California plays chicken with Uber and Lyft

 Washing Post Opinion piece:

Most recently, Uber and Lyft, based in San Francisco, announced they would close their California operations after a court ordered them to reclassify drivers as employees [under new law AB5]. They’re still running at the moment, having secured a last-minute stay, pending appeal, but ultimately, unless that appeal proves fruitful or the law changes, they say they’re pulling out. ...

And you should believe them, though AB5’s architect, Democratic Assemblywoman Lorena Gonzalez of San Diego, seems to think they’ll blink if she just shows enough steely will. “These are billion-dollar companies who are publicly traded,” she told a local television station. “They have enough money to treat their employees correctly.”

The pandemic has shifted the game, however. Now that Uber and Lyft are losing money, unemployment is high (so drivers dont have as many options), and public transport is suddenly very risky, it seems likely that Uber and Lyft will exit unless the State folds:

It was doubtful they could ever have stayed in California with AB5 in effect, but until the coronavirus is conquered, the thing is clearly impossible.

Lets see how well economics can predict this outcome of this bargaining game.