California introduced another rights-violating, so-called gig work law (AB5) this year. Its intention is to “protect” gig workers by forcing companies contracting with them to make them employees with guaranteed hours and to provide benefits.
While the new law applies to all gig work, it particularly targets Uber (and other ride-hailing services) and their drivers. The rapid expansion and market value creation of Uber (which is still not profitable) makes it a target for anti-free market politicians, such as many California legislators. In their hubris, they think they know what is best for people in their state and believe they have the right to coerce their view on individuals and businesses through laws such as AB5.
By attempting to curb gig, or flexible, work, the California government is violating the United States Constitution. The Constitution limits government’s role to protecting the individual rights—the rights to life, liberty, property, and the pursuit of happiness. Yet, the California government is violating those rights.
The government is violating Uber’s and other ride-hailing companies’ right to liberty by attempting to force them to operate in a particular way. Rather than Uber trading with drivers as independent contractors, the government tries to coerce them to hire drivers as employees. Likewise, drivers’ freedom to choose to engage in flexible work as independent contractors is violated by AB5.
The AB5 legislation has ramifications also for Uber’s riders (likely a large portion of California voters). They will be paying for Uber’s increased costs through higher prices and potentially, diminished availability of rides.
Uber, fortunately, is not taking the government’s initiation of force lying down. It is already altering its app to show that its drivers are independent contractors like truckers and free-lance journalists (who are also seeking exemptions from the law).
Uber will give drivers more information about rides (such a trip’s distance and time), so they can choose rides (and reject less profitable ones). This, of course, can negatively affect riders. Also, the Uber app will no longer display a set price to riders but a range, letting the actual distance and time determine the price, making it more profitable for drivers.
Violation of Uber’s, its contractors,’ and riders’ rights to liberty to trade freely not only makes the California government’s gig work law unconstitutional—it makes it also profoundly immoral. As my Executive MBA students recently observed in their analysis of Uber’s case, the company has created a tremendous material value that enhances human life and flourishing, the standard of value by which an action’s morality is properly gauged.
Through its innovative app and ride-hailing service, Uber has disrupted the entrenched, government-protected monopolies of the taxi industry mostly everywhere (including in communist countries like Vietnam). This has created the value of more affordable, dependable, and convenient transportation for customers, thus enhancing their lives. Uber has also made enabled flexible work and income for many who prefer independent contracting and the choice of when and how much they work, such as students and entrepreneurs and those who want to supplement their income from other sources.
Government’s restricting Uber’s, its drivers’ and riders’ freedom of choice is immoral.
The California government is not alone in its violation of the right to liberty, although it has gone the furthest in its law on gig work. Governments elsewhere have tried to block Uber from their jurisdictions by throwing mountains of red tape at the company: regulations for driver training, licensing, insurance, and of course, additional taxes.
But convinced of the value of its innovation, Uber has tenaciously fought those regulations and taxes everywhere, eventually succeeding in most places. For example, it took for about two years for Uber to finally get to my home town, Calgary and overcome the opposition of the taxi monopoly to which the municipal government was acquiescing.
We owe Uber our gratitude and support for making our lives better (including those in the complacent taxi industry who must either improve and offer competitive service, or exit the business). Let’s make our voices heard by our local governments in support of Uber
The government, for its part, deserve our condemnation for violating our right to trade freely and for diminishing our flourishing.