In normal circumstances, harmful policies that destroy jobs would not be replicated, but these are not normal circumstances, at least not in America, a nation where Congress–particularly Democrats and some Republican representatives–want to replicate a failed California labor law nationwide despite its political and practical failure.
What is A.B. 5? The failed La fallida labor law that was rejected by Californians
A.B. 5 is California legislation that generated unprecedented labor strife in the Golden State. That bill applied what is called the “ABC test” which was established through a California judicial precedent.
The idea of this test is to determine whether a person is self-employed or an employee.
An article in Reason explains that “Whether the person wanted to be a freelance worker or an employee was utterly irrelevant to the test.” This creates a notorious conflict, as many workers indeed want to be self-employed. Why? To keep their service and earn their daily bread.
According to the “ABC test”, there must be three conditions to consider a person who provides services for your company as a freelancer:
a) The worker is free from the control and direction of the hiring entity in connection with the performance of their work.
b) The worker performs work that is outside the usual course of business of the hiring entity.
c) The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
These three rules, of course, were an ordeal for the so-called “gig economy” as it directly affected companies like Lyft and Uber and delivery services like DoorDash and Grubhub.
Why did this ABC test affect these services? Because “These companies operate via independent contractors rather than employees, which undermined the strong union controls over the labor market in the state,” says the cited Reason article.
The rest is history: the implementation of A.B. 5, along with the ABC test, directly affected businesses and the jobs they create, but Californians said “enough!” to much of the law’s stipulations and in November voted to drop several of its considerations; among them the ABC test.
Because Californians vetoed a good portion of this failed labor law, many companies did not have to hire independent contractors as employees; saving, of course, the jobs of these individuals.
Reason reviewed it as follows: “A.B. 5 ended up hitting thousands upon thousands of freelance jobs in the market, from writers to musicians to real estate agents to interpreters. Eventually, lawmakers had to go back and carve out a bunch of exceptions to the law. They kept the ride-sharing and delivery services, the target for the legislation, in the law. But the companies didn’t take it lying down and instead forced the measure to a vote via Proposition 22. California voters, despite their strong Democratic leanings, agreed that drivers should be permitted to remain independent contractors. Prop. 22 was passed.”
Democrats and politicians in DC want to pass the PRO Act, a twin sister of A.B. 5
At this point it should come as no surprise that politicians generate harmful legislation that destroys jobs and businesses. Now, what is surprising is that one of the most liberal and blue states, such as California, refused an unequivocally bad labor law, and yet there are politicians who want to push it through under another name, which is what is happening.
The Protection of Right to Organize Act (PRO Act) of 2021, which passed the lower House, and now must go to the Senate, has in its essence the same ABC test as A.B. 5 (as well as being similar on other issues).
By simply replicating this ABC test on the federal level, which failed in California, a large number of jobs would be at great risk of disappearing overnight. It would be crippling to the economic recovery and the pocketbooks of thousands of citizens.
Rep. Mike Garcia (R-CA), explained in an article for Fox News that politicians in Washington want to replicate several of California’s bad policies at the federal level, including A.B. 5 reincarnated as the PRO Act.
“The House agenda this week includes a bill called the Pro Act. California workers know this as AB5, legislation making independent contractors (read: Uber drivers and kids delivering newspapers) full-time employees of their respective employers,” Garcia wrote in his op-ed column.
The representative explained that AB5 “cost tens of thousands of California jobs” and that its elimination was one of the central issues in his race to Congress. As a result, the Republican boasted that “voters elected me not once, but twice, in a district that Joe Biden won by 10 points. In November, while Biden won California with 63.5%, the voters, through a referendum, overturned the disastrous bill with 59% of the vote.”
Garcia’s efforts to explain why this law is harmful were in vain. And California’s Democratic representatives, despite being taught a lesson at the ballot box by their own voters in November, had the gall to support the PRO Act in the lower house.
“Six California representatives are among the PRO Act’s sponsors, and when the House voted on the bill on Tuesday, every Democratic representative from the Golden State voted yes, in defiance of what the voters decided just months ago,” Reason reads.
The PRO Act passed by a vote of 225 to 206. Only one Democrat, Texas state Rep. Henry Cuellar, voted against it. And he explained why he did so on his Twitter account:
According to Representative Cuellar (D-TX), the ABC test component of the PRO Act is bad enough to reject the proposal. This bill undermines state laws. A worker does not have to be obliged to join unions and pay union dues if they do not want to be represented by these groups. The PRO Law goes against this right.
Democrats, especially California representatives, saw the failure of A.B. 5 in the most progressive state in the country. Not content with that, they now want to replicate it nationally. That is a very bad idea, especially in the pandemic context in which we are immersed, where every job is worth its own weight in gold. We can only hope that the Senate does the right thing and reverses this disastrous bill.