Gig companies like Lyft, Uber, GrubHub and Amazon Flex need to become financially solvent — both for themselves and for the public. These companies’ models are financially unsustainable because customers do not pay the full cost of the services provided — which means someone else picks up the tab. In many cases, that’s the broader public and economy. By relying on a system of subsidies to operate, the companies harm other industries that are self-sufficient, exploit a vulnerable workforce, and increase travel and traffic.

Lawmakers need to put an end to this.

Assembly Bill 5 is an important component to correcting these harms. By codifying gig workers as employees, AB5 would close loopholes that have enabled gig companies to classify low-skill workers as independent contractors in order to set and amend earnings rates through imposition rather than bargaining, not reimburse sick or family time off, and not reimburse operating expenses, among other things. This exploitation of labor is wrong, should never have been allowed and should not be allowed going forward.

The companies like to point out that most gig workers are side hustlers who rely on work-hour flexibility. Yet, a disproportionate share of gig work is done by the few who commit full-time; while the average ride-hail driver moonlights, the average trip is fulfilled by a full-timer. Thus, the industry depends on full-time workers. For full-timers, while $1,500 per week appears big at first, it doesn’t account for costs, and many get cajoled into the gig without realizing this until it’s too late.

To date, gig companies have relied on models that milk vulnerable workers and venture capital in order to subsidize customers. When a ride-hail rider sells his or her car “because Lyft/Uber is so cheap,” what they’re really saying is that they’ve opted to support undercutting another driver and venture capital subsidizing their having access to a car. With services so underpriced, a vast volume of people who wouldn’t or couldn’t otherwise afford the services have come to depend on them.

Once the subsidies of venture capital and workers being shortchanged on their expenses are absolved, there will be a market correction: Owning a car or using transit will suddenly look better, so ride-hail usage will significantly decrease. Gig companies going public will solve the former subsidy; AB5 will solve the latter.

When I began driving for Uber in June 2015, trips and earnings were market-driven, even if underpriced. However, demand pricing didn’t work: many drivers didn’t independently plan around high-demand times and areas, and detested the cat-and-mouse game of it. At the same time, riders complained about price unpredictability. In response, Lyft and Uber aggressively invested in “driver promotions” to control when and where drivers work. This is why the assertion by their executives — Dara Khosrowshahi, Logan Green and John Zimmer — in a recent Chronicle opinion piece that being a driver on their platforms affords work-hour flexibility is misleading, at best. In order to maximize earnings on these platforms, drivers’ schedules must revolve around demand and incentives; not the other way around.

To illustrate, in September 2016 Uber introduced “Earnings Boost,” which guarantees drivers a minimum fare multiplier for picking up trips in defined areas at defined times, even if surge pricing is not in effect. It worked: Drivers flood boost zones, which creates an oversupply of drivers that shields riders from surge pricing and literally delivers them a driver “on the tap of a phone screen.” But drivers’ increased wait times from the oversupply and the “boost” paid to them cost money that riders don’t pay, making this scheme financially unsustainable. Take, for instance, a 32-minute trip I completed from South of Market to San Rafael: I waited 24 minutes to get that trip after my last drop-off and took in $66.98, while the rider paid just $38.71 — meaning Uber lost $28.27 on that trip. And that’s just in terms of the company’s, the rider’s, and my relationship with the fare. When you account for that trip’s marginal cost to Uber’s worldwide workforce and computer servers, my full operating expenses and the value of my wait time, both Uber’s loss and the rider’s subsidy are much larger.

Much like how the gig economy has exposed and taken advantage of holes in employment law that AB5 seeks to seal, the companies have also systematically exposed and taken advantage of deficiencies in how we finance transportation and manage traffic. Me and thousands of other drivers flooding local streets “in the hunt” for a boosted trip places a cost on that area’s quality of life and parking supply, and riders do not pay these “costs of convenience.”

Suddenly, localities around the country have come to the epiphany that traffic is better managed with congestion pricing than endless road build-out! Similarly, the companies have circumvented antitrust principles by using venture capital to subsidize their services at the expense of taxis, rental car companies, private parking companies, public transit and more. This isn’t innovation in urban transport and deliveries; it’s innovation in ripping off people, cities and industries.

If the gig economy is to exist, it should be expected to be self-sufficient so that the broader public and economy is protected from these harms. Lawmakers need to close these cracks. The passage of AB5 is imperative in order to close cracks in employment law that should never have existed and need not exist moving forward.

Zakhary Mallett is a Ph.D. student in Urban Planning and Development at the University of Southern California, former ride-hail driver, and former member of the BART Board of Directors.