Over the weekend California announced it will not accept new employment claims for the next two weeks. The state’s Employment Development Department is so overwhelmed that it will have to take a break and do a “reset” to allow the agency to update its claims processing.
The state has processed 12.6 million claims for unemployment so far this year, which has overwhelmed the agency. “[M]any thousands of Californians were frustrated due to their inability to reach a representative for help or a status update on their claim,” the state agency reported Saturday. Now those Californians will be frustrated for two more weeks.
That’s a tough break for residents of the Golden State, which has one of the highest unemployment rates in the nation right now at 11.4 percent, well above the national rate of 8.4 percent. Only Rhode Island, New York, Hawaii, and Nevada are worse. New York was one of the epicenters of the coronavirus outbreak and Hawaii and Nevada are heavily dependent on tourism. Why does large, diverse California suffer so much worse than the other states in the nation?
Well, at the end of last year, California passed AB5, which was intended to go after rideshare companies Uber and Lyft. The law requires them and other so-called “gig economy” companies to classify all of their workers as employees, not contractors, as the companies prefer. California Governor Gavin Newsom and other fans of AB5 claimed that the contractor-based worker model was a sneaky way for the companies to avoid paying overtime, unemployment, health coverage, and other state and federal requirements. To force the companies to submit to this, AB5 had to put struct limits on how much contractors could work. These restrictions went into place exactly as the COVID-19 outbreak hit. Not only were existing professional freelancers limited in how much they could work, so were people who found themselves stuck at home and in need of alternate, temporary means to earn money. What are typically called gig economy jobs.
California’s unemployment hit a high of 16.4 percent over this summer, and while its ticked down since then, it’s still far above other states. California lawmakers recently rolled back parts of AB5, excepting some professions like musicians from the requirements, a tacit admission that the original version overreached. There are still numerous other people struggling to work despite the law, though. Meanwhile, Uber and Lyft have threatened to cease operations if either a court challenge or a fall ballot initiative to roll back AB5 fail.
Here’s an idea to reduce California’s backlog of unemployment and lower the jobless rate: Allow more people work by repealing AB5.