The New Deal Is In Trouble, Thanks to An App
And no, I'm not talking about Robinhood!
|Jordan Zakarin||Jan 31||6|
Welcome to a big Sunday edition of Progressives Everywhere!
This morning, a gang of ten Republicans presented a joke of a stimulus counterproposal that Democrats should throw into the Potomac River before it freezes over. The Biden administration says that it is willing to negotiate, even if the United States isn’t supposed to negotiate with terrorists, but they’re not going to bend over backward to get a few Republicans on board.
Now, there isn’t going to be an actual negotiation — Republicans will only make a plan worse before largely voting against it anyway. The GOP simply does not want to provide people evidence that the government can actually improve their lives, especially after spending four years displaying how much devastation it can cause. Their plan is to weaken and block as many Biden’s plans as possible, then blame him for not getting anything done during the 2022 midterm elections. I’d rather pressure Joe Manchin (which Dems are doing!) than fall for the GOP’s naked cynicism.
Time is of the essence:
Anyway! I’ve got a packed issue for you today, including an interview about why the gig economy carries giant political implications and some important news from the states.
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“This what corporations have been trying to accomplish since the New Deal”
It’s been a tough few weeks for gig economy workers, who were already at the bottom of the economic totem pole:
A few weeks ago, the grocery store chain Albertson’s announced that it was laying off its unionized delivery workers and instead contracting with low-paid Instacart drivers to do app-based shopping for customers.
A week later, Instacart fired any and all employees that were trying to unionize.
DoorDash and Uber Eats just quietly instituted new fees on customers in some cities to get around caps placed to protect consumers in other cities.
Unlike many overt abuses of corporate power, these are not fait accompli. In fact, President Joe Biden can actually do something about them. He just has to empower his National Labor Relations Board to take action on Prop 22, one of the biggest under-the-radar threats to working people and democracy today.
What Is Prop 22?
Two events fundamentally rewired the American economy last year. The first, obviously, was COVID-19, which continues to rage and roil what was an already grossly unequal system. The second, the passage of Proposition 22 in California, went a bit under the radar but seriously compounded the shifts instigated by the pandemic.
When the pandemic blossomed in March 2020, businesses shut down and employers began massive waves of furloughs that became layoffs. Desperate for any sort of income, hundreds of thousands of people joined an already overcrowded, underpaying gig economy; within the first few months of the outbreak, grocery delivery apps like Instacart and Amazon Flex added over 550,000 workers, who were forced to put themselves at the mercy of algorithms and assume all risk and expenses in exchange for low wages and no security. In 2019, one study showed that drivers were making an average of $9/hour after all the expenses that they had to cover. Even more competition made it even worse.
A few years ago, lawmakers in California decided to do something about the garbage compensation that Uber, Lyft, Instacart, DoorDash, and other gig companies offered their workers. In 2019, Gov. Gavin Newsom signed a law known as AB 5, which created a standardized “ABC” test to determine whether someone is a full-time worker and therefore owed certain benefits and pay from their employer. But “laws are only as good as their enforcement,” says Veena Dubal, a law professor at the University of California, and the gig economy companies decided that they didn’t feel like obeying AB 5.
“Mom and pop companies know that they cannot weather a lawsuit, so they are going to be in compliance,” Dubal tells Progressives Everywhere. “But companies like Uber and Lyft, they don’t have a viable business model and they’re hemorrhaging millions a year, but because of all of their venture capital funding, they can afford to say ‘go ahead and sue us.’”
Tony West, a former Obama assistant attorney general, headed up Uber’s legal strategy, which included not just disobeying the law, but in cooperation with the other app-based gig economy companies, buying their own law. Anthony Foxx, Obama’s former Secretary of Transportation, heads up Lyft’s policy team and was also involved in the plan. So as the state’s lawsuit against the companies snaked its way through the California courts system, the Silicon Valley titans went all-in on making it irrelevant with a ballot initiative known as Proposition 22.
Dubal was a big part of the scrappy, very outspent campaign to defeat the initiative, which among other things carved driving-based gig employers an exemption from AB 5. Uber, Lyft, Instacart, DoorDash, and similar companies wound up spending at least $200 million and turned their apps into propaganda misinformation machines.
“The apps would ask drivers whether they supported Prop 22, and what are you going to say? They’ve been flooding you with misinformation, and even if you still don't support it, are you going to be deactivated if you don't say yes?” Dubal points out. “Then when a passenger they got into the car, a little image would pop up on their phone that said that that driver that they're about to ride with supports Proposition 22.”
Most of the rhetoric around the proposition revolved around giving drivers a higher minimum wage and healthcare benefits… but left out the fact that they were far less generous than what’s generally required by law, not to mention that they would be almost impossible to earn. For Uber drivers, for example, only time spent actually driving people counts towards the time accrued toward being considered full-time. Most drivers spend most of their time looking for passengers, especially with such a saturated market, and none of that time counts toward the total.
Just look at this misleading ad for a taste of what they pulled:
As a result, most California voters were led to believe that they were helping drivers; even the New York Times’ opinion section editors were deceived, as they kept taking out Dubal’s mentions of the minimum in her most recent op-ed, as they overlooked the fine print “engaged” clause in the proposition.
Polls now show that a majority of people regret its passage. Had it not passed, the California State Supreme Court’s decision that those companies were indeed subject to AB 5 would have settled the issue. Instead, a very dangerous precedent has been set — especially because it will take an unprecedented, probably unconstitutional seven-eighths margin of the state legislature to repeal it.
The Bigger Picture
The individual law itself is more dangerous than it sounds. It carved out an exception for all delivery-based jobs, which can be exploited by companies all along the supply chain. Uber is already expanding into the pharmacy delivery game, Amazon continues to acquire businesses to staff with its exploited drivers, and industries like trucking and long-haul driving are in the crosshairs.
While Prop 22 only governs California, there is no state more influential on the functioning of the national economy, so trends very often spread eastward. And as Dubal says, the proposition “created a blueprint other corporations can now follow, where you can buy your own law, and then seal yourself off from any kind of scrutiny, amendments, or changes by adding the seven-eighths provision that they added into the proposition.”
The ride-share companies have already indicated that it plans to export the model — Lyft’s CEO literally called it a “model for other states” — and while not every state has a ballot initiative process, as we discussed last week, many red states where people might be sympathetic to the “freedom” rhetoric, do have robust initiative systems.
And it’s not just about drivers, either. The bigger concern is that really any industry with enough clout will be able to ignore laws and then push their own pre-written legislation.
“This proposition is what corporations have been trying to accomplish since the New Deal was passed in the 1930s,” Dubal says. “They are trying to get out from underneath having to pay workers a minimum wage. This will become normalized very quickly and then what will happen is that once we accept that there are logistics workers that don't make a minimum wage, that don't have access to overtime or access to health insurance or unemployment insurance that or workers compensation, then you’ll have new companies springing up that are in health care, education, restaurants, programming, who then get to benefit from the Proposition 22 system.”
So What Can Be Done About It?
This leads us to the ultimate question: Will Biden take action? Does he want to? During the campaign, he touted his support for the PRO Act, a House Democratic proposal that would make AB 5 a national law, but narrow majorities and a current unwillingness to nuke the filibuster make that legislation a heavy lift in the Senate.
It’s also a concern that there are so many former Obama officials involved with these app companies. Along with West and Foxx, Uber also hired Obama campaign architect David Plouffe and even had Eric Holder on contract for a time.
So first, as Sen. Elizabeth Warren says, personnel is policy. Biden has nominated a solid team at the Department of Labor (Secretary-nominee Marty Walsh and Deputy Secretary-nominee Julie Su). At the same time, it’s unclear just how much he’ll want to regulate Big Tech — Attorney General Merrick Garland reportedly wants a former Facebook lawyer to be the top antitrust official, which is disconcerting. Then again, Lina Khan, a top name in antitrust, is a frontrunner for a role on the FTC.
Dubal outlined a number of steps that Biden’s administration can unilaterally take to potentially reverse the impact of Prop 22. Her recent op-ed in the New York Times offers a glimpse at a number of them, which we’ll go over here, too.
In its final few weeks, the Trump Department of Labor issued memos that narrowed the definition of workers who qualify for overtime and minimum wage. The memos were filled with legal analysis that Dubal calls poorly written and perhaps easily rescindable due to its shoddiness; Biden’s executive order to freeze late Trump memos and rules for review already puts his administration on its way to completing that key first step.
Dubal also suggests that the Department of Labor could also write a legal opinion saying that it believes that Prop 22 is in violation of the Fair Labor Standards Act, giving the Attorney General an opportunity to take action.
“Proposition 22 flies in the face of the Fair Labor Standards Act because Congress did not intend for app-based workers to be exempt from basic minimum wage and overtime laws when they passed it,” she says. “The law applies to all workers who are not explicitly excluded.”
As we outlined last week, ballot initiatives have become another battlefield, and this is the biggest one of them all.
Important News You Need to Know
Here are some stories from around the country — I deliver more news and keep up on these stories throughout the week in the issues sent out to premium members!
The Republican assault on voting rights has kicked into high gear.
Mississippi: Few states make it as difficult to vote as Mississippi, where there is still no early voting period. Now, lawmakers there want to make it even harder to cast a ballot. Senate Bill 2588 authorizes county officials to purge voters from the rolls if they don’t respond to a single mailer or vote in four elections in a row… in a state where it is extremely hard to vote.
They present this as mere maintenance, to clean up all the people who have moved or passed away, but new data out of Ohio proves that purges can be extremely disenfranchising.
Ohio: Last summer, Ohio Secretary of State Frank LaRose (the guy who just couldn’t possibly allow more ballot drop boxes despite being cleared by the State Supreme Court to do so) put forward a list of over 110,000 “inactive” voters who he wanted to purge from the rolls. He required people on the list to take one of several “election-related actions” to keep their registration active, and in the end, nearly 20,000 of them did so AND wound up voting.
South Dakota: A State Senate Bill that aimed to create an online voter registration system in the South Dakota passed through the Senate State Affairs Committee… after the online voter registration part was stripped out by a Republican amendment.
Now all it really authorizes is a system that will people who have already registered in person to update their address. They can’t be afraid of Democrats taking over, but perhaps they were spooked by the huge success of the marijuana legalization ballot initiatives last year? They’re suing to overturn those, but if they can stop voter registration, they won’t even have to worry about that next time around.
Florida: This isn’t voters’ rights, per se, but it’s about negating the choices of voters. Once again, Florida lawmakers are working to totally gut a progressive ballot initiative passed with overwhelming support by voters there — last time, it was the re-enfranchisement of 1.4 million voters, and this time, it’s all about trying to undo an increased minimum wage. That Democrats can’t beat these sociopaths is infuriating and depressing.
Georgia: A whopping 338,000 Georgians enrolled in Medicaid between March and December of last year, a monster number that could have been even bigger had the state fully expanded the program. In 2018, lawmakers approved a limited expansion that only permitted able-bodied adults who made less than 35% of the poverty line each year to enroll; full expansion would take that up to 138% of poverty wages (which is still way too low).
Officials in the state are increasingly discussing going for the full expansion, though it won’t be able to get a waiver to do something ghoulish like issuing block grants now that Trump is out of the White House.
Wisconsin: Ready for an incredibly stupid story?
On Tuesday, the same day that COVID-19 deaths hit a 10-day high, and one of the highest one-day totals since March, Wisconsin Republicans in the State Senate voted to repeal Gov. Evers’ mask mandate. It was a giant flex for the maniacs in the red caucus — they’d been trying to stop Evers’ mask orders since the summer, but didn’t have the numbers to do so until now.
Businesses have urged Republicans not to do this, as have just about every public health official and non-profit. The only people suggesting this is a good idea are the lunatic dead-enders who still follow Trump. The science is unimpeachable — this is an insane thing to do.
Then on Wednesday, the Journal-Sentinel reported that the legislature’s bill to repeal the mask order wouldn’t just spread disease, it’d starve people. As the paper noted, it would mean that “nearly 243,000 households in Wisconsin would be prevented from collecting $49.3 million in monthly assistance.”
A quarter-million people denied $50 million a month in food assistance. Usage of SNAP benefits went up by 50% in the United States in 2020.
Speaker Robin Vos delayed the vote after outrage surged around the news of the budget cuts. Right now, they’re trying to find a way to kill the mask proposal without starving people, but we know where their priorities are.
Tom Nelson, the former State Assembly Majority Leader, county executive, and Johnson’s only declared Democratic opponent, meanwhile, just declared his support for Medicare for All — a move immediately praised by progressive Rep. Mark Pocan. Click through the tweet to watch his video about it:
So, in full disclosure, I’m doing some work to help out Tom’s campaign. Clearly, as long-time readers know, I wouldn’t be doing so if I didn’t believe in his integrity and agree with his political stances. That he’s running against the very odious Sen. Ron Johnson in 2022 is a bonus. But he’ll have to beat two enormously wealthy self-funding candidates to earn the Democratic nomination, which might make it tough despite his being the most electable candidate (as The American Prospect argued last week).
The FCC deadline is here, as you’ve undoubtedly been told a thousand times in fundraising emails. Tom is working hard to raise money, but if you want to help the progressive, electable choice get the nomination in Wisconsin and ensure Democrats don’t make the same mistakes as they did with 2020 candidates, any donation would be amazing. (And to be clear, he didn’t ask me to write this, I just believe in the guy.)
North Dakota: Here’s a very interesting story: State Rep. Jason Dockter recently introduced House Bill 1420 (lol), which would legalize recreational marijuana in the very Republican state of Nebraska. What’s notable here is that Dockter is a Republican… and an anti-weed Republican at that.
Voters in South Dakota just legalized both medical and recreational marijuana, and pro-pot organizations are lining up to get weed on the ballot in 2022 in North Dakota. Instead of fighting the inevitable with endless lawsuits, Dockter decided to get out ahead of the curve and pass legal weed with more strict limits than any ballot initiative would include.
Idaho: On the other hand, Idaho Republicans are trying to do the opposite. Already one of three states to not allow any sort of THC product, even for medical use, Idaho Republicans have put forward a constitutional amendment that would outright ban all psychoactive drugs. That’s a large roster, considering the state’s existing prohibitions, but their eyes are really on marijuana, which has been legalized in all of the states that border Idaho. It would ban medical marijuana and perhaps even CBD oil, which is pretty nuts (even if personally I don’t think CBD oil does much?).
Also, the main sponsor’s name is Rep. Scott Grow, which is funny.
National: As with most Republican legislation right now, the proposed Idaho ban is just as much performance as it is actual policy proposal. The reality is that marijuana is getting closer and closer to being legalized nationwide, especially now that so many states are facing huge budget deficits. Legal cannabis sales hit $20 billion last year and that’s without states such as New York, New Jersey, Florida, and Texas having legal recreational weed. It’s going to be legal in NJ very soon and NY is just around the bend. Can’t come soon enough.
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