In 2019, Governor Gavin Newsom (D-CA) approved AB5 — a piece of legislation that claimed workers are “exploited” through their classification as independent contractors instead of employees. Although a California court granted Uber and Lyft an emergency stay in 2020 over a lawsuit that would have pressed the firms to conform to the law, the Supreme Court recently declined to hear the case, leading to the end of the stay.
The status of roughly 70,000 owner-operator truck drivers in California are threatened under the law, sparking protests and blockades at the Port of Oakland. In response to an inquiry from CNBC, the Governor’s Office of Business and Economic Development Director Dee Dee Myers said that truckers ought to “move forward, comply with the law and work together to create a fairer and more sustainable industry for all.”
Adopting a more conciliatory approach, the Port of Oakland created “Free Speech Zones” so that truckers can continue protesting with minimal disruptions to shipping traffic.
“Prolonged stoppage of port operations at Oakland for any reason interferes with commerce, increases congestion, and harms business for everyone,” Port of Oakland Executive Director Danny Wan said in an open letter. “Disruptions in truck movements and moving cargo drive customers away and prompt them to consider taking their business to ports outside California. We do not want to see the loss of business and jobs here.”
The Port of Oakland emphasized that it continues to meet with protesters and state officials. Newsom’s office said in a statement that AB5 was enacted with “sufficient time for affected parties to understand the requirements of the law” and urged the industry to “move forward” in supporting the change.
“California is committed to supporting our truck drivers and ensuring our state’s truck drivers receive the protections and compensation they are entitled to,” the statement added. “This administration has employment tax incentives, small-business financing, and technical assistance resources to support this essential industry.”
The reversal of the pause on AB5 occurs one year after Democratic lawmakers introduced the Protecting the Right to Organize (PRO) Act — a similar law that would narrow the definition of an independent contractor at the federal level under the guise of granting them more protections.
Pew Research found in 2021 that 16% of Americans — including 30% of Hispanics, 20% of African-Americans, and 12% of whites — have participated in gig economy work, such as shopping for and delivering groceries, cleaning homes, or delivering packages. Young Americans and those with low incomes are most likely to earn money through a gig platform.
Although incomes are nominally rising, real average hourly wages dropped 3.6% between June 2021 and June 2022 amid rising inflation. Meanwhile, worker shortages driven by a decline in the labor force participation rate — the percentage of people who either have a job or are actively looking for one — have worsened inflation as businesses struggle to fill open positions.