Ridesharing companies Uber and Lyft almost exited California last week over a dispute regarding their drivers’ legal status. In 2019, the California legislature passed Assembly Bill 5 (A.B. 5) making the companies’ drivers employees and not independent contractors. A judge stayed an August 20 compliance deadline. Politicians’ efforts to restrict contractors could arrest the development of the sharing economy, hurting us all.
All work in a market economy must be voluntary. I must induce assistance I would like from others, which usually involves paying them money. If I run a business and want a task done repeatedly, we might formalize this into employment, as governed by law.
Voluntary employment makes both parties better off. Suppose I paid someone $50 to rake leaves. (This is a hypothetical, as I live to rake leaves.) I would prefer to pay the money to doing the work myself, and the person doing the work must prefer the $50.