, any Californian paying attention to the Sacramento political wars knows about AB 5. It was the legislature’s attempt to codify a California Supreme Court decision on worker classification. The bill was heavily pushed by organized labor hoping to remove the independent contractor label from drivers who work in the gig economy, especially the app driver delivery services, so that the workers may be unionized. 

Uber, Lyft and DoorDash claim their services won’t work under the new rules and filed Proposition 22, which if passed would take those app-driver services out from under AB 5’s dictates, while offering drivers certain benefits. 

The debate over AB 5 has always been about how workers fit under traditional labor union standards in a tech driven economy. 

Khosrowshahi was asked if AB 5, and perhaps similar legislation in other states and in Congress, would prompt a switch to self-driving cars eliminating the need for drivers. Khosrowshahi dismissed the idea overall but added, “The way that I think about self-driving in our network is just like in factories. Robots take the most rote, predictable work. I think the same thing will happen in self-driving. As we introduce robot cars, they will do the simplest routes.” He went on to say elimination of drivers for short routes will allow for price reduction and predicted that a demand for more divers to cover a wider network and evolve further out into suburbia will occur.

That may be the case, but it also should get policy makers thinking about coming up with a new paradigm to confront great changes in the working world. 

Robots are coming to relieve workers of some routine work. Trying to shoehorn the future into past formulas to deal with workers, as AB 5 proposes to do, will slow technological advancements and a futuristic economy. 

Khosrowshahi argued against the old formulas in the interview by praising capitalism as the optimal system to help to meet the future needs of business and people. He said the optimized system is not called “laborism.” 

Yet, issues over labor are central to the AB 5 approach. Labor unions want to use old standards that protect unionized workers in addressing modern business situations. 

Policy makers in Sacramento are going to have to think long and hard about how this will work and if sticking to old policies will hinder a growing technological economy. The debate is also concerned with worker welfare. Are there programs that will both protect worker vulnerability and be able to unleash economic dynamism at the same time?

The forces of the labor movement have a tight grip over California’s policy machine. But a healthy future economy will also have to consider reducing handicaps on an innovative, high-tech economy.   

California voters are going to set the direction for the labor and economic landscape beyond the state’s borders with their votes on Proposition 22.

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