California passes landmark bill that threatens to upend companies like Uber and Lyft

[upsideguy]

Uber and lyft don't need checkbooks. They will just pass any additional costs on to the public. And, a lot of these contractors fall into the 50% who would not pay federal income taxes anyway, although they would ow FICA.

That is not the way it works. Sorry, but this is basic price theory that is covered in Eco 101. Companies can not merely pass costs along without consequence. If could, their prices would be higher in the first place.

This could have real consequence to companies like UBER and Lyft, squeezing their competitive advantage over taxis. Then again, that competitive advantage has a lot to do with the "gig" economy.

 

[Cougarbear]

Actually, the IRS has a specific test for determining when someone is an independent contractor. No state law is going to override that.

Some of the points are Does the worker set their own hours? Does the worker decide how they will complete the work? Does the worker supply their own tools or equipment? Does the work get paid by the hour or by the job completed?

Uber driver are independent contractors. Cali will pound sand on the first court challenge of this new law.

I think so too. This is another attempt Democrat Socialists are using to change the country into a dictatorship with unions pushing for it. We may see another Hitler arise out of the Democrat Party. He or she will use the unions until they aren't needed. The free market is the best method to raise the standard of living. And, the standard of living in California is going down, not up. It's why people leave for Texas and other states that allow capitalism and free markets.

 

[Cougarbear]

Uber and Lyft have yet to make a profit. They are keeping rates low to drive out competitors then when they are gone raise rates in a monopolistic market (at least their hope)

I was reading an article where a woman was earning $4,800 driving for Uber, part time. Another $700/wk part time. Free markets change the shape of society. The Democrats want to go back to the 1920's where socialism and progressivism took strong hold. They don't like to see innovation. They just want everyone to be as miserable with life as they are. They want to take everything away from people. Think about it. All there plans coming from the Presidential candidates take away rights, money and the ability to pursue happiness from people.

 

[Cougarbear]

That is not the way it works. Sorry, but this is basic price theory that is covered in Eco 101. Companies can not merely pass costs along without consequence. If could, their prices would be higher in the first place.

This could have real consequence to companies like UBER and Lyft, squeezing their competitive advantage over taxis. Then again, that competitive advantage has a lot to do with the "gig" economy.

Times change. But, not the Demorats. They just want to take rights away from people. Innovation is a cuss word to them.

 

[Lord Tammerlain]

I was reading an article where a woman was earning $4,800 driving for Uber, part time. Another $700/wk part time. Free markets change the shape of society. The Democrats want to go back to the 1920's where socialism and progressivism took strong hold. They don't like to see innovation. They just want everyone to be as miserable with life as they are. They want to take everything away from people. Think about it. All there plans coming from the Presidential candidates take away rights, money and the ability to pursue happiness from people.

Uber and Lyft right now are losing money.

That of course has to change at some point for the companies to remain in operation. That means one of three things in general, raise prices, lower costs (driver payouts) or a combination of. They are not losing a little bit of money, but on order of 30% of revenues. So the payouts the part time drivers are getting will likely become lower in the near future. I also wonder how many of the drivers have accounted for the depreciation of their vehicle and the overall costs of vehicle operation into their compensation

Now for innovation, we all need to recall that Uber is investing in self driving car technology, with the eventual goal of replacing all these independent contractors. Of course by then Uber will have no capital and will franchise out the operation of the vehicles to independent contractors who will buy the vehicle and be responsible for cleaning and maintenance while having the vehicle drive itself for hours on end

 

[Scarab]

Times change. But, not the Demorats. They just want to take rights away from people. Innovation is a cuss word to them.

You realize, don't you, that CA in particular made the tech boom happen by offering tax incentives, building millennial-friendly homes, expanding shared and public transportation, etc.? Innovation is not a partisan issue and even if it was, you would be wrong that Democrats oppose it.

 

[Cougarbear]

Uber and Lyft right now are losing money.

That of course has to change at some point for the companies to remain in operation. That means one of three things in general, raise prices, lower costs (driver payouts) or a combination of. They are not losing a little bit of money, but on order of 30% of revenues. So the payouts the part time drivers are getting will likely become lower in the near future. I also wonder how many of the drivers have accounted for the depreciation of their vehicle and the overall costs of vehicle operation into their compensation

Now for innovation, we all need to recall that Uber is investing in self driving car technology, with the eventual goal of replacing all these independent contractors. Of course by then Uber will have no capital and will franchise out the operation of the vehicles to independent contractors who will buy the vehicle and be responsible for cleaning and maintenance while having the vehicle drive itself for hours on end

The laws don't allow driverless vehicles. But, innovation is the key to keep up with technology with the world. Democrats want that to stop. As with any new business, they will pay more in the beginning and charge less. Then, the shift will happen. It always has and always will. So what? $4,800/mo is a good amount of money when you can write off either depreciation or mileage as an independent contractor. Why should a taxi company be able to require you to have your own car? Why is that the government's business? Oh ya, California Franchise Tax Board is losing $8 billion a year. Follow the money and you'll figure out why the law is written and for whose benefit. The State Legislature and employees and unions of course.

 

[Cougarbear]

You realize, don't you, that CA in particular made the tech boom happen by offering tax incentives, building millennial-friendly homes, expanding shared and public transportation, etc.? Innovation is not a partisan issue and even if it was, you would be wrong that Democrats oppose it.

It's almost funny if it weren't so insidious. California lours techs to California until they can't leave. Then, they lower the boom!!! Here is comes! True Democrats with the Socialist desires are insidious. Like Sanders, smiles and smiles until he can destroy you. But, when you hear the Presidential candidates and media, where is the innovation? Instead, they are now trying to turn the tide away from free market capitalism by taking away more and more rights. This is just one of them. If you aren't union, you can't work! Sad, sad, sad...And, you Democrat think their intentions are holy.

 

[Scarab]

It's almost funny if it weren't so insidious. California lours techs to California until they can't leave. Then, they lower the boom!!! Here is comes! True Democrats with the Socialist desires are insidious. Like Sanders, smiles and smiles until he can destroy you. But, when you hear the Presidential candidates and media, where is the innovation? Instead, they are now trying to turn the tide away from free market capitalism by taking away more and more rights. This is just one of them. If you aren't union, you can't work! Sad, sad, sad...And, you Democrat think their intentions are holy.

You're talking to me? I have never been a Democrat. Most of the Democratic presidential candidates have proposed innovation in sustainable energy production and use, health care, and education. Some have talked about a new Cabinet level position to serve as the liaison between the tech industry and the federal government. One of them is an entrepreneur. None of them have proposed unionizing the entire workforce; and the CA bill that is the subject of this thread has nothing to do with unions.

 

[sjmay]

Uber and Lyft right now are losing money.

That of course has to change at some point for the companies to remain in operation. That means one of three things in general, raise prices, lower costs (driver payouts) or a combination of. They are not losing a little bit of money, but on order of 30% of revenues. So the payouts the part time drivers are getting will likely become lower in the near future. I also wonder how many of the drivers have accounted for the depreciation of their vehicle and the overall costs of vehicle operation into their compensation

Now for innovation, we all need to recall that Uber is investing in self driving car technology, with the eventual goal of replacing all these independent contractors. Of course by then Uber will have no capital and will franchise out the operation of the vehicles to independent contractors who will buy the vehicle and be responsible for cleaning and maintenance while having the vehicle drive itself for hours on end

Don't know about Lyft,

But ask yourself WHY they are losing money, Uber is not just a ride sharing company anymore. Uber is more than likely taking the Amazon approach, Amazon didn't turn a profit for a decade, and now it's one of the biggest companies out there. Uber is doing the same thing.

 

[Moderate Right]

That is not the way it works. Sorry, but this is basic price theory that is covered in Eco 101. Companies can not merely pass costs along without consequence. If could, their prices would be higher in the first place.

This could have real consequence to companies like UBER and Lyft, squeezing their competitive advantage over taxis. Then again, that competitive advantage has a lot to do with the "gig" economy.

Well, I am not a fan of these Uber and Lyft companies. So, I don't really care what their fates are.

 

[Lord Tammerlain]

Don't know about Lyft,

But ask yourself WHY they are losing money, Uber is not just a ride sharing company anymore. Uber is more than likely taking the Amazon approach, Amazon didn't turn a profit for a decade, and now it's one of the biggest companies out there. Uber is doing the same thing.

Uber is attempting to do what Amazon did. It will only work if it gets some key patents on self driving vehicles. The cost of entry into driver service is rather small a website and an app and a local provider can be up an running. Pay drivers more and get Uber drivers to work for you. Amazon spends a huge amount on capital improvements to make it more efficient and competitive. A drivers service right now does not have those capital costs (the drivers do however)

 

[Lord Tammerlain]

The laws don't allow driverless vehicles. But, innovation is the key to keep up with technology with the world. Democrats want that to stop. As with any new business, they will pay more in the beginning and charge less. Then, the shift will happen. It always has and always will. So what? $4,800/mo is a good amount of money when you can write off either depreciation or mileage as an independent contractor. Why should a taxi company be able to require you to have your own car? Why is that the government's business? Oh ya, California Franchise Tax Board is losing $8 billion a year. Follow the money and you'll figure out why the law is written and for whose benefit. The State Legislature and employees and unions of course.

4800 a month when 2000 goes to operating costs is not alot and no way is that done on part time hours. That person has to pay for their own benefits, there own SS contributions (are they eligible?) and pay entirely for their own pension/retirement

 

[Stealers Wheel]

Well, I am not a fan of these Uber and Lyft companies. So, I don't really care what their fates are.

I happen to love both. In my community (and in every other community I've used them) they are faster responding, their cars are new and clean, the drivers are safe and friendly, and they cost less than taxis.

Each driver is rated by the customer at each ride. If a driver gets low ratings, all the other customers know it before they get in the car and can cancel the ride and order another for no cost. I love that. Can't do any of that with a taxi. If a share ride driver consistently gets poor ratings, the company remedies the problem or they fire the driver. The app allows and even encourages the customer feedback immediately. If there was something wrong with the ride, the company wants to know about it right now. Also, the customers are also rated by the drivers, so a crappy customer (belligerent, dirty, rude, no tipper, etc.) won't have drivers responding quickly when they summon a ride. Everyone has built-in incentives to be on their best behavior.

Maybe this sounds like I am shilling for ride share companies, but I assure you I am not. I'm just a very satisfied customer.

 

[aociswundumho]

That person has to pay for their own benefits, there own SS contributions (are they eligible?) and pay entirely for their own pension/retirement

Everybody pays for their own SS. The employer doesn't pay half, the employee pays it all in the form of lower wages. It was sold that way to intentionally deceive the American public.

 

[JasperL]

Uber and Lyft have yet to make a profit. They are keeping rates low to drive out competitors then when they are gone raise rates in a monopolistic market (at least their hope)

I don't short stocks because the market can remain irrational for a very long time, but I just don't get that business model at all. Taxi driving and related has always been a low margin business, which is the justification for medallions and other limits, so that those in business can make a profit. So Uber comes in and obliterates barriers to entry. How can that possibly IMPROVE the business model. Their technology is great (never used Lyft...) but it's replicable, and so how in the hell do they ever get monopoly power? I don't see how they ever earn their valuation...

Maybe I'm missing something but it's like WeWork. They rent office space, which is cutthroat and prone to crashes. They lost like 50 cents per dollar of revenue, which was up from losing a $1 per $1 of revenue, their business model is easily copied, and they priced that IPO at $40 billion... :shock:

 

[sjmay]

Uber is attempting to do what Amazon did. It will only work if it gets some key patents on self driving vehicles. The cost of entry into driver service is rather small a website and an app and a local provider can be up an running. Pay drivers more and get Uber drivers to work for you. Amazon spends a huge amount on capital improvements to make it more efficient and competitive. A drivers service right now does not have those capital costs (the drivers do however)

There's the problem, you only see Uber as a driver service.

 

[JasperL]

"... The bill has the potential to change the employment status of more than 1 million low-wage workers in California, not just gig workers at companies like Uber, Lyft, DoorDash, Postmates and Instacart. It will make it harder for gig economy companies to prove that their workers aren’t staff, while ensuring key benefits and protections, like minimum wage, insurance and sick days."

I forsee more the potential of 1 million low-wage workers being out of a job.

On the other hand, if Uber, Lyft and the like hire a sort of middleman like an employment agency, their extra costs would be kept to a minimum with no need to offer health insurance, minimum wage or any other benefits to the low-wage workers.

I don't know about the legal aspects of the bill, but frankly a business that survives based on screwing 'independent' contractors should die off. It's not even so much about Uber drivers, but when that business model takes over, those who want to do the right thing and hire employees and provide benefits can't compete, so it drives out the good business models in favor of exploitative ones. It's a race to the bottom, and who is getting the shaft are the workers. Uber execs are already wealthy beyond their wildest dreams from the IPO.

You mention using employment agencies versus direct hiring. That's more of the same. It creates a two-tier workforce with the white collar high skilled people being employees with vacation and sick pay and insurance, and then the companies use a temp agency for the blue collar work that doesn't offer crap for benefits. I don't see how that's good for working people going forward.

 

[JasperL]

I usually question bills like this that for whatever reason have intended targets without much consideration for unintended consequences.

Ultimately there is nothing in the bill for companies that do this to simply take the forced relationship cost additions and pass that right to the consumer, and most articles I can find on this all suggest that is the likely outcome.

All that really means is California *thinks* they are doing something for the worker, but the company will not go without, as the bill in this case literally targets the consumer.

We sure we are all good with California going at this "problem" this way? And are we sure that all employees in this condition are equal (meaning work for Uber, Lyft, and so forth all the same way and under the same terms?)

I get that but what it means in practice if those workers are making min wage or less, with no insurance, no benefits, then ultimately we taxpayers pick up the difference with Medicaid, ACA subsidies, food stamps and EITC and all the rest. So in a real way, as I see it, it's one way to pass off costs that SHOULD BE paid by the users of a service like Uber and offloading them onto the public dime.

 

[PirateMk1]

California passes Assembly Bill 5 for gig workers



Its my opinion that with very few exceptions, the people where the rubber hits the road aren’t making any money. Independent contactorship can work in lots of areas, but it takes big sales with low overhead. Uber snd Lyft make the money, the driver/owner gets the squeeze.

Tax collectors don’t like independents because they often end up owing, and cant pay. And regular taxi companies are getting hammered.

So we shall see. Uber and Lyft had better bring out the check books, ‘cause Daddy is hungry.

This bill isn't just about Uber and Lyft. Its also about the Teamsters Union and the trucking industry. The Teamsters want to organize the port drayage drivers which for the most part are leased to companies that pull from the port. This law makes the owner operators leasing on to a larger company untenable. Basically it turns people who own hundred thousand dollar pieces of equipment into employees and therefor subject to easier unionization attempts.

 

[Waddy]

This bill isn't just about Uber and Lyft. Its also about the Teamsters Union and the trucking industry. The Teamsters want to organize the port drayage drivers which for the most part are leased to companies that pull from the port. This law makes the owner operators leasing on to a larger company untenable. Basically it turns people who own hundred thousand dollar pieces of equipment into employees and therefor subject to easier unionization attempts.

I KNEW there must be more to this story. It never was about a bunch of cab drivers, not much anyways.

 

[PirateMk1]

I KNEW there must be more to this story. It never was about a bunch of cab drivers, not much anyways.

This bill has tons of carve outs for all sorts of industries. Its mainly targeted at the trucking industry and was initiated because of a lawsuit that was successful in targeting the owner operator captive lease arraignments. I am not saying there is not a problem with misclassifications just that the abuse is not the reason the law was passed.

 

[Lord Tammerlain]

There's the problem, you only see Uber as a driver service.

That is primarily what it is. Unless/until it can develop self driving cars it is a driving service and food delivery service as well.

 

[bluesmoke]

In one sentence you acknowledge that Uber drivers are indeed independent contractors, and then you say they are controlled by Uber. Which is it? Does Uber control their hours, provide the car, the insurance, gas, maintenance, etc., or do anything besides sign them up to drive as independent contractors? The deal is Uber gets the booking fee and a cut of the fare. For that Uber provides a service, including rating both passengers and drivers. That rating costs the same whether it is a minimum ride or a long ride. So the booking fee is legit. I don't see this as a bad deal for either the driver or Uber. I smell the taxi lobby in this. They hate Uber.

How would construction sub-contractors like an Uber deal? Some would love it. Uber would rate the employees used by the contractor, which might making hiring lees of a crap shoot, they would rate the homeowner and general contractor, which means the sub-contractor might get paid on time, (sometimes they don't ever get paid, and put a lien on the home/business). So, yeah, some might just love it.

I smell that the Uber independent contractor system, and many others like it, is a scam. That I acknowledge they are legally independents does not change my message. There is nothing "independent" about that arrangement any more than as an employee. An employee has more independence by having more rights that an Uber independent doesn't have and is thus taken advantage of by Uber. Sure, an Uber driver can run "their" business as they see fit. As long as what they see fit is how Uber wants them to run their business. They're about as independent as a driverless taxi.

Having had my own construction business, if I went to my independents with any kind or arrangement as Uber has, they'd tell me to stuff it. Same with the others.

 

[Bullseye]

Yeah, classic progressive/liberal "we don't care what YOU want, we know what's best for you." move. Bill was written by California Labor Council to get more members(and money).