A California judge has ordered Uber and Lyft to reclassify their workers from independent contractors to employees with benefits, a ruling that could be consequential for gig economy workers if it survives the appeals process.
If you have not read this August 10, 2020 story about Uber and Lyft, click here to read it on NPR, and they reference this story a year ago about the reclassification of 1099 workers as employers. That means the law says in California these workers need to get health benefits, worker’s comp, etc.
So, let’s just clarify what is happening here. Basically, if you really think about the overall macro issue, it’s simple. Whether employees work at Uber, Lyft, Wal-mart, or Amazon as 1099 employees, they don’t have the benefits or healthcare of full-time workers. That is the exact problem. It’s even worst off than you think because Uber and Lyft drivers are the likeliest to get in an accident.
So, don’t go off and think I am falling into the trap of being extremely conservative or extremely liberal. I am just stating facts.
I personally see all benefits we have gained as a society from Uber and Lyft. I love their service. And I also sympathize with the workers, who can smash their head tomorrow on the glass while driving you home from a drunken time with a mask on last Saturday night!
I see a lot of similarities in the worker plight at a Wal-mart for instance or even a worker in China. For god-sakes we can buy t-shirts at Wal-mart for 3 bucks! Why, because we cut all the costs down through outsourcing and automation. The Uber worker has cut our costs down to grab a taxi. It has benefitted all of us.
But here is the reality, this law that seems ready-made for Uber and Lyft can not be applied to all small businesses. It’s not fair and it makes no sense. I am a partner in a small business that employs 70 part-timers who work literally a few hours a week in some cases. If this law were enacted in Florida, we would shut our doors and so would many other businesses. Uber and Lyft are the size of a Wal-mart. So, that is the number 1 problem with the California law, it should not apply to small or startup businesses.
So, how do we really solve this problem! It is very, very simple and obvious. And we better start this process now, before this crazy 1099 situation arrives on your doorstep. Forcing startups to offer benefits to all employees makes no sense and it will be damaging for small businesses in general. It makes no sense and it means the system is broken.
Take away the cost of medical benefits from the employer and offer it directly through national health care! So, like my parents in their 80s, who get medicare, put all these Uber drivers on medicare as well. It makes sense, and it is time for startups to not have the medical burden!
Like social security, medicare costs can be drawn from paychecks. Obviously with 1099s today, social security and medicare costs are not being taken out unless the 1099 person is doing it themselves, which we should, but trust me we don’t. That enforcement is coming and is required. We all need to go legit in 2020…we used to say.
The big time saving here is obvious to me. The people you want on a national health care system are the healthiest, which are pretty much Uber drivers.
The people on medicare (our current national healthcare system) are over 65. Duh, they are the most costly…
Why are all seniors on Medicare?
It’s obvious to me. They make the insurance industry the least profit!
Because the insurance industry wrote the rules and influenced this decision. They wanted all those 26 to 40-year-olds, who often don’t have serious medical costs to keep their insurance premium profits rolling in. That’s who health care insurance companies want as customers; people who are healthy and don’t need medical services! This group is probably a 95% profit to the insurance industry. When I was between 26 and 40, I hardly went to the Dr. But as you get older, you need to go. I just got put on a blood thinner for AFIB, and I am in my mid-50s.
So, in a bizarre way, the left (social/people-focused) and the right (business-focused) have the same objective, reduce health care costs, and make things work better.
There is a reason every other country has national healthcare. Before we destroy Uber and Lyft because we want them all to offer up to $20,000 a year benefits per 1099 employee, let’s move to a national healthcare model, medicare for all.
You can call it Medicare for all, or give it another name, whatever you want to call it, and call it a day. That day is the best day for startups because that cost would no longer be a consideration in starting a new business!