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Julie Su wants the world’s fifth-largest economy to remain a global juggernaut. To do so, California’s labor secretary acknowledges, the state will need to position its workforce for the jobs of the future—a catchall term that encompasses not only the promise of innovation, but also the dystopian threat of increased income disparity.

Economists project massive upheaval from disparate forces such as automation and an aging population. California’s challenge, as Su sees it, is to roll with those disruptions while making sure jobs here continue to pay a living wage, offer worker protections and accommodate working families.

In short, she wants the future of work to bridge today’s wealth gap. A labor and civil rights attorney—and past recipient of a MacArthur Foundation “genius” grant—Su has been leading the Future of Work Commission alongside Chief Economic Adviser Lenny Mendonca and Senior Adviser on Higher Education Lande Ajose. They have been hosting meetings across the state with the goal of coming up with a new social compact for workers.

Meanwhile, Su—whose full job title is secretary of the California Labor and Workforce Development Agency—has committed to a new future-of-work department to execute the commission’s findings and recommendations. In an interview, edited here for length, she spoke about the commission’s goals and how she plans to enforce California’s own recent workplace disruption—the new worker classification law known as AB 5.

What are we looking at in terms of future of work? And why should Californians care about this topic?

We hear so much about how A.I. (artificial intelligence) is going to destroy jobs, such as how a robot will take the place of humans. But the commission was formed under the principle that there’s nothing inevitable about the shape of our future economy. We can, through policies and interventions … come together to reverse the 40-year trend of growing income inequality and poverty.

What’s your understanding of the distribution of wages right now, whether it’s gender, race or geography?

Over one-third of working people in California make less than $15 an hour. And a full 20 percent of those earning less than $15 have a college degree or some college education, which forces us to think about the connection between education and job opportunity, right?

It’s not enough to address the cost of things; we also have to address how much people actually make, so we have to focus on the quality of jobs.

Over the last 40 years, productivity has increased by 259 percent, but wages only by 11.6 percent, which means that we have a massive distribution problem. The productivity gains are going somewhere, but they’re not going to working people. And that’s creating not just income disparity, but also wealth disparity.

And the racial wealth gap is astounding. The median wealth of black families who have a college education is below the median wealth of white families who do not have a college education. Those are the problems we need to solve.

So what are examples of solutions?

I don’t want to pre-suppose what the commission’s going to come up with. I think that there are some policies, strategies and ideas that have been tried and we just need to expand them. We’re looking here and elsewhere in the world. What lessons do they have for California? And then, I think that there are ideas and solutions that sitting here today we have not yet imagined.

Can you at least tease me with an idea?

For example, at the first meeting, the commission had a panel of four workers, and one had a union job where she worked as a janitor. The union job actually helps to preserve her security, but that job was also subcontracted out, and when it was, she’s lost certain things like a retirement benefit.

So clearly, one part of the answer is: What is the role of union? And how do we ensure that unions are strong and can organize and, given changes in the economy, are supported in new ways of organizing? There’s data that shows that having a union does more to ensure higher wages than even having a college degree.

The second was a warehouse worker who talked about how he basically felt like a number. Automation was used … to set a high level of surveillance, and he felt expendable. So what ways can technology innovate, not just for the benefit of the shareholders and consumers, but for the benefit of working people?

Then the other two workers who spoke were in workplaces, both of whom have received money from the Quality Jobs Fund, a collaboration between the Federal Home Loan (Bank of) San Francisco and the New World Foundation. And the fund was used for capital investments in companies that meet certain job-quality criteria. These two workers both talked about how their jobs allow for a living wage, have flexibility—one of them had a special-needs child and needed to go to appointments—(and) that include benefits, access to training and professional development, and then upward mobility and a chance to build wealth.

All those suggest higher labor costs for employers, though. Is there a point where government then starts to subsidize private industry in order to provide a private-sector worker with better wages? Is that a direction we should contemplate?

I think everything is on the table. What the governor has charged the commission with is to think really boldly, not assume that anything that’s already in place has to be here or that anything we haven’t yet seen is impossible to create.

In parallel to the commission, we’re also creating a future-of-work department under the labor agency. We’re going to create a department that will be poised when the commissions has its recommendations to actually execute many of them. That’s how concrete we want to be.

Part of the initial phase of the department is really just to realign existing service inside of government. One of the things that I think is very frustrating to people who try to interact with the government and try to access services, is when we say to you, “not this agency, the next agency.” What I want to do is eliminate the next window problem: “You’re in the wrong line, go to this next line.”

You want to create one line in which people can get what they need when they seek help from the government. It’s not just about creating new legislation and new powers; it’s about taking powers you already have and creating one streamlined, efficient and accessible department.

The governor signed AB 5, the worker-misclassification bills, and it will now take effect in January. I’m wondering what will you and your agency’s role be in enforcing that?

I often say that the instability that working people face—partly because of misclassification—has resulted in the day-labor-ization of our economy. Instead of steady, consistent, reliable work, people end up basically in odd jobs, and you’re hustling all the time, right? So AB 5 is meant to address that kind of misclassification so that we can bring more people who should be under the protection of our labor laws back on that floor.

We’re going to be enforcing both through our wage-claim process, where individuals who feel like they have been misclassified can come and file wage claims. An example of that is we’ve had almost 1,000 cases in the port-trucking industry filed before the labor commissioner that we’ve adjudicated and found millions of dollars owing to truck drivers who have been misclassified.

The other is just doing investigations and audits. That will be on both wages and tax, because AB 5 expands the ABC test that way. So we will be doing investigations and audits so that those who want to comply with the need to reclassify can do so, and those who don’t will understand that’s not the kind of economy we want in California. So we can issue citations and demand both wages and taxes and other kinds of penalties.

Do you expect to investigate Uber and Lyft?

We do not talk about who we will investigate or the fact we are investigating. I do want to say that misclassification did not arise when the gig economy came into being. And it will not be ended by that. We also are hopeful that there are businesses who will join us in this administration who are committed to combating misclassification and also find new ways for workers to organize.

There are some workers who have been excluded from federal protections, and California has a really unique opportunity to bring them into the fold and think about ensuring that they have true union protection working side by side with labor and businesses who are interested in doing that.

Did you have conversations with Uber, Lyft, DoorDash, Postmates or any other entities?

We did. I think we always want to work with—whether it’s business or labor—on trying to solve some of these complex and intractable problems. As the governor said when he signed AB 5, we want to continue to be open to those conversations and whatever possibilities they might bring about for trying to improve working conditions and the lives of the drivers in California.

Why wasn’t a third way accomplished in the last legislative cycle? Why couldn’t a compromise be done?

That’s a good question. We wanted to make sure we were working with folks who wanted to talk about this, but I don’t think there was a deadline in our minds for that. These ongoing issues; they’re very complex. And when we talk about creating a voice for workers, that it’s really a voice premised on unions—like a genuine right to a union on the job. If we can accomplish something, it will set a model for the country. 

What’s realistic for the state or local government to stem this growth in wealth inequality? You’re setting up high expectations here. We have a capitalistic society, so what’s doable here?

We would rather set really high standards for ourselves. And if we cannot reach them all, we at least challenge ourselves to give it everything we’ve got. We are looking at this from all angles. There may be some simple things that we can do. Some of them are building off the great innovation and talents of people in California already. Are there models we can replicate and support and share so that people who want to do this right don’t have to invent it from scratch? At the first meeting, we talked about tax law, about social structures.

We don’t have an end date for the commission’s work. We have monthly meetings from now until April. We will also be issuing a report in May that’s a part of the governor’s executive order. We’d like to make sure we engage with a broader segment of Californians around what whatever the recommendations are, and that could be academic institutions, philanthropy, worker centers, the tech industry and business. 

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Local Issues

Doctors, real estate agents and hairdressers can keep their independent contractor status—but not truckers, commercial janitors, nail-salon workers, physical therapists and, significantly, gig economy workers, who will gain the rights and benefits of employees in California under sweeping workplace legislation passed this week.

Gov. Gavin Newsom has committed to signing the bill, which cleared the Assembly 56-15 in a challenge both to the longstanding trend toward outsourcing labor and to the business model of companies such as Uber, Lyft and DoorDash, who have threatened a $90 million fight at the ballot box.

Once signed, AB 5 would upend longstanding employment practices that have seeped into the Democratic presidential debate about how workers should be treated, particularly in today’s gig economy.

“With one clear test across our state labor laws, we will raise the standards for millions of workers and ensure they gain access to critical rights and benefits,” said Sen. Maria Elena Durazo, who presented the bill in the Senate on Tuesday night. “We can make California the global leader in protections for gig workers, janitors, construction workers and so many working people who can’t even pay their rent.”

Lyft spokesman Adrian Durbin said lawmakers missed an opportunity to find a flexible solution for rideshare drivers, and Uber announced it was ready to pour millions more into the ballot fight. “We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need,” Durbin said.

From the beginning, the bill’s author, Assemblywoman Lorena Gonzalez, a labor organizer and a Democrat from San Diego, made it clear her goal was to improve wages and workplace standards, and expand the right to collective bargaining at a time of growing income inequality.

She acknowledged more work remains but insisted the legislation is needed to establish a state standard after the California Supreme Court, in a landmark 2018 decision, created a strict test for certifying independent contractors, with the highest hurdle being that the work performed must be outside of the core of the company’s business. It’s commonly referred to as the Dynamex decision.

In advance of the vote, she shared a picture of a sentence plastered to the top of a wall in her office: “The Most Amount of Good for the Most Amount of People.”

California’s pushback against the gig economy intensifies pressure on Silicon Valley flagships such as Lyft and Uber, which were already trading below their IPO share prices amid investor concerns about the difficulty they’ve had turning a profit, despite many millions of users. Uber cut 400 people from its marketing team in July, reported a quarterly loss of $5.2 billion in August and sent layoff notices to another 400-plus workers this week.

On Wednesday, Uber chief legal officer Tony West said in a press call that the company plans to fight the tougher employment test once AB 5 takes effect next year. “We still may pass the test,” he said. “We believe we can pass the harder test.”

But concerns around basic worker protections also have become pressing in California, where one worker in three earns less than $15 an hour; also, the 18.2 percent poverty rate, when the cost of living is taken into account, is rivaled only by that of Washington, D.C. As lawmakers were debating AB 5, in fact, a commission on the future of work, appointed by Newsom, was convening not far away in Sacramento to address such issues as the proliferation of low-wage jobs, automation, artificial intelligence and the gig economy.

Aside from the philosophical questions around AB 5, the state estimates it loses about $7 billion a year in payroll taxes due to worker misclassification that could be supporting schools, roads and other public services. Supporters of the bill argue that by avoiding unemployment insurance taxes and workers’ compensation premiums, businesses shift the burden to the state—and its taxpayers—when workers get laid off, get sick or get injured on the job.

Opponents warned the bill will invite trial lawyers to file frivolous lawsuits against thousands of California businesses and called the bill a blatant power grab by big labor.

“This bill is the union caucus’ main event of the year,” said Republican Sen. Jeff Stone, who held up an exemption request form, obtained by CalMatters, that labor groups had been presenting to industry advocates seeking a carve-out.

Industries as varied as trucking and health care also pushed back, arguing that the legislation would rewrite the rules for independent workers whose status has worked for them for decades.

“AB 5 does not take into account the more than 70,000 California truckers who have built their business around the independent owner-operator model, invested hundreds of thousands of dollars in their trucks and have made the decision to run their own businesses,” said Shawn Yadon, CEO of the California Trucking Association, before the bill passed.

Hospitals, too, are worried the bill will not only cause confusion, but may have the unintended consequence of delaying patient services. Gail Blanchard-Saiger, vice president of labor and employment at the California Hospital Association, said although doctors, psychologists and podiatrists are exempt from AB 5, and hospitals employ more than 90 percent of their workforce, many medical professionals such as physical therapists and certified registered nurse anesthetists are contracted at small and rural hospitals where volume is low.

“The impact on the hospital for these health professionals is probably a delay in services, and in particular rural communities, maybe a reduction in services,” said Blanchard-Saiger.

Among the other health professionals not exempt under AB 5: occupational therapist, speech therapist, optometrist, nurse practitioner, physician assistant, radiation therapist, licensed professional clinical counselor, marriage and family therapist, licensed clinical social workers, respiratory therapists and audiology.

In the final weeks of the legislative session, gig companies unsuccessfully campaigned heavily for a new, first-in-the-nation framework that would allow their workers to remain independent while offering a wage floor and some kind of bargaining tool. And on Tuesday, Newsom told The Wall Street Journal that he is still talking to Lyft and Uber, “and regardless of what happens with AB 5, I am committed, at least, to continuing those negotiations.”

The San Francisco Chronicle reported potential legislation calling for a new category of workers—to be known as “network drivers”—to cover rideshare and delivery service drivers, guaranteeing at least 1.27 times minimum wage, reimbursement of 30 cents a mile and contributing 4 percent to a Drivers Benefits Fund to purchase workers compensation insurance and other benefits.

Uber and Lyft say the codification of the Dynamex decision—that established a three-part test for certifying contractors—will force them to fundamentally change their hiring practices. It likely means the rideshare industry will take on fewer drivers and assign shifts, giving drivers less flexibility.

Labor representatives called it a scare tactic and said nothing prevents companies from maintaining flexibility for workers.

In shifting to employee status, companies would have to offer basic worker protections such as guaranteed minimum wage, overtime pay, contributions to Social Security and Medicare, unemployment insurance and disability insurance, as well as workers’ compensation, sick leave and family leave. Workers could also get reimbursed for mileage and maintenance of their vehicles, which doesn’t happen now.

The bill triggered several rounds of protest at the Capitol with Uber and Lyft drivers circling downtown Sacramento one day, followed by truckers honking their heavy-duty trucks the next day.

Under the final version of the bill, doctors, dentists, lawyers, architects, engineers, accountants, insurance agents, real estate agents, hair stylists and barbers received exemptions. Travel agents, graphics designers and grant writers will continue to offer their professional services without disruption. Licensed cosmetologists and barbers that set their own rates and schedules won’t change. Commercial fisherman are exempt until 2023. Tow-truck drivers affiliated with the American Automobile Association got a carveout. And freelance writers and photographers can continue, provided they don’t submit more than 35 submissions to an outlet a year.

On the other end, AB 5 captured the industries targeted by labor: gig workers; big-rig, Amazon and other truck drivers; and low-wage services ranging from janitors to home health aides. Unlicensed nail technicians, language interpreters, musicians, strippers and even rabbis could be impacted.

If approved, the bill will take effect in January and gives the state attorney general and large cities the right to sue companies that don’t comply. San Francisco City Attorney Dennis Herrera and Los Angeles City Attorney Mike Feuer both say they would ensure workers are treated fairly.

“The city attorney welcomes the new authority, and if enforcement action is needed under the new law, he will exercise it,” said Feuer’s spokesman, Rob Wilcox.

During debate before the Senate vote, Republicans sought to include hostile amendments aimed at expanding exemptions for newspapers, physical therapists, the timber industry and more. Each was tabled by Democrats who control both houses of the Legislature.

Gonzalez, however, did agree to exempt the newspaper industry from converting carriers for one year.

“While I personally disagree with this delay, I’m willing to allow the newspaper industry the additional year to comply if it means those delivery drivers and nearly a million other misclassified workers are provided the minimum wage, benefits and workplace rights of Assembly Bill 5,” she said.

A few industries did get the exemption they sought, such as builders and contractors. Peter Tateishi, CEO of the Associated General Contractors of California, said his organization ended up backing the bill after being allowed to contract with other contractors under a business-to-business carve-out.

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

On this week's recyclable, gluten-free weekly Independent comics page: (Th)ink hands the ink over to guest cartoonist John Bolton; This Modern World looks at the fallout when Republicans all become brain-eating zombies; Jen Sorenson feels bad for old rich people who can't sell their homes; Red Meat is bummed out because Earl lost his job; and Apoca Clips listens to Sarah Huckabee Sanders' farewell press conference.

Published in Comics