Been There, Done That on Denying Americans the Freedom to Work as They Choose

Inspired by California’s controversial AB 5 – which was called “the worst piece of legislation to be passed and signed in California” by PRI’s Kerry Jackson – the Biden Administration is proposing new regulations to impose this agenda nationally.  If successful, these policies would hurt entrepreneurship and minority economic advancement by denying the ability of millions of Americans to work as independent contractors.

California Has “Been There, Done That”

One of his first policy proposals as President was the PRO Act, a measure that has languished in Congress to adopt AB 5-style restrictions on gig work nationally, saying that, “All of us deserve to enjoy America’s promise in full . . . and that starts with rebuilding unions . . . (who) lift up workers, both union and non-union (and) are critical to strengthening our economic competitiveness.”

But as PRI’s Dr. Wayne Winegarden testified before the California advisory committee of the U.S. Commission on Civil Rights, “our analyses have found that AB5 will impose net negative impacts on the economy and reduce entrepreneurial opportunities, with a particularly negative impact on low-income communities and communities of color.”

In PRI’s Breaking Down Barriers to Opportunity series, Winegarden cites research showing that more than 75 percent of gig workers are satisfied with their current work arrangements, the majority are working in the gig economy by choice, and around three-quarters have health insurance.

When given the chance to repeal some of AB 5’s restrictions on gig work, California voters leaped at the chance when they passed Prop. 22 in November 2020 with nearly 59 percent of the vote.  A Los Angeles Times post-election analysis showed that Prop. 22 “found widespread support in neighborhoods with large Black and Latino communities.”

How California’s AB 5 is Standing in the Way of Millions
Moving Up the Economic Ladder

“AB5 is an anti-entrepreneurial policy that reduces opportunity in California. These impacts are particularly large for low-income entrepreneurs and entrepreneurs from communities of color. These adverse outcomes indicate that to better promote economic opportunities for communities of color, AB5 should be repealed.”

— “AB 5 is Taking Away Opportunities for Communities of Color & Low-Income Communities,” Wayne Winegarden, testimony before U.S. Civil Rights Commission California advisory committee, 3/9/22

—“And The Damage From AB 5 Begins,” Wayne Winegarden, Right by the Bay, 5/6/20

“Union bosses see the 2 million or so independent contract workers in California as dollars in their pockets. They want to rope as many of them as possible into their trade syndicates.

“It would be a mistake to believe that gig economy workers asked for the law. Aside from a few vocal protesters, most independent contractors and freelancers like their arrangements. The Bureau of Labor Statistics found that ‘79% of independent contractors preferred their arrangement over a traditional job.’”
— “Is There Any Way to Escape Punishment of AB5?,” Kerry Jackson, Chico Enterprise-Record, 5/19/20

Read the PRI study “The Small Business Gig: How The Gig Economy Promotes Small Business Growth and Development”

Instead of Restricting People’s Ability to Earn a Living, Promote Entrepreneurship and Economic Opportunity for All

Instead of imposing restrictions on the ability of people to work as they choose – and denying the ability of working class Americans and minorities to climb the economic ladder by becoming entrepreneurs, the Biden administration should be removing these barriers to opportunity. 

Dr. Wayne Winegarden makes the case in PRI’s Breaking Down Barriers to Opportunity series that leaders in the federal government and other states should embrace gig economy entrepreneurship by adopting free-market policies to:

• Repeal regulations that have imposed terrible burdens on people’s ability to become gig economy entrepreneurs.
• Reform unnecessary regulations that create disadvantages for traditional economy firms, while imposing tworkerhe smallest necessary regulations on gig economy companies; and
• Modernize health insurance, retirement plans, and other benefits so gig economy workers have access to the same tax-free benefits as workers for more traditional companies.

Visit www.pacificresearch.org/beentheredonethat