Opinion: California Needs to Close Gig Economy Loopholes

A state bill would force gig companies to treat workers fairly and would stanch the flow of subsidies that keep customer costs artificially low.

1 minute read

June 23, 2019, 7:00 AM PDT

By Camille Fink

Transportation Network Company

Roman Tiraspolsky / Shutterstock

The gig economy exploits workers, and California lawmakers need to fix a broken system, argues Zakhary Mallett. Assembly Bill 5 would limit the ability of companies such as Uber and Lyft to classify workers as independent contractors and would provide worker protections.

Mallett worked as an Uber driver, and he makes the case that riders are not paying the full cost of their trips. Instead, the rides are subsidized by underpaying workers and depending on venture capital. For example, he explains that driver incentives to work during certain times and in certain locations result in an excess of drivers, longer wait times, and costs that are not passed on to customers.

"Take, for instance, a 32-minute trip I completed from South of Market to San Rafael: I waited 24 minutes to get that trip after my last drop-off and took in $66.98, while the rider paid just $38.71 — meaning Uber lost $28.27 on that trip," he writes. Mallett also discusses the additional societal costs from drivers flooding city streets, including traffic congestion and decreased available parking.

"Similarly, the companies have circumvented antitrust principles by using venture capital to subsidize their services at the expense of taxis, rental car companies, private parking companies, public transit and more. This isn’t innovation in urban transport and deliveries; it’s innovation in ripping off people, cities and industries," he notes.

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