See
What Happens When Someone Dies While Health Care Workers Sit at Home, Prohibited from Working? by Lee E. Ohanian. He is a professor of economics at UCLA.
"A broad group of economists, including Nobel prize winners, advisers
to US presidents and California governors, former US Treasury
officials, and advisers to the Federal Reserve and other central banks
agree that California’s destructive Assembly Bill 5, which prevents many
health-care workers and delivery drivers, among others, to work as
independent contractors, should be suspended immediately.
The Independent Institute is collecting signatures from PhD-level economists and other social scientists on a letter that began circulating last week.
The letter, which is addressed to California governor Gavin Newsom
and the state’s legislature, argues that AB5 is damaging the ability of
the state to respond quickly and flexibly to our rapidly changing
economic needs, and is creating long-term economic harm to our most
vulnerable individuals:
By prohibiting the use of independent contractor drivers, health
care professionals, and workers in other critical areas, AB-5 is doing
substantial, and avoidable, harm to the very people who now have the
fewest resources and the worst alternatives available to them. . . . The
current situation of voluntary (and mandatory) self-isolation has
created an immediate need for flexible and low-cost ways of delivering
goods to customers.
The letter also argues that hiring regulations compound the problems
that companies face in managing their current workforces, and that AB5
is killing off many productive and mutually beneficial work
relationships:
Hiring laws . . . mean that companies are unwilling to make
long-term commitments to traditional jobs, because they are presently
too expensive to contemplate given that employers do not know whether
they will be able to fill any permanent jobs at all and, if so, when.
The letter points out that suspending AB5 could be a potential game-changer for California:
It doesn’t really matter how great the pay is, how predictable are
the hours, nor how generous the benefits may be, if the law prevents a
job from existing in the first place. AB-5 unintentionally has pushed
all of the risks and all of the costs of a vibrant gig economy onto
lower and middle-income individuals, those who would benefit most from
flexibility to work around the restrictive policies.
The letter concludes by emphasizing just how important our needs are
and how policy must facilitate the best decisions during this national
emergency:
A mountain of work needs to be done, deliveries made, and people
stranded at home helped to receive groceries and medications. Meanwhile,
furloughed Californians stand on the verge of being wiped out
financially because the law prevents them from working part time in a
variety of positions.
Blocking work that is needed and impoverishing workers laid-off from
other jobs are not the intentions of AB5, but the law is having these
unintended consequences and needs to be suspended.
The Independent Institute is focusing on gathering signatures from
economists and other social scientists within California. But I have
shared the letter and the background of AB5 with economists outside of
California, most of whom identify as politically moderate or
left-leaning. Their responses clearly articulate why this law must be
suspended, and ultimately repealed and replaced.
From an economist at the University of Texas: “Why would Californians
stand for such an awful intrusion on their ability to earn a living?
What a terrible law!”
From an economist in Spain: “I am constantly fighting the Spanish
government to adopt better economic policies. Even Spain would not pass a
law this destructive today.”
From an economist at the University of Maryland: “California’s woes
are all self-inflicted from a legislature that clearly cares not a whit
about their constituents.”
From an economist in England: “I can’t imagine any group that
benefits from this other than trade unions. There is simply no other
explanation for passing such a ruinous law.”
From an economist in Canada, whose quote forms the basis for the
title of today’s column: “Lee, you are kidding, right? California is not
permitting health-care workers to work as independent contractors?
Despite an extraordinary and rapidly rising demand for their services?
What happens when someone dies, sitting in an ER, when hundreds of
nurses and respiratory therapists are sitting at home?”
Exactly. What will happen when this horror occurs, if it hasn’t already?
Monday, Governor Newsom responded to the growing health-care crisis—not by suspending AB5—but by creating a new state government health-care bureaucracy that will hire health-care workers.
Interestingly, and importantly, the governor has suspended some
significant regulations in dealing with this crisis, including waiving
medical certification for health-care workers. Yes, medical and nursing
students can work now, thanks to suspending certification regulations.
The governor made the right call here.
But what about suspending other regulations, such as AB5, which make
much less sense than medical licensing? Nope, not going to happen, at
least not now.
And what about all those other workers who are desperately needed,
such as gig drivers to deliver food and medications? Will the governor
create separate bureaucracies to hire those individuals? And all the
other individuals who can’t work as independent contractors?
Or, Governor Newsom could just suspend AB5. With a stroke of his pen, he could do a world of good for so many. Fingers crossed."
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