Amidst Coronavirus-Fueled Economic Downturn, State Leaders Must Suspend Government Barriers to Opportunity

Amidst Coronavirus-Fueled Economic Downturn, State Leaders Must Suspend Government Barriers to Opportunity

In his “Breaking Down Barriers to Opportunity” series, PRI’s Dr. Wayne Winegarden has argued that one of the most important ways that elected officials can help to lift people up the economy ladder is by embracing policies that encourage entrepreneurship.

As many Californians struggle to stay afloat financially during the sharp economic downturn associated with the coronavirus pandemic, entrepreneurship may also prove key to California’s economic recovery once the crisis passes.

Right now, in the midst of the peak of the crisis, we don’t really know how bad things will get economically, and for how long.  At his Tuesday press conference, Gov. Gavin Newsom estimated that the state had passed the 1.6 million mark for people filing for unemployment since mid-March. With companies small and large struggling to stay afloat, thousands will surely find themselves out of work permanently.

Unfortunately, Sacramento continues to make it difficult for people to become entrepreneurs so they can provide for themselves and their families.  Even before the coronavirus pandemic impacted the economy, Winegarden recommended stopping “the current push to increase the regulatory burden on the entrepreneurial sector that is being advocated by too many national and state policymakers.”

And he says policymakers must take a step further and address “overly-burdensome regulations at the federal and state level (that) are still harming the entrepreneurial economy,” he cites exorbitant hurdles associated with “government mandated licensing requirements” that make it tough for people to earn a living.

Here in California, the most overly-burdensome of these laws is the controversial Assembly Bill 5, enacted last year.

Before the pandemic hit last year, Winegarden wrote in the Orange County Register that to, “lower startup costs and increase capital for low-income and immigrant entrepreneurs . . . (lawmakers) should repeal anti-work, anti-entrepreneur mandates like AB 5.”

The problems caused by AB 5 have grown exponentially now that the kind of work performed by many independent contractors – such as the work of sign language interpreters, online tutors, those who provide health care services, those who deliver groceries or meals, and many others – is even more important amidst the coronavirus.

Assemblyman Kevin Kiley, one of the law’s most vocal opponents, has called upon Gov. Gavin Newsom to use his emergency executive powers to suspend the implementation of AB 5 while the state’s economy faces the wrath of the coronavirus.

Kiley recently told KUSI television that, “right now, it’s impossible for most people to work outside the home, and yet we have a new law that also makes it impossible for many Californians to work inside the home.”

Not only do laws like AB 5 potentially infringe upon critical work being done in our current pandemic, but they also potentially stand in the way of people earning a living going forward, especially for those who will lose their jobs or have had to switch to a home-based line of work to take care of their kids with nearly all schools closed for the foreseeable future.

It’s been particularly devastating economically for many Californians who have already been struggling since the first of the year due to its implementation.  Kiley said, “. . . this has just been a double-whammy for folks who have lost a lot of their work because of AB 5 and now the shutdown from the virus has caused them to lose the rest of it and they have no ability to provide for themselves and to provide for their family.”

The California Legislature is on recess until at least April 13th due to the coronavirus.  One would hope that repealing or reforming AB 5 and other laws impacting people trying to earn a living amidst this unprecedent economic slowdown would be at the top of their agenda when they return.  Certainly, Congress should reject the effort by House Democrats to enact a national version of AB 5, as is reportedly under consideration as part of the “phase four” of the coronavirus response.

Taking swift action to remove barriers to opportunity is important not only to help Californians get through the current economic crisis, but also to usher in a quick and strong recovery.

Tim Anaya is the Pacific Research Institute’s senior director of communications and the Sacramento office.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.