Truckers sue California, say new gig economy law would kill 70k jobs
foxbusiness.com
foxbusiness.com
I don't have any comment about the suit or the law, but I do think this is fine opportunity to discuss the nature of propaganda.
Not to overstate the obvious, but that's pretty much the entire point of unions: by working collectively, individuals aren't directly competing against each other, forcing management to pay higher wages, with the goal being that the wages paid are higher than any individual could make if the union didn't exist.
Joining unions is impossible for many. I once lost a job because the union insisted that I be let go rather than let me join. It was not a performance issue.
Independent truckers don't have management. They make more money and don't pay union dues. That's the whole point, and why the Teamsters want them gone.
The story seems to be created based on a PR release (https://millerpublicaffairsgroup.cmail19.com/t/ViewEmail/i/5...) that CTA issued after amending their complaint (https://01a3edcb-713b-4446-a7f4-8c833b6d990e.filesusr.com/ug...).
The Fox article is just an AP release: https://apnews.com/7f23a934b6514560a2c9f3bb5ee326c0. I guess the author emailed the press release to the politician and went from there, threw in Berkeley because it was in his inbox too.
There are other articles, e.g. https://thetrucker.com/california-trucking-association-two-o... has a Teamster's union source (but no politician).
https://www.routefifty.com/management/2019/09/california-gig... from September has some of your prized trucker sources, they basically say the same thing as the association except they sound more scared and anti-union.
There's not much to see here besides the continued death of journalism in mainstream news.
[1] https://www.ooida.com/MediaCenter/PressReleases/pressrelease... [2] https://www.ooida.com/Legislative/leg-watch.aspx
> Many would have to abandon $150,000 investments in clean trucks
I read this as: truckers will no longer be expect to supply their own $150,000 trucks to get into the business.
> and the right to set their own schedules
I read this as: truckers will no longer be expected to "comply with the laws, wink wink" to meet impossible schedules in ways that legally aren't the contracting company's fault.
>I read this as: truckers will no longer be expect to supply their own $150,000 trucks to get into the business.
Loads formerly carried by owner/operators and small fleets will in steal be hauled by Swift, Schneider and the like. Those are the kinds of companies that have enough people to absorb these new laws with little cost other than shuffling drivers and trucks around to comply.
Owner/operator and small fleet is where truckers go after they've put in their time working for the bottom of the barrel driving sweatshops (the big dry van companies). Removing those small operators is basically removing the part of the industry that sucks the least to work in.
This is basically the trucking equivalent of replacing the independent sandwich shops with Subway and saying it's no big deal because meals are still getting served. Sure it may be an improvement for some people but the rigidity that comes with working for a big company (yes I know it's a franchise but the franchise tightly controls each location so bear with me here) be bad lot of the people formerly working for the small shops.
>I read this as: truckers will no longer be expected to "comply with the laws, wink wink" to meet impossible schedules in ways that legally aren't the contracting company's fault.
This doesn't remove the federal electronic logs mandate and DOT working hours rules.
Edit: improved restaurant analogy.
Now if you had a restaurant that tried to claim their staff were all independent contractors (because they worked for multiple restaurants in the same chain) in order to avoid complying with labor law, you'd have a closer analogy. Ultimately this sounds like they wanted to get away with offloading the risks of trucking to the individual rather than deal with it at a business level.
The analogy is not 100% equivalent, as truckers in question are independent owners and operators.
Closer restaurant analogy would be someone opening a taco truck, and getting hired to cater a small event. California now says that whoever hires that taco truck is responsible for benefits and other labor regulations, so pay up or hire caterers from a well-established corporate entity like Wendy's. For analogy's sake let's also consider that the taco truck owner has already invested a six-digit amount into their [now useless] food truck.
This benefits large established corporations in favor of small independent businesses.
It helps no one, as truckers always had a choice to go work for one of those large corporate entities (the churn in corporate trucking is consistently high, which is why you tend to see those "We're hiring" signs on the back of the trucks) if they wanted a full array of benefits and schedule/routes set by someone in corporate. For whatever personal reasons (larger take-home income, benefits provided by spouse, ability to choose preferred routes, schedule preferences, etc.) they chose not to.
For what it's worth, labor law specifically carves out restaurant owners and their family members (including things like minimum wage). Truckers want the same carveout.
The law says no such thing. The biggest change from pre-existing law regards the second prong of the new law, which asks whether the type of work is within the usual course of the hiring entity's business. This is the same test in pre-existing law, it's just that this test is applied strictly rather than only given weighted consideration.
Are you a company that organizes and dispatches taco trucks? You're likely effected. Are you a company that hires a taco truck every Tuesday for employee lunch? I'd bet money that you're safe. Are you a family hiring a taco truck for a birthday party? It's ludicrous to suggest the new test imposes a legal burden on you.
That's Travis Kalanick's "Cloud Kitchens".
I don't want to stereotype truckers because it is a diverse group. But I will say that in my anecdotal experience, this is a job that tends to attract people who want to be left alone. These are people who value freedom and hard work above everything else and many of them will change careers or retire if they are forced to work for big corporations. The average trucker is 55 years old, and many of them will just sell their and retire if AB5 is not overturned.
Supplying a $150,000 truck is not at all a barrier to entry. There is a major shortage of truckers and employers are offering free training, big sign on bonuses, and high starting pay to attract talent. Walmart, which is certainly not known for paying its employees well, pays truckers an average of almost $88,000 per year--and Walmart supplies the truck. The people spending $150,000 on a truck are doing it because they want to, not because they have to. This is not a medallion situation.
As for your "wink wink" comment, ELD's have been mandated since the end of 2017, and even companies that are small enough to not legally be compelled to use one are often forced to comply due to customer contracts. (Shippers want the data the ELD provides to offer better ETAs to their customers.)
In my opinion, the most likely outcome of this law is that some truckers retire and sell their rigs to big corporations, some decide to work for big corporations, and prices go up for everyone who ships goods or buys shipped goods. Unless you're in asset based trucking and looking to expand, the chances are that AB5 is going to hurt you, not help you.
Costs may go up, but they could very well go down--economies of scale in accounting, payroll, etc. Even if they go up, the real question is by how much, and the portion that would be passed on to customers; depending on elasticities of the supply and demand curves, some of it might be borne by the trucking companies themselves.
And then there's the elephant in the room: the presumption that the ABC test would necessarily rope in all independent truckers and completely destroy the business model. There's an outside chance that some segment of "independent" truckers--the kind driving the narrative--with multiple, varied customers and schedules of their choosing will remain as independent contractors, especially if they travel interstate.
More likely they'll have significant latitude in being able to incorporate themselves, so long as their business entity rigorously handles payroll taxes, insurance, etc. Because those things are trivial to automate--and I'd bet there's at least one startup founder on HN providing and bundling these services--the impact might prove minimal in the long haul. Independent contractors are supposed to be managing these things by themselves, anyhow; otherwise we're simply defending scofflaws.
The new test for independent contractors may turn out to be a bad idea, but it's not so obviously bad on its surface that we can make sweeping claims irrespective of context. Remember, UPS has more revenue and better profits than FedEx, even though UPS relies on unionized, employee truckers while FedEx flounders with their independent contractor model.
And the new test originated in court in response to legitimate concerns with the ride-sharing model. If it makes sense there, maybe it's worthwhile to keep an open mind about its salience in the trucking industry. Is independent trucking dead in Massachusetts; did trucking costs rise? Massachusetts has had a similar test since the 1990s and an identical test since 2004. I can't find hard data, just a few court cases (suggesting litigation might be minimal) and hyperbolic reporting by industry, bereft of revenue numbers.
So why won't the logistics companies simply swing this to: "A load is a starting point X. The destination is ending point Y at time Z. Bid for it."
The problem is that everybody wants to control the hours, control the price, etc. rather than letting people actually bid for things and control the variables themselves.
And, to be fair, if you want to impose control on the employee variables, well, that's not really a contractor now is it?
To be fair, I would much rather see a law along the lines of "for every 40 hours of contract work--you have to supply the equivalent benefits (healthcare/retirement/vacation) as one full time employee or get fined the equivalent amount of money." That way, the whole "We'll subcontract it because it's cheaper" actually gets whacked for being cheaper for fobbing off the externalities but not if cheaper is simply that subcontractors are more efficient."
I would add, "setting their on schedule" likely refers to independents choosing which loads to take and where.
If trucking prices go up, companies might opt to move more cargo at the same time (same amount of moved cargo, but less trucks on the road) or they might simply eat the loss (if they're already making massive profits) or any number of alternatives.
If we were to take your argument into absurdity, the best thing to do would be to reduce trucking prices to $0, because then we would fundamentally move a lot more cargo, which would drive down prices across all of the US benefiting a lot more than just the small minority of truckers.
It's an overly simplistic way of looking at things that reminds me of the assumption that raising the minimum wage would cause the prices on everything to hike up by the same amount.
What is absurd about that? If we could wave a magic wand and reduce the real transportation cost of goods to 0, it would have massive beneficial effects in the overall economy. In large part we're seeing the benefit of that in the macro due to the (formerly) falling cost of global shipping.
It's magical thinking that an increase in the cost of transport won't have some sort of negative effect on the economy.
Yes, if you could magically teleport goods from one location to another, that would be fantastic for the economy and terrible for truckers. I think it's more magical thinking however to look at one statistic and assume that it would lead to doom and gloom, as many did when Seattle decided to change the minimum wage to $15.
That said, if we believe that reducing the cost of trucking at all costs is important to the economy: Why not just remove all worker protections? In fact, why not just not pay workers at all? We have plenty of prisoners that could be truck drivers.
We can kick out all of the high earning truck drivers being leeches on the economy by increasing the cost of transport and replace them with something far cheaper until automation comes along. That sounds like a good idea, yeah?
I'm making an observation, not an argument.
Claiming that there is a shortage of workers in a particular field is generally nonsense. Is there a shortage of gold? No, I can buy as much as I want tomorrow ... at the market price.
All it's doing is taking freedom and choice away by squashing freelancers, not creating any new opportunities.
I've been on the 1099 side of the fence for a handful of jobs. It's a difficult place. You're on your own for a large portion of taxes and likely need to make estimated quarterly payments, there are no benefits (health insurance, etc), and there's a tangible lack of stability compared to a standard W2 situation.
The only solution I see is twofold, first providing adequate social services so that people can survive reeducation / changing careers and then legislation exactly like this which ensures that employers act in a manner that's compatible with long-term social stability.
Do you think there is a place for sub-minimum wage jobs?
On a slightly broader scale, I don't see any mechanism by which markets self-regulate to police unethical behavior. All I see is the opposite, companies rebranding when their image gets tarnished and hiring PR firms to lie to people but they don't actually stop behaving unethically. Even in rare cases when they get fined, oftentimes the fines are less than the profit they made from the specific actions they were fined for.
[0] Global issues, trade, outsourcing, etc are a far bigger discussion.
If that is the case why aren’t we all making minimum wage?
The people on the floor, whether they're there because they're just starting out or because they've experienced hardships or just because they don't want to go further, those people, shouldn't have to be living on the streets or go bankrupt from medical expenses. That's the entire point behind a minimum wage.
I don't see any reason to limit people's freedom if they choose to go independent and create their own conditions. The better option would be, as you say, provide the social safety net with healthcare and tax support that isn't tied to employment so they aren't greatly disadvantaged when it comes to benefits.
Specifically, companies are allowed to treat people as contractors only when the work performed " a) is under the worker’s control and not that of the business, b) is not part of the company’s core business, and c) is part of the worker’s independent profession."
Many freelancers will be entirely unaffected by that.
>I don't see any reason to limit people's freedom if they choose to go independent and create their own conditions.
Because the people the law was written for don't have a choice. The companies they work for didn't offer them a choice between employee and contractor, if they wanted the job they had to accept being a contractor. A lot of low end work these days is contract work, finding a position as an actual employee can be difficult (depending on the field of course). Very few of the people I talk to who are contractors are classified as such by choice. At some point, shouldn't helping the people at the bottom be a good thing even if a few better off freelancers have to make some changes (i.e. seeking employment with the companies they work for rather than contract status)?
Then it's not a job, it's a contractor/freelance position.
The choice if you don't want to be a freelancer driver for Uber is to not take that position. There are still millions of professional full-time drivers for trucks/shuttles/buses/taxis/medical/etc and those jobs have existed for decades.
Ride-sharing only added more choices to the market. If you want to help people at the bottom, taking away choice is the opposite of what you should do. Create more jobs instead.
So you either modify the floor so that contractors have the same benefits as employees, or you make them employees. Both of which are fundamentally the same thing.
Why must contractors have the same benefits? They have the choice to make whatever deal they want. A better strategy would be healthcare and taxes that aren't tied to employment so that contractors can more easily match employee terms.
The question is where you draw the line, and there's real difference of opinion on this front.
The fact we have different states experimenting with these laws is what makes the US form of Federalism great.
Expect more legislation and regulation of the new markets created by AirBnB, Bitcoin and Uber.
Protecting people from themselves to the point of eliminating personal freedom and choice isn't going to help anyone.
Well, not by magic, by well understood economic principles. It would be very unusual for the demand for shipping to be inelastic to price. So as prices rise due to labor cost increases, demand will fall.
I'm not advocating one way or another. I'm simply saying the impact can be reasonably anticipated.
Also, since the new gig economy law just enshrined in statute the rule already adopted and enforced by state courts, while adopting some new exceptions not germane to the immediate issue, the law substantively hasn't even changed.
So more jobs lost, thanks to legislation to protect a certain group of people.
Hazlitt would have recommended examining the law's merits prior to passage to see if it 1) Benefited only a group of people, not the whole, and 2) Did not help the whole in the long run (paraphrased).
What does HN think?
As a trucker, I have no problem with automation. No one has the right to any specific job or career.
Im asking about any company since 2000 or mid 1990s that has put people out of jobs. Netflix nope, Alphabet nope, Facebook never.
Salesforce maybe some jobs.
Here’s the SV 150 list.[1] Intel and HP killed paper pushing jobs that could be automated by computers. Adobe probably killed a lot of art departments.
[1] https://www.mercurynews.com/2017/05/01/sv150-2017-ranking-of...
Blockbuster employees' jobs?
At Blockbuster’s height they employed 85k. The majority were high schoolers in my area.
So the following trucks don't need the drivers that would drive them today.
Things change. Not always the way we predict. I do expect much to be automated, not just trucking, because about everything else that is streamlinable seems to have been done, and companies or executives don't seem to be able to survive unless they find some way to cut costs. Status quo is not good enough.
Automation is Checkov's gun on the wall. It will go off.
Push it back to the mid 1990s and answer the same question.
s/would/could/
> performing work "outside the usual course of the hiring entity's business
That bans subcontracting, no? It's a common, long established practice in a lot of industries.
https://www.latimes.com/business/story/2019-11-15/california...
https://www.labormarketinfo.edd.ca.gov/file/lfmonth/countyur...
This would therefore appear to ban subcontracting, as that normally occurs within the same industry.
A sensible reply would have either said that I'm wrong, and normal subcontracting is not affected. Or you could have argued that subcontracting as described in this wiki is morally bad.
But instead you made neither point and appear to think I'm merely confused.
California believes that if you "subcontract" an individual to do the work your company is in the business of doing, you're not "subcontracting" with them at all, you're employing them.
That's not a ban on subcontracting. It's a ban on calling an employee a contractor.
Sometimes, he subcontracts for others when they have a job they can't fulfil on their own. At other time, he has subcontracted work out to other photographers. They are also independently established.
1. This is banned by the California law?
2. You approve of this restriction?
To be clear, these people aren't employees under the law in Canada, our jurisdiction. California seems to be redefining the word "contractor".
https://iccoalition.org/top-news/california-dynamex-decision...
> The Court adopted an “ABC” test for determining “employee” status for purposes of the wage order, which presumptively considers all workers to be employees, and permits workers to be classified as independent contractors only if the hiring business demonstrates that the worker in question satisfies each of three conditions:
> (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
> (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
> (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed for the hiring entity.
Your friend's subcontracting would be covered by case C. The problem becomes if that subcontractor that your friend sometimes works with only ever does photography work for your friend, and isn't "engaged in an independently established trade" they might run into problems. At some point that starts to resemble a part time employee.
> C Factor: Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity? The Court interpreted this factor as intending to identify an individual who independently has made the decision to go into business for himself or herself, for example, through incorporation, licensure, advertisements, routine offerings to provide the services of the independent business to the public or to a number of potential customers, and the like. The fact that a company has not prohibited or prevented a worker from engaging in such a business is not sufficient to satisfy this factor; rather, a hiring entity will need to prove that the worker is customarily engaged in an independently established trade, occupation, or business.
> (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
This pretty clearly seems to render the arrangement illegal. Does this change your view at all?
And what would those standards be?
It bans people from having a choice.
TFA states:
> The law implements a legal ruling last year by the California Supreme Court regarding workers at the delivery company Dynamex.
implements a legal ruling sounds suspiciously like "the court says that the previous state of law was ambiguous/incongruent and the legislature must pass a law to address it".
Can anyone shed light on whether I am on base or not?
[1] https://scocal.stanford.edu/opinion/dynamex-operations-west-...
The new law codified the Dynamex ruling but also added some new industry-specific exceptions; outside of those exceptions they are essentially the same.
[1] https://en.wikipedia.org/wiki/Commerce_Clause (note that the wiki article is the "Commerce Clause", but it mentions the "Interstate Commerce Clause")
Regulations like these lead to lobbying which leads to corruption. This isn’t about “justice for workers” - it’s a shakedown by politicians in a single party state.
Are you counting in base10? I count[1] 6 terms of 4 years each = 24 years.
67% off. Not bad for government work.
If your argument is a Democrat in the governorship, since 1942 it's (R=47, D=30). Since 1958 it's (R=31, D=30). Republicans are at least equally to blame for California's governorship.
In practice, the governor is largely about qualities of a single person. The legislature is heavily skewed D/blue because that's how density votes in the US.
[1] https://en.wikipedia.org/wiki/List_of_governors_of_Californi...
Can you explain your thinking here?
From my reading, the law she wrote/sponsored was largely aligned with the Supreme Court of California interpretation of the Dynamex case.
Any law maker should embrace a court challenge to their law. Suggesting the courts are an obstacle to their constituent’s is bad precedent.