I think we basically agree. The dangerous outcome is that Uber becomes more expensive for end users in California, Uber drivers become employees, but they make exactly minimum wage because that's the minimum Uber can pay them, and Uber's profits in California go to zero. (I doubt the Uber business will cease to exist because taxis are so bad in comparison.) Uber's market shrinks because they became more expensive, so they can hire fewer people.
Is that better for anyone? It sounds worse for both Uber drivers and for Uber users than the status quo. Unless you think that a minimum wage job is superior to the current job of Uber driver, and we really need more minimum wage jobs.
Which means it is inevitable that Uber will become more expensive, or it will fail. It's just a matter of time.
That's not how it works. Uber isn't operating at a profit because their current-investor-subsidized-rates are below the cost of their service. But there is a bit of a chicken-and-egg problem there: there rates are low because they want to gain marketshare, which is only enabled by the flood of VC/IPO money.
Eventually, all of the rideshare companies will need to raise their rates to cover the cost of service, and that cost should include reasonable remuneration for their workers. If it turns out the market isn't viable at those costs (i.e. if people just stop taking rideshares altogether because it's too expensive), then it never should have existed in the first place.