Terrible New Worker “Protection” Laws Threaten the Gig Economy
2020-07-01 · Guest: — · 51:42
Bob Zadek and freelance journalist Kim Kavin discuss the damaging effects of “worker protection” laws like California’s AB 5 on the gig economy and independent contractors. They explore how these laws, often driven by union interests and a desire for tax revenue, strip millions of workers—particularly women and minorities—of their freedom to choose flexible work arrangements.
Topics: Gig Economy, AB 5, Independent Contractors, Worker Protection Laws, Freelance Journalism, Labor Unions, PRO Act, California, New Jersey
Speakers: Bob Zadek, Kim Kavin
Introduction to Worker “Protection” [00:17]
Bob Zadek: Hello everyone, welcome to the Bob Zadek Show, the longest-running live libertarian talk radio show on all of radio. We are this morning and always the show of ideas, never once the show of attitude.
This morning’s show, I guess, is kind of “coming attractions.” Remember when there were movie theaters and you had coming attractions and you were warned “the following preview is rated PG” or rated whatever they rate these coming attractions at? Well, this is coming attractions as to what’s in store for us if the Democrats win three branches of government. It is about the government at its most protective. The government that we are looking forward to, indeed that we are experiencing today in certain parts of the country. The government today is protecting all of us from what? We are being protected from our freedom. Because if we dare to exercise freedom, like how we earn a living, we will waste away our lives, waste away our money, and that decision about how we spend our workday is simply too important to be left to us to decide. So government has to protect us from the freedom to decide how to earn a living.
And this morning’s show is about being protected from ourselves, being protected from our free choice about who we work for, how we work, the hours we work, and what we do.
Introducing Kim Kavin [01:18]
Bob Zadek: To help us understand this important issue, I am delighted to welcome to the show Kim Kavin. Kim is a working journalist, she’s a freelance writer, she is significant to this morning’s show. She is co-founder of the coalition called Fight for Freelancers New Jersey, and she’s also professionally a member of the American Society of Journalists and Authors. She is widely read, she writes about a wide range of topics including—she writes for many yachting magazines—and she wrote a book in 2016, still available, called The Dog Merchants.
Why is Kim on the show this morning? Because Kim is experiencing government attempting to deny her a livelihood. Yes, denying her a livelihood, protecting her from her own decision about how to earn a living. This story started in its recent history in California. It is spreading like wildfire, like wildfire in blue states, but maybe more states to follow. And breathlessly trying to catch up are bills in the United States Congress to accomplish the same denial of freedom to earn a living. We are talking about, in the broad sense, the gig economy and all of the legislative and judicial activity seeking to deny workers the freedom to work as independent contractors for the large number of gig economy participants. You know about Uber, you know about Lyft, you know about Postmates, you know about TaskRabbit—all of these services that help us as consumers connect up with those people who want to serve us for a price they are happy to receive.
So this is so important because it is happening today, and already we are promised—if “promised” is the right word—we are promised that if Biden ascends to the White House and if the Democrats take control of Congress, what we are talking about this morning will for sure be the law of the land. So Kim, we are going to discuss this morning your being denied the freedom to earn a livelihood. Now, give us the big picture of what the topic is and then we’re going to drill down. Tell us why you, as a freelance journalist happily doing what you love to do and doing it at a price you’re willing to accept, how are you being denied the right to earn a living?
Kim Kavin: Well, good morning, Bob. Thanks so much for having me on. As you said, the issue really came to light in California with AB 5, and a lot of the media has been about what you just said—people like Uber drivers and Lyft drivers and things like that. But what they’re finding since that law went into effect in California on January 1st is that the way it’s written doesn’t just affect those kinds of people. It actually affects people in more than 300 professions that have been identified so far. Everybody from courtroom interpreters and respiratory therapists—just last week there was a pharmacist with a PhD who was thrown out of work because of this thing.
The Scope of AB 5 Beyond Uber and Lyft [03:01]
Bob Zadek: Now Kim, let me just—Kim, if I may, let me just interrupt just so the audience understands what the “it” is and what AB 5 is, a phrase which is common to you and I but may not be so common to people around the country who are listening this morning. And I’m just going to give a very, very brief non-legal summary of what this is all about.
AB 5 is a bill passed by the California legislature. It’s the law in California. New York and New Jersey and other states are considering similar legislation, so this show is by no means about California; it is about the country. And what AB 5 does, by statute—and it has a judicial history that’s not so relevant to this morning’s show—what AB 5 does basically, it says that drivers for Uber and Lyft and, as Kim will explain, hundreds of other activities, these employees—and I’m using the word “employees” in a very broad sense—these workers, is a better phrase, what they do is they are independent contractors. They, if you will, get paid by the hour or by the something, whatever the term is. They are not employees. They are paid a fee. They pay their own Social Security taxes and they are not—they do not contribute to unemployment insurance funds or Social Security funds. They deal with it as independent contractors.
The Legal Mechanics of Independent Contracting [04:11]
Bob Zadek: And in exchange for being independent contractors, they get to work the hours they want. They work for two hours a week or 200 hours a week, whatever they want. They have the freedom to work when they wish, which means the activity works beautifully if you have a complicated life. You have 10 hours a week you want to spend making money and no one’s going to hire you as an employee for 10 hours a week, so you work in this massive activity in many, in hundreds of industries. You work on the hours you want to work, you set your own hours, and you are told what you will get paid for an hour. If you don’t like it, you simply say, “I’ll pass on being an Uber driver, I’ll do something else.” So you are independent contractors—emphasize the word “independent.”
And the California legislature says, “No, no, you may think you’re an independent contractor, but we decide by statute you’re not. Therefore, you’re an employee. You must work for 40 hours a week, unemployment insurance benefits, Social Security benefits—all these benefits. You become a full-time employee.” And the whole flexibility, the whole business model fails. Now, there are so many industries that rely upon that as to how they function. Kim will explain. That’s what the fight is all about. Sorry, Kim. Now, please go on with your story about how many different industries are affected.
The Rise of the Female Independent Contractor [05:31]
Kim Kavin: Yeah, that’s right. You’re honing in on it. And in my case, so I was a daily newspaper editor and a magazine, a national magazine editor for about a decade. So I know what it is to be a full-time company employee in the publishing industry. What I decided almost 20 years ago now is that I could make more money and have a better life if I simply became an independent contractor and offered myself up as a freelance writer and editor to all kinds of different magazines and newspapers. And I have never looked back. I, like I said, I did a decade as a staffer. I know what that was like. I experienced a lot of things that a lot of women experience in the workplace with glass ceilings and, you know, you know you’re never going to even be considered for the top jobs.
But as an independent contractor, I not only have all the flexibility you described—I work when I want to work, how I want to work, for whom I want to work—but I actually make more money than I ever made in some of the top jobs at those publications. And even throughout the pandemic, what we’ve seen is with our friends and our colleagues who are still staffers, a lot of them got furloughed and laid off when the pandemic hit. People like me? Yeah, we took a dip. Some of our clients pulled back on their freelance budgets, but I never lost all my income in one shot. And I can maneuver and move around and find other work in other places.
So for people like me, it’s about way more than 10 hours a week. This is how we pay the bills. I mean, and it’s not just me. There was a big report that the IRS put out last year that showed that since the year 2001 in this country, the number of women who are also independent contractors who are the breadwinners in their family, it’s up 90%. 9-0. Wow. So the notion that this is just about a guy picking up 10 hours of work a week with Uber, that is not what this is ultimately about.
Debunking the “Exploitation” Narrative [06:41]
Kim Kavin: The rotten core of these bills, like the one that California already passed, the one that we so far have stopped in New York and New Jersey and that we’re trying to correct at the federal level, the rotten core of these things takes our labor laws back to the 1930s when people like us were not allowed to exist. It drags us backwards. That is what we are fighting against.
Bob Zadek: And what’s interesting is the legislation purportedly—the political cover that Lorena Gonzalez, who is the member of the state assembly, regretfully from San Diego, has always said—her legislation was designed to protect workers from being exploited. The most absurd label one can imagine. How could somebody be exploited when a new business model is created and Uber goes out into the world and says, “Okay, we have this business model. If you want to participate, sign here,” and you can work whatever hours you want? There was no compulsion. There’s no company town. Nobody is being compelled. How can that possibly be exploitation when an opportunity is created in the gig economy that didn’t exist before and workers say, “Wow, that works for me, where do I sign?” How could it possibly be exploitation? Yet, haven’t you found in your campaigning, Kim, against the bill, that isn’t that a substantial portion of the political cover and isn’t it utterly hypocritical?
Kim Kavin: It is definitely what a lot of the people supporting the bill have been led to believe they’re doing. They have been told that if they enact this, they’re going to help people who are struggling. And that’s a good impulse to want to help people who are struggling, right? You see someone struggling, you want to help them. But there’s two things I would say in terms of whether independent contractors are actually being exploited.
One is that in every study we can find—and serious studies—the U.S. Treasury Department, the Internal Revenue Service, ADP Research, Intuit, and Gallup—and these are studies released just up until a couple months ago right before COVID hit—70 to 80% of independent contractors routinely say they want to stay independent contractors. They like their lives the way they are. That does not sound to me like people who are being exploited. Not even a little bit.
The other thing I would say is if you’re being exploited, it means you’re being denied something, right? You’re not getting your fair due. All of these studies show that independent contractors make as much if not more money than people in similar roles in traditional workplaces. The most recent study that came out that Gallup did said we’re actually happier as independent contractors working in just one field than someone with a traditional job in just one field. So the notion that somebody like me is in a bad place, I just can’t understand that. We understand that in certain professions, which tend to be unskilled, low-paying things like janitorial house cleaning, things like that, is there an opportunity to cause harm to low-paying, underskilled, undereducated people? Sure there is. Should government agencies go after corporations that do that and exploit people that way? Of course they should. But when you write a law the way that these laws are being written, they can’t tell the difference between people like that and people like me. So it wipes out everybody. The best line I saw about that was in the New York Times. Somebody said, “This is like trying to kill a cockroach with a cannon. You’re blasting away the middle class.” That’s what this is.
Market Dynamics and Worker Choice [07:51]
Bob Zadek: And what’s interesting is let’s take Uber and Lyft, which were really the targets, the starting point. They were like, in the eyes of the legislature, they were the exploiters, although there are, as Kim has said, there are hundreds of occupations that are structured around this model. But focusing on Uber and Lyft, if you wish to spend your day driving a car, moving other people around and being paid to do it, and if you want full-time work and you want security, there are plenty of opportunities. Then sign up for a cab company as an employee. You have that choice.
But if, on the other hand, you find the 40-hour work week and being an employee and not having the freedom to be unappealing to you, now you have freedom, as I said in the introduction to this topic. All it does is it gives people an option. How could that possibly be exploitation? You’re not—
Kim Kavin: Well, this is what Uber’s trying to prove, right? And did you see the study that came out last week, Bob, from Cornell University about Uber and Lyft specifically on this?
Bob Zadek: I did not.
Kim Kavin: It was just released on the first week of July. What Cornell University’s researchers did was they got hold of all the data from inside Uber and Lyft. They went into the apps to look at what the drivers were actually doing and how much money they were making. It was a study of just Seattle, but it was the first time ever that anyone had looked at—they call it microdata—this way.
What they found was that nine in 10 of the Uber drivers in Seattle and Lyft drivers were making more on an hourly basis than the taxi drivers. 92% of them were earning more than the Seattle minimum wage. The median driver after costs was earning just shy of $50,000 a year, which is way more than taxi drivers. It was just shy of the median for all Seattle occupations. And 96% of those drivers were working less than 40 hours a week. Does any of that sound like exploitation to you?
Bob Zadek: Of course not. And even more absurd is remember, Uber and Lyft, for whatever reason, have not made a profit yet. Therefore, they are not the ones who are profiteering. They cannot be exploiting workers and underpaying them and keeping all of the money for themselves because they aren’t even making a profit yet. And the only ones who benefit, and the ones who are always supposed to benefit, are the consumers. The consumers get to have flexible services available when they want it at a price they are willing to pay.
So this is simply a question of the marketplace almost purely dictating the value of the time of an Uber driver. And if Uber drivers do not make enough, they will not sign up. They will say, “This is a crappy way to spend the day, I’m not making enough.” Kim’s statistics are wrong, and I’m going to do something else. Uber will not have enough drivers. They will have to increase their cost to consumers to keep the model alive. The drivers will get, again, the market.
So in effect, what Uber does in a manner of speaking is create this almost perfect marketplace for service. Rather than have the price being dictated by the legislature, it is dictated pure and simple by the market. And the market operates at two levels. If it’s too low, if the drivers don’t make enough, they will not show up, Uber will fail. If Uber does not pay the drivers enough and keeps the profit, they will run out of drivers. And if the service is too high, consumers will not pay. And again, the model will fail. So the marketplace will give all the information anybody needs about whether the business model will succeed. And so that’s what the fight is all about.
Impact on Specialized Professions [10:31]
Bob Zadek: Now, I’ve mentioned Uber because Uber and Lyft are always ground central for this fight. But Kim, I would like you to help our friends out there understand how widespread the model is. There are, as you started to explain—I’d like you to expand that—hundreds of activities that operate in this structure. And so many people well, well, well beyond Uber and Lyft drivers and Postmates, etc., are dependent upon this model for their livelihood. Give us a sense of how broad this business model is in the economy, because most consumers don’t see it.
Kim Kavin: No, you don’t realize when it’s happening. But like they said, they’ve identified more than 300 professions so far. The total number of people this affects, it depends on whose data you want to believe, how you want to define an independent contractor or a self-employed person. But everything from the U.S. Bureau of Labor Statistics to the more recent surveys by specialized private organizations, they tell us that there’s somewhere between about 10 and 50 million Americans that are working this way, either a couple hours a week or people who do it like me and it’s the way they earn their entire living.
So when you write a law that affects all independent contractors, you’re smashing quite a lot of people who don’t deserve to be smashed. You know, even California’s own legislative analyst’s office, when they did a study of this back in February, they came out and said that in California alone, they think this is going to hit about a million people, and probably very, very few of them will actually be helped by it. They’re going to be hurt by it. That was the government’s own analysis of this thing.
So if you extrapolate that and go all across the country, you’re talking about people like—let’s say you are a sign language interpreter. You help people who are deaf to communicate with people who do not speak sign language, right? You’re an interpreter. And let’s say you do that for the courts where someone who has a hearing impairment is before the court, they need an interpreter to help them navigate the court process. Well, the courts have a list of sign language interpreters who on any given day can go to any different court around their state and do this job, which is a very necessary job for inclusiveness in our legal system and our processes. Well, those persons doing the interpreting are independent contractors, right? They don’t work for just one court. They aren’t an employee of just one town. It doesn’t make sense for just one town to employ a person like that because they don’t have a full roster all day long of people who need that service. It’s a service they need once in a while. So the interpreter sets herself up as her own business. She’s a self-employed person running her own business going from court to court. These are some of the people being thrown out of work right now because of the way these laws are written.
The same thing’s happening to writers like me, people who do freelance editing, which I do as well. You know, there’s plenty of magazines who need maybe eight or 10 hours a month—not a day, not a week, a month—of help with editing copy for their publication. Are they going to pay someone a full-time 40-hour-a-week wage to do eight hours a month of work? No, that doesn’t make any sense. But for somebody like me, you string together a couple of those magazines, well, all of a sudden you’ve got a pretty good full-time job. And if you can make a couple hundred bucks an hour doing that, you’re no different from a specialized lawyer or accountant. So again, we’re not talking about exploitation with the majority of independent contractors. We’re not talking about people who are low-skilled with a lot of independent contractors. We’re often talking about really highly skilled people who are simply choosing to work for themselves because that’s what’s best for the marketplace and that’s what’s best for us as individuals. Does that make sense?
The Origins of the Legislation [13:11]
Bob Zadek: And so—of course it makes sense. It makes sense to all of us. And I’m reminded of Ronald Reagan’s very famous comment: “The most dangerous words you can ever hear is ‘I’m from the government and I’m here to help.’” Ooh, gives me the willies. So the government now has stepped in to protect, allegedly to protect, quote, “exploited workers.”
Now, I should also mention as we go to the break, Kim, I’m not aware of any groundswell of complaints by the people being, quote, “protected from their own freedom.” There never was in California or elsewhere. Nobody was crying out for help. Nobody was organizing unions. Nobody was organizing ad hoc coalitions. “Help us, protect us from Uber or Lyft.” They were, in my experience, anecdotal, grateful for the opportunity. They were given somebody who was traditionally driving a cab as an employee, now gets to set their own hours, determine, drive their own car, interact with consumers, and have all of the other work, all of the back-office work done for them. So there was no crying out for help. It’s not like some journalist discovered exploitation, blew the whistle on the whole ugly mess, and legislature jumped in.
The history of this, as we go to break, was there was a California Supreme Court case called Dynamex which the State Supreme Court of California, in effect, in a ruling citing legislation and tradition that goes back to the 1930s, it set forth this standard of restrictive standard of independent contractor. So the State Supreme Court did it, and the legislature said, “Wow, that’s a cool idea,” and they said, “Let’s codify it in legislation.” So they took the California Supreme Court—started with a very old body of law, they made a ruling in the State Supreme Court, legislature jumped on the bandwagon. So that’s what gave birth to this whole process. It was not the discovery of an area that needed legislation. This was an invention of the legislature.
Now, when we come back from our 30-second break, Kim, I’d like to explore with you the real motivation, how this is driven by unions, how this is driven by the bloodlust of government for more tax revenue and more control. It’s not about protecting workers. That’s the political cover. It is about something a little less pleasant and a little less protective of us all. This is Bob Zadek, I’m speaking with Kim Kavin. We are discussing Kim’s wonderful article in Reason magazine, quote, “I don’t want to be anybody’s employee.” And Kim, neither do I. We’ll be back in 30 short seconds.
[Ad break omitted]
From Journalist to Activist [16:11]
Bob Zadek: Welcome back to the Bob Zadek Show, the longest-running live libertarian talk radio show on all of radio. This morning we are speaking with journalist Kim Kavin. Kim has written a wonderful article in the recent issue of Reason magazine entitled, quote, “I don’t want to be anybody’s employee.” And Kim, those are very praiseworthy, freedom-loving attitudes which I 100% endorse.
We are talking about Kim’s battle against the legislative attempts—California succeeded so far—attempts in New Jersey, which Kim will share with us her experience fighting successfully the New Jersey legislature, the experience in New York, which has backed off a little bit, and in Washington. Now Kim, we’re going to discuss government motivation in a second because while they’re using “protecting workers from their own freedom” as the political cover, their motivations are a little more unpleasant than that. But before we do that, Kim, because the story is so interesting, there you are, a journalist writing about yachting, having the time of your life, earning a living, writing about what you love to write about, and all of a sudden you become—who would have thunk it—an activist. Tell us how that all happened.
Kim Kavin: A friend of mine here in New Jersey, a fellow freelance writer, put up a post on Facebook that said, “Holy bleep, California’s AB 5 is coming to New Jersey.” And we all knew what that meant because we’re members of the American Society of Journalists and Authors, which had been trying to fight this in the state of California and trying to sound an alarm bell and saying, “Whoa, whoa, whoa, they’re talking about Uber in the news, but this hurts people like us.” And so when we realized back in November that it was coming to New Jersey too, all we knew was—you know, I couldn’t have told you how to look up a bill on the state legislature’s website back in November. But all we knew was that we had to stop it. And we very quickly became the loudest voices in the state attempting to do that.
Bob Zadek: Well, you’re journalists, so of course you know how to work the system pretty well because you had access to the media. And I guess what happened was the legislature discovered they kicked a beehive when they started to threaten the livelihood of journalists because they have direct access—
Kim Kavin: We are the people who make media for a living, and we got very angry about that. And to your point actually before the break, we all went to testify here in New Jersey back in early December about this. And it was a packed, packed, packed legislative hearing, a big, big room. It was the kind of thing you see in the movies, just people flooding in by the dozens and dozens and dozens and dozens. Not a single one of them was an Uber or Lyft driver who was asking for help. The testimony went on for more than four hours here in New Jersey about this bill in December. There was only four people who testified in favor of it. One was the sponsor of the legislation, who news reports say makes about a quarter million dollars a year from the unions. One was a top director of the AFL-CIO here in New Jersey. You know, it was just people tied to the politics of it who wanted it. The actual real people in the room, people of all colors, all genders, all kinds—everyone from truckers to musicians to bakers—everyone standing up that was a real person to talk about this bill was there to scream no.
The Political Realities of Labor Law [18:31]
Bob Zadek: Now, here’s kind of a personal question, you can fudge it if you want. Obviously, I presume that the first article you had posted in a libertarian magazine—in this case Reason, a magazine that I read cover to cover the second it comes out and I commend it to all of our listeners, although I shouldn’t have to, they probably all read it—but was that the first article you had published in a libertarian magazine?
Kim Kavin: It was, and it’s obviously not the first article I’ve ever published in my life. I’m a writer, so you Google me, you get, I don’t know, 40,000 results or something. But on this topic, we’ve been—my fellow writers and I, we’ve been able to get op-eds and articles published in quite a lot of places. As wide-ranging—you know, out here we had them in the Philadelphia Inquirer, the Washington Post, all the big New Jersey papers. You know, one of our writers got one into Parents magazine. We’ve been able to do that. But generally speaking, the traditional media, they seem to be covering this from the Uber angle, which really frustrates us, which is why we’re trying to raise our voices so loud. They don’t seem to grasp just beyond the basic talking points about Uber what this is really all about. So that’s what we’re trying to do when we raise our voices.
Bob Zadek: So, and the writers’ group, could you generalize—or is that utterly absurd—what their overall political orientation is, if there is one? Are they apolitical? Is there a clear focus, or is that not even discussed? It is a single-issue—your organization is for the minute a single-issue organization designed to accomplish a very specific legislative goal.
Kim Kavin: We’re definitely the latter and we are non-partisan. With that said, though, we set up separate Facebook groups that are all well over a thousand people now, some are a couple thousand people now. They exist in New Jersey, New York, other states where this was threatened—Illinois, Massachusetts. We are coordinating with a group called California Freelance Writers United out in California. If you look at the makeup of all these groups, you see this really amazing thing that something like 70% or so of these groups are women.
And when we started to notice that, that was when we started to realize how closely the idea of independent contractor work is tied to women wanting control and a work-life balance and to get rid of the glass ceiling and to get all the Me Too stuff out of the way that you have to endure when you’re an employee. All of that goes away. So when we realized it was so many women, that was when we went looking for the data and statistics and found out that we are the data and statistics. Women do flock to this kind of work.
In terms of political affiliation, we don’t ask people what their politics are, but I can say just from kind of talking to people, they tend to lean a little more liberal. We certainly have conservatives and Republicans in our group. We absolutely have liberals and progressives and Democrats in our group. We have independents in our group. All different kinds of people. But we all agree that this legislation is idiotic. That is where we all come to a point and agree, which is really a beautiful thing if you think about it in America right now, that people can come together in a place and put their other politics aside and just say, “This is wrong. People should be able to work how they want to work.” So we don’t focus so much on politics, but there are Democrats who are members of our group for sure, and they’re just as angry about this as the Republicans.
The Federal Threat: The PRO Act [20:11]
Bob Zadek: Now, the question has to be asked only because it’s forced upon us. There is a bill in Congress called PRO, I think it’s called PRO Act. That’s an acronym for something or other, I don’t know the acronym.
Kim Kavin: “Protecting the Right to Organize” is what that stands for.
Bob Zadek: Organize equals unions. Hmm, I wonder if that’s a coincidence. So we have this PRO bill in Congress, and we have Joe Biden has as a specific element in his platform that he would support AB 5 on a national level. So if you can give us an insight at all, because of course national politics is upon us, we have a presidential election coming up in a few months, so you can’t avoid having a conversation at least in part on national politics. So to what extent does this issue or might this issue affect women, affect independent contractors across the board who might otherwise be loyal Democratic voters, in the fold if you will, and maybe routinely vote Democrat? To what extent might this affect—how passionate is their feeling? To what extent might it affect actually how they vote? Is it a single-issue vote for many people, or is it just something to be grumpy about but vote Democrat anyway?
Kim Kavin: Well, I obviously can’t speak for everybody in America on how they’re going to vote. But you know, the pandemic just made very clear to every single American all across the country of all political persuasions: this is what happens when the government shuts down your ability to work. This is no longer theoretical to people the way that it was before COVID-19 hit, right? We now understand that the government can come in and say, “You’re not allowed to work anymore.” And it scared the heck out of a lot of people.
That is what this legislation actually does. So if you’re a person whose career is caught in the crosshairs of this thing, if you’re like me, you have survived this pandemic, you’re building your business back up, how do you think I’m going to feel as a voter if I have to go in and pull the lever for somebody who’s saying, “Now we’re going to shut you down anyway”? You know, that’s not a good feeling walking into the voting booth.
And it’s not a small thing that’s being said. Now the good news I’ll tell you is when we walk into rooms with lawmakers, including Democrats who have voted in favor of this legislation already because it already passed the House, when we walk into the room with those folks, if we can actually get them into a conversation about the problems with the way this legislation is written, they listen and they seem to really understand that there is an actual problem. What we’re up against is the head of the AFL-CIO coming out and saying, “If you vote no, we’re not going to give you a dollar or any campaign help in this election cycle.” So you know, you’re talking about very big powerful union organizations telling these lawmakers that they want this. And then you’ve got the everyday people like us trying to say the lawmakers, “Hang on a second, this isn’t okay.” And the lawmakers seem to agree with us for the most part when we get in the room with them. It’s our hope that as we keep talking to them and lobbying them and explaining to them what the problem is, that they will work with us to correct the problems with the legislation. You know, this can be fixed if we actually want to fix it, and we have proposed fixes to it. It’s just trying to get in the room and listen because we’re not a big giant organization with hundreds of millions of dollars to throw around at campaign time.
Bob Zadek: But you mentioned some key points. You mentioned the profound, the disproportionate effect upon women entrepreneurs. And women entrepreneurs are collectively a strong voting block even for women who are not themselves entrepreneurs, they would identify with women who are entrepreneurs. And that to me strikes me as an important campaign issue. It’s very interesting because like the issue, for example, of charter schools—I’m not getting off message, but just an observation—the issue of charter schools also causes strange bedfellows. People find themselves allied in favor of charter schools who otherwise—which is an opposition to Democratic dogma, but they feel passionately about that. This is another one of those issues that readjusts the alliances somewhat. It’s quite interesting to me.
Constitutional Challenges and Arbitrary Exemptions [23:11]
Kim Kavin: One of our members actually wrote a whole article about that when this happened. A woman named Elaine Pofeldt wrote it. The headline was “California’s AB 5 Leaves Women Business Owners Reeling.” And that article talked about how women are the fastest-growing group of business owners in this country. The number of women-owned businesses is up over 20% just from 2014 to 2019, and that’s compared to 9% for all other businesses. So the notion again, this is about so much more than Uber. This is about how people, and in particular a lot of us women, are choosing to earn a living because we can succeed this way. We can be in control of our own destiny. This is to me as much about choice as any other issue. It just happens to be choice of how I want to work instead of choice about things like what I do with my body.
Bob Zadek: And as I said at the outset, I’ll remind our listeners out there that at its core, this type of legislation—AB 5, then New Jersey, New York, although New York has backed off, and now Congress and Joe Biden—this type of legislation, this criminalizing freedom to contract how you want, this denying freedom to organize your own work life the way you want, this protection from freedom, is an issue that could really readjust some voting blocks.
And also, what’s also interesting, Kim, in my research, I found that there is such a group or such a collection of black business owners, black entrepreneurs. There are journals whose appeal is to black entrepreneurship, and they are almost universally opposed because—you didn’t mention it specifically, but I know you’re aware of it—is that while this impacts women profoundly, it also impacts minorities profoundly. And this is once again denying minorities that first rung on the ladder of entrepreneurial independence. This is the easiest way to experience freedom in how you organize your work life. It’s the easiest way, just sign up somewhere and you get to experience freedom. And that scares the bejesus out of the unions.
Kim Kavin: Yeah. A month ago, just a month ago in the middle of COVID and everything, the head of the California Black Chamber of Commerce, the president and CEO of the Los Angeles Urban League, the people who are in the crosshairs of it in California because that’s where it went through so far, they came out just viciously attacking this legislation and saying that it is destroying, absolutely destroying the lives of black business owners. Which again, if your business is being put in the crosshairs of this thing, certainly I think you’re going to take that into consideration when you step into a voting booth.
Bob Zadek: Oh, for sure. It’s like getting between a mother bear and her cubs sometime in early October in Glacier National Park. You don’t want to get between a mother bear and her cubs. Well, you don’t want to get between an independent business person and their livelihood. That is—you get hazardous duty pay for doing that.
Now, Lorena Gonzalez, who sponsored—who was—started all this stuff, she was the chief sponsor of AB 5 in California. She has been inundated with complaints, and there have been, I think, Kim, over 30 or 40 amendments working its way through the system as now the political process gets ugly and you have subgroups such as yours, Kim, in the media, saying, “Okay, you didn’t think about us, so give us a carve-out.” And some groups—the medical profession, accountants’ profession—have gotten carve-outs as the legislature says, “Well, we didn’t really intend to capture you, so we’ll let you out.” So now we end up, just like tax favors, now it gets really ugly as subgroups—and I’m not trying to castigate you, I don’t—I wouldn’t blame you for trying—but we have subgroups getting exceptions. So now the legislature is dealing with one angry subgroup such as you guys, Kim, in the media. We gotta get you off our backs, so we’ll give you a carve-out. Now you go home, you’re quiet. And so each subgroup has got to get their own carve-out, and you’re left with the bill only regulates the people with less political power, which is painful for me even to say. Because now we have the most powerless group—and remember, the legislation is designed to protect people from being exploited. Well, the classic exploitation is if you don’t have political power, you lose. And therefore, by all the carve-outs, it ends up the legislation itself ends up exploiting the most powerless, and it becomes the only evidence of exploitation is in the legislation itself, not in what it’s trying to protect against. And that’s the crime of all of this.
Unions, Taxes, and the Future of Freelancing [24:41]
Bob Zadek: Now, just to help you understand a little bit—we’re running out of time regretfully, I’m having a great time, Kim, and maybe you and I will continue this the rest of the day on the phone, who knows? But Lorena Gonzalez pointed out in defense of her bill that, “Hey, these people are like free riders because they aren’t paying, by not being employees, they aren’t paying unemployment insurance, they aren’t paying Social Security taxes, and therefore they are free riders in our country.” Of course, the answer is they also don’t get unemployment insurance benefits. So you have made an election: “I like this lifestyle, I’ll take care of my own quote ‘unemployment insurance,’ I don’t need government to force it upon me.” I make a conscious decision as a consenting adult: I will forgo the benefits and forgo the tax.
And the other reason is, as you mentioned earlier, Kim, is that all of this legislation has the ugly taint of simply being one to reverse the decline in union membership. Union membership has declined profoundly, about 8 or 9% of the workforce in the private sector is unionized, and it’s down from like 30 or 35% 30-40 years ago. So union membership is on the decline. Union membership is very yesterday. And they are fighting like crazy to remain relevant and to keep a cash flow. So this is about the government, in effect, getting more tax dollars and about unions getting more membership, both under the guise of protecting workers. Nonsense. It’s not about exploitation except the legislation itself. It’s about enhancing unions and enhancing government treasury.
Now, tell us in a word—we only have about a minute left, Kim—tell us about your overall experience and the success you had in New Jersey. Have you driven a stake into the heart of the beast, or have you just won a short tactical victory but more to follow? We have about a minute.
Kim Kavin: Well, we definitely won the first battle. We stopped the bill inside of six weeks from finding out it had been introduced and the lame-duck session ending, we stopped it. It has since been reintroduced, but it has not moved forward through committee. And every once in a while, we let them know: we may not have the power that you talked about of lobbyists in a room with a lot of money to throw around in the statehouse, but we sure do have the power of the pen. So they know who we are, they know that we’re here, and we are ready to fight if they try to do this to us again.
Bob Zadek: I must end every show, even though sometimes it’s hard, on an optimistic note. Tell us your prognostication for the future of New Jersey specifically and New York and the country in general on this legislation.
Kim Kavin: It is my deep hope that the people pushing this type of legislation will come to their senses and realize it’s not just what you do, it’s also how you do it. This is the wrong way to do what you’re trying to do. It’s just immoral.
Bob Zadek: What are you being told sort of off the record, if you can, conversations you have had? What are the legislatures telling you when they’re not on camera and being recorded?
Kim Kavin: They’re telling us that they understand there’s a problem with the bill. We’re trying to figure out how to fix it.
Bob Zadek: Hallelujah. Well, Kim, thank you so much for giving us an hour of your time and for sharing your experiences. You’re doing God’s work as you well know, Kim. So thank you so much.
Kim Kavin: Thank you again.
Bob Zadek: Good luck in New Jersey, and let’s wish us all good luck in Washington with this horrible PRO Act legislation. Bob Zadek saying so long for now, a special thanks to Kim again, and I’ll be back again next Sunday. Please, have a good rest of the weekend.