California Gov. Gavin Newsom lashed out at President Donald Trump last week for his state’s escalating homelessness, which in turn has led to mounting crime and disease.
“I imagine if you’re the president of the United States, any leader like myself feels a deep sense of responsibility to address some of the most vexing issues in the country,” he told a reporter. “In that respect you would imagine some accountability and some responsibility to be supportive and reach out.”
Before Newsom turns his eyes to Washington, D.C., he should look first to Sacramento — the seat of his own government.
In 2016 Jerry Brown, Newsom’s predecessor, signed a new minimum wage bill into law, which calls for annual increases until it reaches its peak of $15 an hour in 2022. How has that worked out for them?
Without surprise, a University of California at Riverside study released in April found that raising the minimum wage negatively impacts the labor market by eventually offering 40,000 fewer jobs. Although “the number of new jobs in the full-service industry will grow by 120,000, [they] would have grown by 160,000” absent the minimum wage hikes.
Add rising wages to the Golden State’s ranking as 48th in litigation costs and a mountain of state and local regulations that burden each business an annual average of $134,000 in compliance costs, and you realize why California small businesses are struggling.
But lawmakers weren’t done tinkering.
Last week California Assembly Bill 5 went into effect — a bill Newsom signed into law in September that rewrote employment law for freelance workers.
Referred to as the gig law, it’s meant to increase the rights of gig workers, which include Uber and Lyft ride-share drivers as well as other freelance employees, by turning a large segment of that workforce into employees.
“Today, we are disrupting the status quo and taking a bold step forward to rebuild our middle class and reshape the future of workers as we know it,” bill author and Assemblywoman Lorena Gonzalez said in a statement. “As one of the strongest economies in the world, California is now setting the global standard for worker protections for other states and countries to follow.”
Vox, a left-leaning news and opinion website, also championed the legislation, although admitting it wasn’t without its flaws.
“So AB 5 is an imperfect solution, but it’s something,” Vox’s Alexia Fernández Campbell wrote. “More importantly, it outlaws the common practice of hiring freelancers to work regular shifts like an employee would but without giving them basic benefits or labor protections.”
Employers love freelancers. They can get work done without being burdened with payroll taxes, unemployment taxes, and workers’ compensation, to name a few.
Gig workers like it too. They’re generally free to work when and for whom they please, can work for multiple companies, and can even cut down on taxes by self-incorporating.
But California ruined that perfect, symbiotic relationship, and Vox led the charge.
In order to comply with the new law, Vox cut hundreds of freelance writers from its workforce rather than take them on as employees. That included SB Nation writers, a sports news site owned by Vox.
“This is a bittersweet note of thanks to our California independent contractors,” John Ness, executive director of SB Nation, wrote last week in a post headlined “Thank You, California.” “In 2020, we will move California’s team blogs from our established system with hundreds of contractors to a new one run by a team of new SB Nation employees.”
Ironically, Fernandez Campbell was apparently one of the writers who was let go. In her Vox piece published October 21, she described herself as a “Politics & Policy Reporter.” According to her Twitter biography, she’s now a “workers’ rights investigative reporter” working for The Center for Public Integrity — previously Vox.
But California’s mistakes are capable of being duplicated anywhere. Consider this: Florida has the 9th most vibrant economy in the United States, and ranks 2nd for fiscal stability. But that may soon change.
Florida voters will decide in November whether to make a $15 minimum wage a constitutional right. Orlando lawyer John Morgan, who spearheaded the movement, apparently realized he’d never persuade Florida lawmakers into passing it, so he collected enough signatures to place it on the ballot.
A few years back esurance ran a commercial that included the tag line, “that's not how this works — that's not how any of this works!”
And that’s not how income and prosperity works either. It can’t be legislated into law because you want it — it has to be earned.
Michael Dorstewitz is a retired lawyer and has been a frequent contributor to BizPac Review and Liberty Unyielding. He is also a former U.S. Merchant Marine officer and an enthusiastic Second Amendment supporter, who can often be found honing his skills at the range. To read more of his reports — Click Here Now.
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