Democrats face litmus test on economic inequality with California gig economy bill
Should Uber and Lyft treat their drivers as employees? That question is dividing the Democratic Party and becoming a litmus test for 2020 presidential candidates on how they see the future of work.
Several candidates including Sen. Bernie Sanders, I-Vt., Sen. Elizabeth Warren, D-Mass., and Mayor Pete Buttigieg of South Bend, Indiana, cheered on the California Senate as it passed a bill late Tuesday that could convert thousands of contract workers in the state to full-time employees, who receive benefits and wage protections. The high-profile state bill could give them ammunition in tonight's primary debate as they address economic inequality - an issue amplified by drivers' protests across the country.
Sanders, for his part, wants the protections in the bill known as AB5 enshrined in federal law. "Sen. Sanders . . . is pleased that the California legislature stood up to reject a reality in which a tiny handful of Americans become extraordinarily wealthy by paying their workers starvation wages," Sanders campaign spokesman Mike Casca said. "For too long, so-called 'gig economy' workers across the country were denied a living wage, the right to organize, and basic workplace protections. The war against the working class, fueled by the greed and corruption of the corporate elite, will end when Sen. Sanders is in the White House."
But the most prominent moderate Democrat in the race, former vice president Joe Biden, was notably silent. Biden declined to take a position despite multiple requests from The Washington Post.
It's possible that top-polling candidates - who are finally appearing on the same stage togther tonight in Texas - will seize the California bill as a way to distinguish their economic positions. It's especially hot-button given the wide-ranging stakes for the future of the American economy: It could pose an existential threat to the business model of gig economy companies.
A national spotlight on drivers' rights would be bad for Uber and Lyft, and the technology industry is already bracing for possible questions about the future of the gig economy and going on the defensive. Last night, the industry group TechNet, which represents Lyft and Uber, put out a blog post reminding 2020 candidates that the gig economy "has created new jobs and income opportunities in virtually every corner of the country."
"It is imperative that policymakers work closely with innovators in this space and other stakeholders to ensure that these opportunities can continue to expand, remain flexible, and meet consumers' demand," TechNet executive director for Texas David Edmonson wrote.
The classification of gig economy workers is no longer such a wonky topic. Compared to past political cycles, Uber and Lyft are now much more mature companies. Their recent initial public offerings highlighted the divide between their drivers' wages and protections and the financial gains of early company employees and investors.
Biden is in a complicated position: Many Obama administration officials such as former senior adviser Valerie Jarrett are in roles at the ride-sharing companies now, Faiz notes, and some Democrats working for the companies have even publicly tussled with the party's prominent liberal stars over the future of gig economy workers. Rep. Alexandria Ocasio-Cortez, D-N.Y., last month called out former California Sen. Barbara Boxer on Twitter for serving as a Lyft adviser and writing an op-ed that was critical of AB5.
Others have no issue taking a stand. Sanders has been active on this issue since 2018, when he introduced the Workplace Democracy Act, which would expand the definition of employer in the U.S. Warren wrote an op-ed in support of AB5 last month. Buttigieg has made the issue key to his economic plan, and he's stood alongside Uber drivers as they protest for better working conditions. California Sen. Kamala D. Harris and Former Housing and Urban Development Secretary Joaquin Castro have also said they support the bill.
There could be fireworks if the issue comes up tonight, because some 2020 candidates supportive of AB5 aren't happy with industry's response. Uber announced yesterday that even when AB5 takes effect in 2020 of next year, it will not automatically reclassify its drivers as employees. Tony West, Uber's chief legal officer, told reporters that the law requires companies to show that contractors are performing work that is outside the core function of the business. Uber, he argued, can meet that qualification because it's a technology platform for several types of marketplaces, though he expect the company's position could be challenged in arbitration and courts.
But candidates like Buttigieg and Sanders are taking issue with that position. Sanders tweeted: "Uber's drivers are employees, not independent contractors. Large corporations will do anything to get out of paying workers a decent wage and offering them good benefits. That will end when we are in the White House."