California Union Bill Puts Workers out of Work at Christmas

Beware major labor unions bearing “gifts.” California (with an assist from Vox Media) has given us yet another case study in union “gifts” to workers backfiring. The short version of the story is that California passed a union-favor law (backed by, among others, liberal commentators at Vox Media’s flagship website Vox.com). Vox Media now has had to cancel its contracts with freelance contributors in the state to comply with the law, putting hundreds of writers out of work (or at best slashing their income) just in time for Christmas.

Targeting Uber and Lyft

The long story starts with taxis and the taxi unions. Earlier this year, California passed Assembly Bill 5 (AB5), legislation aimed at punishing app-based ride-hailing brokerages such as Uber and Lyft under the sponsorship of the California Labor Federation (CLF), the state affiliate of the AFL-CIO union federation. The core of the law is a so-called “ABC test” that limits the ability of firms to classify workers as contractors rather than employees. Employment rules for independent contractors are far more flexible for firms and the workers than the rules for formal employees. (A Competitive Enterprise Institute report demonstrates the effects of changing from a contractor model to an employee model under AB5 for “transportation network companies” such as Uber and Lyft.)

Unions loathe Uber, Lyft, and other “gig economy” brokerages because of a provision of traditional independent contractor employment rules: Unions cannot force collective bargaining for independent contractors under the federal unionization law, the National Labor Relations Act. So, after the California Supreme Court essentially adopted the “ABC test” by its own judicial initiative, the CLF “sponsored” AB5 to codify the California Supreme Court’s decision. (According to the California Legislative Glossary, “sponsor” means that CLF was “the legislator, private individual, or group who developed a piece of legislation and advocates its passage.”)

UnIntended Consequences

Vox writers, who advocate for a managerial progressivism of a sort supported by America’s labor union movement, praised the legislation as “a historic moment for the US labor movement” and expressed hope that “hundreds of thousands of workers—possibly millions—will see an immediate impact on their working conditions after the switch.” And for their colleagues at SBNation, Vox Media’s largely freelancer-based sports writing division, that happened—though not in the way the Vox writers hoped, but almost assuredly in the way the unions intended. AB5 limits the number of paid contributions a freelance writer could make, so Vox suddenly let go over 200 California-based writers.

Protecting Big Labor

So why would labor unions want this? Because unions operate first and foremost as a cartel—a means to control the availability of workers and to control the workers’ voices—ending freelance relationships and independent contracting arrangements that give workers more control over their work outside a unionized collective bargaining context gives Big Labor a stronger cartel. The cartel is even stronger if the result of firing the freelancers reduces competition for unionized workers.

Unions like to pretend that they represent all working Americans. The AB5 freelancer fiasco is conclusive evidence that they don’t.