Why I’m Joining the Exodus
Why I’m Joining the Exodus

The “California Exodus” has been a talking point for years and years now.

The phenomena of masses of people migrating to other areas out of California.

It’s to be expected when you’re the biggest state in the country population-wise.

Of course with so many people living here and coming into the state, it’s understandable that lots of people come in and lots of people go out.

12% of the country’s population lives here in California, with 40 million people and counting making us larger than some countries.

If it were its own country, California would be 34th in the world population-wise, not to mention our economy which is in the top 10 of the world’s nations.

I was born and raised here and there are so many things I love about my home.

But I have no desire or inclination to stay much longer.

Californians are moving to states like Arizona, Nevada, Oregon, and Texas in droves.

About 691,000 people left California to live in other states in 2018, new census estimates indicate. At the same time, roughly 501,000 people came to California from other states, creating a net loss of about 190,000 residents in 2018.

Phillip Reese, The Sacramento Bee

Now California as a whole isn’t losing population because immigrants and out of state transplants are always moving into the state and it’s still very popular.

But residents and people who grew up in the state and have lived here for years are constantly leaving in mass numbers.

It seems like people are waking up from the California dream.

Some are waking up on their own, and others are being woken up abruptly by the realities in the state.

The rent is too damn high.

As are home prices.

It’s one of the contributing factors to the ever-growing homelessness issue in the state.

Lots of people can’t afford to live in or buy homes in the very same neighborhoods they grew up in.

It also absolutely kills social mobility for the lower and middle classes.

And it seems like the state may be making the housing issue even worse with legislation it’s passing.

California has passed a statewide rent control bill that will take effect in 2020.

Rent control sounds nice, doesn’t it?

But don’t let the name mislead you.

Rent control policies tend to have the opposite desired effect on rent by restricting the supply of new units onto the market.

What ends up happening is some renters get a bargain while most other people don’t get access to rent-controlled housing.

Rent control incentivizes people to never move out because it’s so cheap.

The result is that developers build only high-end units for the luxury market, because there is no money in creating affordable housing if landlords can never raise the rent. Developers get rich. And rich people get all the best new housing.

In turn, this magnifies an already bad situation for the not-rich: By definition, every luxury unit built is a more modest unit not being built.

-Business Insider

And in a state like California that’s already heavily bogged down by regulation when it comes to development and creating new housing units, this is looking like a disaster waiting to happen.

Is the government of California really thinking things through?

This bill forces employers to consider certain independent contractors or “gig workers” like rideshare drivers and food delivery workers as employees.

While the bill may be well-intentioned, it seems like lawmakers might not have fully thought out the far-reaching implications of the law.

Leaving average joes like myself to deal with the repercussions while the large corporations skirt the law on legal technicalities.

The bill makes a fundamental change to California employment law.

Under the ABC Test a worker is presumed to be an employee — and the burden to demonstrate their independent contractor status is placed squarely on the shoulders of the hiring company. To do this successfully a company must demonstrate (the emphasis is on “demonstrate” as scrupulous documentation is critical) that the worker satisfies all 3 criteria of the test (1 or 2 doesn’t cut it).

A worker can only be classified as an independent contractor if:

a) the worker is free from control and direction in the performance of services; and
b) the worker is performing work outside the usual course of the business of the hiring company; and
c) the worker is customarily engaged in an independently established trade, occupation, or business.

JD Supra

Fortunately, the bill exempts lots of different professions:

  • physicians
  • surgeons
  • dentists
  • podiatrists
  • psychologists
  • veterinarians
  • insurance brokers
  • lawyers (of course the lawyers who drafted this bill made sure to exempt themselves)
  • architects and engineers
  • private investigators
  • accountants
  • registered securities broker-dealers and investment advisers
  • direct sales salespeople who sell (must not be paid by the hour and have written IC contracts)

However, there are a lot more professions and industries that aren’t included in the exemptions.

Freelance writers like myself for example, which the law would want any company that hires a writer who writes 35 or more pieces of content in a year for them as an employee.

Other freelancers in different professions and industries will also be affected.

These workers will now have the burden of proof be put on them to prove their independent contractor status and it will absolutely make it harder for employers and freelancers to do their jobs.

The problem is many freelancers like being independent contractors and aren’t looking for a business to make them an employee.

In addition, companies who all of a sudden are told that they need to hire their contract workers as employees are going to do their best to avoid it.

If they wanted employees they’d hire them.

Hiring contractors allows companies flexibility and often significant savings in time and costs due to administration, pay, and benefits.

Remote working freelancers like myself will run into issues finding work because some employers won’t want to deal with the implications of hiring a Californian.

I’ve already seen job postings online for freelance positions telling Californians they need not apply.

The trucking industry is also being highly affected by this bill.

One of these is trucking, which has already paid out millions in settlements to drivers claiming they were improperly classified as freelancers. With the passage of AB5, trucking firms in California that rely on more than 70,000 freelance drivers are concerned they won’t be able to afford the extra costs and will lose business, according to Reuters

– CBS News

It almost feels like the bill was meant to be targeted at rideshare titans like Uber and Lyft but their legal teams are already fighting hard against it and it’s very likely they find a way to exempt themselves anyway.

That would mean California took a big swing and a miss at Big Tech and ended up making a direct hit on the average working-class people.

You can check out the #AB5 hashtag on Twitter to keep up with developments as it’s been a very heated topic with ongoing debate since the bill was passed.

California’s a great state but sometimes it seems like it succeeds in spite of itself. It has a lot of issues already and some of the conscious decisions made by the government seem to be making it worse.

  • California already has one of the highest tax bases in the country
  • The highest gas tax in the country
  • A homelessness problem that’s becoming an epidemic
  • Some of the most competitive and expensive real estate markets
  • The highest annual LLC tax in the country at a considerable $800 per year
  • Awful traffic and congestion in the major cities, decaying infrastructure, and poor public transportation and urban planning

At a certain point great weather, legal cannabis, and cool beaches just aren’t enough. I’m among the native Californians who don’t like the trajectory the state is moving toward.

The state is truly becoming a place where the divide between the “haves” and “have nots” seems to be growing wider by the day.

I wrote previously about my issues with Los Angeles in particular and the decisions the state is making aren’t giving me much more hope.

Many Californians are doing a cost-benefit analysis of their quality of life and asking themselves if the juice is still worth the squeeze.

What are your thoughts?

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