California: Enjoy the Comic Circumstances

California local governments have been able to harvest significant sums from the taxi industry; permit fees have to be purchased in each city and can total $3,000 to $13,000 depending on where a cab operates.

(Chart from Rideguru)

Ride-sharing companies have severely damaged this revenue source in recent years. It had been hoped that a new California law going into effect would increase the taxes on Uber and Lyft and help taxis compete. As is too often the case, the law has unintended consequences: [bold added]

California’s new gig work law, which takes effect in January, sought to prod Uber and Lyft to turn their drivers from independent contractors into employees.

It could hit the taxi industry instead.

Taxi drivers are generally contractors. While many say they might benefit financially by making minimum wage and overtime plus benefits, they also fear their industry is so financially precarious that the additional expenses could make it collapse.

“If we weren’t struggling to stay afloat, I would probably support AB5 for taxi drivers,” Marcelo Fonseca, a longtime San Francisco driver, said of the gig-work law. But “in this current market, AB5 will probably bankrupt the taxi industry.”

Uber and Lyft plan to fight the gig-workers-are-employees law in the courts and through ballot propositions, bypassing the legislature:

Uber and Lyft don’t intend to reclassify their drivers, despite the law. They are pursuing a 2020 ballot initiative to allow independent contractor drivers to receive some benefits and minimum earnings guarantees. Uber says it will battle reclassification in court.

“The supreme irony is that these companies with their billion of dollars in venture capital can fight this off, and probably prolong that fight for a very long time, whereas the taxi industry may be subject to this on very short notice,” Gruberg said.

“If the taxi industry has to absorb employee status while Uber and Lyft get a pass because they go to the voters or drag it out in the courts for years, this could be our death knell.”

In the one-party State of California your humble blogger has grown accustomed to laws being passed and then watching the scramble to undo the unintended consequences.

We can't do anything about it, so we've learned not only to accept but enjoy the comic circumstances.