Jennifer Eager

AB5 is to Freelancing What NAFTA is to Manufacturing Jobs By Jen Eager & Kolleen Shallcross Have you heard of ‘The Uber bill”? At first glance, it seems innocuous, designed to help workers in the gig economy gain protections that employees working traditional jobs enjoy, such as a living wage, health insurance, disability insurance and paid leave. Everyone has heard of the long hours Uber drivers have to commit to in order to make a buck. As the rideshare platform grew in popularity, what was once an easy way to make some cash has turned brutal. With thousands of drivers added per month (and very little screening to become one), work is spread very thin and everyone’s income went down, to the point where ​some drivers are living in their cars. DoorDash and other food delivery services provide more jobs in the gig economy that do not favor workers. We’re used to restaurant workers making less than ​minimum wage​, because tips “will provide most of their income,” but these ​gig apps don’t even have to pay the minimum wage​. Since these workers are considered independent contractors, all they need to do is accept the job--and as the gig economy grows and more workers sign on, this only benefits the company’s bottom line. Unfortunately, this ​proposed legislation​ affects a lot more than drivers and food delivery people. Under California’s AB5 (passed into law as of Jan 1), and similar proposed legislation in New Jersey and New York, many sectors are affected, including writers, photographers, musicians and more. The language in these bills are written in such a way that employers such as ​Vox prefer not to hire any freelancers in California rather than risk incompliance with the law.​ In California, the law limits companies from allowing freelancers to write more than 35 pieces in a year. If they want 36 pieces, they must hire that writer as an employee, giving them benefits and protections. You might say, so what? Doesn’t everyone need protection from corporate greed? Don’t we all want workers to be treated fairly? Well, yes. In the case of app-based work like Uber, Task Rabbit and Door Dash, I’d say we certainly want to see how the model can be adjusted to protect American workers. However, the language in these proposed bills are written very broadly, leaving freelancers unable to earn a living on their own terms and taking away clients they count on for income. Many creative freelancers, whether they are writers or artists, photographers or musicians, choose freelancing over traditional employment on purpose. They may earn more money, love the freedom of making their own schedule or working hours when their creativity is highest, enjoy flexibility in order to take care of their kids or elderly parents, or just like taking on new and different projects as opposed to working a job that can sometimes be the same work again and again, repackaged for a different client. The proposed bills include an “ABC test,” basically three hurdles a writer would need to pass in order to still be considered an independent contractor rather than an employee. The language is broad and the second requirement, “the person performs work that is outside the usual course of the hiring entity's business,” could really spell disaster for the freelancer. It means that any freelancer writing for a newspaper, magazine or online news source would lose independent contractor status and automatically become an employee. All of a sudden, a huge chunk of potential clients are gone for these writers. As the plot thickens on proposed and pending legislation for American freelancers, the waft of NAFTA begins to permeate the situation. NAFTA (North American Fair Trade Agreement) was signed into law by President Clinton in 1993, and although many ​debate its pros and cons​, one of its biggest problems is the loss of manufacturing jobs in our country. By allowing corporations to relocate production to Mexico and sell products back to the U.S., NAFTA handed power to corporations over their workers and ensured that wages would stagnate, unions would lose a lot of power, and benefits for workers would decrease--all, of course, making the rich richer, less skilled laborers poorer and leaving some with no job at all. The punch line is that corporations didn’t even have to move production out of the country in order to achieve these goals; they could simply tell their workers that if wages or benefits cost them too much, well, there’d just be no choice but to move to Mexico. Faced with no job at all, workers usually take whatever scraps they can get. They could threaten unions in the same way: if the bargaining tipped towards the workers’ favor, the company moves to Mexico. The fact that they could also use this game as a way to make their local government give them tax subsidies was the icing on the​ neoliberal cake. We can view NAFTA as yet another way our country favors the corporation over the worker: NAFTA was the template for rules of the emerging global economy, in which the benefits would flow to capital and the costs to labor. The U.S. governing class—in alliance with the financial elites of its trading partners—applied NAFTA’s principles to the World Trade Organization, to the policies of the World Bank and IMF, and to the deal under which employers of China’s huge supply of low-wage workers were allowed access to U.S. markets in exchange for allowing American multinational corporations the right to invest there.1 NAFTA ​eventually bankrupted ​Main Street​ and literally (in the literal sense of the word) starved the Rust Belt of jobs and stability. ​Example after example ​of the decline of these cities show unemployment, crime and violence on the rise. During the 20th century, America built thousands of manufacturing plants in small cities in the Midwest. There were food processing plants, auto manufacturers, textile fabric mills, cut and sew apparel mills, paper mills, foundries, hand tool manufacturers, major appliance manufacturers, machine shops, and many others, according to the Bureau of Labor Statistics data from that era. When these plants were built, whole communities formed around them providing good paying jobs for millions of people without college degrees, as well as jobs for all of their supplier companies and the merchants in the communities. 2 In 2016 the IMF downgraded the US to a failed democracy, citing the policies of neoliberalism as the cause. America’s heartland now belonged to corporate farms and a desolate population that lost their jobs to foreign competition. AB5 and the proposed legislation in New York and New Jersey are poised to do to the gig community what NAFTA did to America. Companies will go for the safer option of hiring Virtual Assistants from any other country over Americans. They won’t have to worry about the ABC test, or worrying about being penalized. Outsourcing creative work will send more money out of circulation in the US, and the community that was created by the need to eke out a living in a country that gave its soul to corporate conglomerates over the lives of its workers will suffer again. Jeff Faux, “NAFTA’S Impact on U.S. Workers,” ​Economic Policy Institute​ 9 Dec 2013, Economic Policy Online, Web, 12 Jan 2020. 1 Michael Collins, “The Abandonment of Small Cities in the Rust Belt,” ​Industry Week​ 10 Oct 2019, Industry Week Online, Web, 14 Jan 2020. 2 Virtual freelancers are not the only sector that will suffer, as folks that need to hire someone for a physical event, such as a photographer or musician, will opt to go to employment agencies, forcing the freelancer to pay a fee or take less money. Free agency is being ripped from freelancers. The IRS test is enough to establish choice and needs to be part of the conversation. Keeping the US economy humming would be a better goal for these lawmakers.