![]() ![]() I don’t see any reason that should only be the case if the reporter themselves was responsible for that decision. If a reporter is reporting on an upcoming regulatory change, and their own publication has responded to that regulation by cutting hundreds of jobs, I think it’s reasonable to expect the reporter to mention that when printing up their story. Downwardly sticky wages are in fact, as you say, something that is “seriously.wrong with the market for labor.” Given that wages tend to be sticky downwards, it’s far more likely we’d see the latter than the former. ![]() You’re correct that in many cases, contractors might collect what would otherwise be employer benefit contributions in the form of extra pay, but if contractors must be converted into employees, that means either that portion of their pay will have to be cut and converted into those contributions, or their jobs will be terminated. Health benefits, paid vacation, and overtime are also a factor. Employees can be much riskier to attempt to get rid of than contractors (particularly in a state like California!). There are also additional legal and regulatory statues which apply to the latter but not the former, including unionization prospects. Regarding your first point, the benefits mentioned by you (and by me, in the brief excerpt you quote) are only a small part of the increased expense employers would face if forced to convert contractors into employees. I would agree with that if it were true that Vox writers are the same persons who make the hiring and business decisions at Vox. “Given Vox’s own actions when regulation of this very kind is on the horizon, I don’t think it’s too much to ask of Vox writers to preach what they practice.” All else equal, wouldn’t an employer be willing to pay an independent contractor 7.65 percent to account for that? And, wouldn’t a self-employed person demand it? Or, is there seriously something wrong with the market for labor? I also suspect the minimum wage is an issue in only a very small percentage of cases (certainly not writers for Vox?). Only counting SS and Medicare, that would amount to an employer cost of 7.65 percent. I wouldn’t jump to that conclusion too quickly, particularly as regards the cost of Social Security (and Medicare and UI). “That is, one effect of this regulation will be to make people more expensive to employers as they move from contractors to employees.” Another is the right to be paid at least the minimum wage, and for businesses to pay a portion of their Social Security tax.” “One major legal entitlement employees enjoy is the right to join a union. After some quick Googling, I was able to rediscover an article I read just before AB5 was scheduled to go into effect in California. Remember those freelance workers mentioned by Cohen in her article? That’s what woke up the memory imp in my brain. But flowery analysis can only obstruct economic reality from view – it doesn’t prevent economic reality from taking effect.Īppropriately enough, “vox” means “voice.” Vox used its voice to describe AB5 entirely in beneficial terms, but as the old saw goes, actions speak louder than words, even at Vox. Unlike Cohen, the author of this article doesn’t even hint at the possibility that this legislation might have any downsides. I would expect a writer at Vox to be particularly aware of this point, and not just because it’s elementary economics that anyone who reports on economics issues should be aware of.Ī few years ago, when California initially passed AB5, Vox released an article praising the new law as an unambiguous victory for gig workers. And as they get more expensive, we would expect the quantity of workers employed to decrease. That is, one effect of this regulation will be to make people more expensive to employers as they move from contractors to employees. Another is the right to be paid at least the minimum wage, and for businesses to pay a portion of their Social Security tax. One major legal entitlement employees enjoy is the right to join a union. ![]()
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