What would happen if AB 5 was passed nationwide?


Current legislation in the U.S. Congress is proposing that right now (HR 2474). If passed, all Independent Contractors (unless granted an exemption) would be reclassified as employees. Since the significant increase in costs would follow, businesses would dramatically cut back on the number of independent contractors they use. This would decrease the revenue generated by Independent Workers.


So how much money are we talking about? $1.5 trillion.


The American Action Forum recently released a report on the amount of the U.S. GDP Independent Workers generate. The iPSE-U.S. Policy team created visualizations of this data.

These amounts are significant. Independent Workers generate over $1.5 trillion for the U.S. economy.


These amounts would dramatically decrease. Unless specifically granted an exemption, each industry would take a major hit. See the table below to see the amounts implicated by a nationwide AB 5.





Source: Soto, Isabel. The Economic Cost of Worker Reclassification. American Action Forum, 2019, The Economic Cost of Worker Reclassification, www.americanactionforum.org/insight/the-economic-cost-of-worker-reclassification/

Source:

https://www.americanactionforum.org/insight/the-economic-cost-of-worker-reclassification/


https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/weorept.aspx?pr.x=22&pr.y=4&sy=2018&ey=2020&scsm=1&ssd=1&sort=country&ds=.&br=1&c=111&s=NGDPD%2CPPPGDP%2CNGDPDPC%2CPPPPC&grp=0&a=