During a public health and economic crisis, the last thing Congress should be doing is passing laws that hit the brakes on our recovery, kill jobs and hurt small businesses. Unfortunately, House Democrats did exactly that last week by passing the PRO Act, nationalizing the policies that continue to drive workers and businesses out of my home state of California.
The COVID-19 pandemic has left businesses unable to keep their doors open and families struggling to pay rent and put food on the table. In California, we saw the most small-business closures in the nation. Nearly 40,000 small businesses closed by September of 2020, with half closing permanently. Our state also saw a 293 percent increase in unemployment claims in 2020, with more than 782,000 residents filing initial unemployment claims. 1 in 5 people in Los Angeles are unemployed. California has also granted more than $11 billion in fraudulent unemployment claims and has another $19 billion worth under investigation.
To make matters worse, the disastrous California policies implemented through AB 5 have made the task of staying afloat significantly more difficult for small businesses and workers.
AB 5 redefined what an independent contractor is, making it harder and in some cases impossible for workers to drive for Uber in their free time, perform in their local orchestra or do freelance work. Upon AB 5 going into effect, gig companies like Uber and Lyft began making plans to stop doing business in California, putting into jeopardy a major source of income for workers. This caused a push from industries across the state to get relief from the misguided law.
The result? AB 5 has helped special interests and those lucky enough to gain the favor of those holding power in Sacramento while hurting those trying to make a living. Businesses who could afford lobbyists received exemptions, while our small businesses, newspapers, artists, yoga instructors, financial advisors, Uber and Lyft drivers, artists and others were left holding the bag.
We heard the stories of many hardworking, creative individuals who were no longer able to make a living under the new designation of independent contractors. Musicians unable to book gigs as venues and theaters could no longer offer the same compensation. Sign language interpreters and others who provide vital services could not be hired by their employers on a full time basis under the ABC test. Writers, editors, cartoonists and others were no longer able to find potential projects and clients to allow them to unleash their creative talents.
We must create policies that promote creativity, innovation and can adapt to today’s changing, dynamic economy. AB 5 is anti-worker, anti-business, anti-freedom and anti-American. In fact, it is so unpopular that voters in California rejected big portions of the bill in the November 2020 election. Yet, Democrats want the disastrous effects of this policy to expand across our nation’s communities. The so-called “Protecting the Right to Organize (PRO) Act” passed last Congress and was passed again last week by House Democrats.
Whether seeking financial advice, buying a home, taking out an insurance policy, or getting help with their taxes, millions of Americans rely on highly skilled independent contractors to safeguard themselves and their families. Thanks to the independent contractor model, communities across the nation have access to these important services.
From Uber and Lyft drivers to financial advisors to local artists, we should support workers freedom and our gig economy. We must adapt to our evolving economy and allow for all Americans to have the opportunity to succeed. This shouldn’t be a Republican or Democrat issue. As we continue to be impacted by COVID-19, supporting our workers should be — and must be — an American issue.
Kim represents California’s 39th District and is ranking member of the Small Business Subcommittee on Innovation, Entrepreneurship and Workforce Development.