For an alternate viewpoint, see “Point: Gig Work Doesn’t Have to be a Race to the Bottom — but It’s Up to Congress.”
To the typical American, clicking a couple of buttons on your smartphone to snag a rideshare car to take you to the airport seems as unremarkable as it is uncontroversial. But since 2018, progressive politicians, in the name of protecting workers, have waged war on ridesharing and the so-called “gig economy” writ large. The problem with the left’s anti-gig campaign is that it is directly antithetical to what gig workers themselves actually want, and it also overlooks better solutions for helping workers.
According to many on the political left, America is awash with “bad jobs” — by which they mean part-time gig work — and needs to create more “good jobs” — which they define as full-time jobs with a full suite of comprehensive benefits.
California led the way in 2018 by enacting Assembly Bill 5, a piece of legislation that instituted a stringent new legal test for nearly all workers operating in the state as independent contractors — including those far beyond the gig economy. By making it harder to classify workers as independent contractors, the theory was that companies would convert more to full-scale employee roles.
Instead, thousands of freelancers and contractors in various industries lost their jobs, alongside a statewide decline in full-time and part-time work. Golden State voters eventually rebelled, approving a 2020 referendum exempting rideshare drivers from the new law. Despite this spectacular backfire, Democrats decided, as gamblers wedded to the Martingale Strategy at a blackjack table, to double down on their bad bet and take their worker reclassification ideas national.
This ultimately manifested in the Department of Labor deciding this year to reverse a Trump-era rule and issue new standards for classifying independent contractors. While not identical to California’s notorious A.B. 5, Labor’s rule is still designed to make it more difficult for workers to remain contractors. On cue, Republicans have introduced a Congressional Review Act resolution to overturn Labor’s rule, which comes on top of legal challenges launched against the agency.
In defense of the rule, acting Labor Secretary Julie Su — who, incidentally, was California’s labor commissioner at the time of A.B. 5’s passage — invoked a version of the good job vs. bad job narrative by arguing that a “century of labor protections for working people is premised on the employer-employee relationship,” and that these employment-based protections help insulate workers from “exploitation.”
This not only incorrectly suggests that millions of Americans are being classified as independent contractors against their will but that large gig corporations are purposely classifying them that way to deny them protections and benefits.
The only problem with this line of argument is that, in the language of Luke Skywalker, “every word (of it) is wrong.”
First, the idea that the American economy is precariously scotch-taped together by workers who are involuntarily trapped in exploitative part-time gig roles is completely inaccurate. In fact, if anything, involuntary part-time work has been declining, not rising.
Second, far from disliking gig work and being forced into taking such jobs because they lack better options, independent contractors and gig-economy workers overwhelmingly prefer their status as contractors. Over 80 percent report they chose gig work not by necessity but by choice, and fewer than one in 10 independent contractors want a more traditional job. This is mainly because the number-one job consideration for working Americans right now — above even salary and benefits — is flexibility, which is a hallmark of gig and contract work.
Finally, labor protections emphatically do not need to be “premised on the employer-employee relationship,” as Su claims. A far better policy solution would be to safeguard legally independent contractor status from these types of reclassification efforts while at the same time tying that protection to the creation of a portable benefit system for independent workers.
Similar to a SEP-IRA account, a portable benefits model could operate using a system of both employer and employee pre-tax contributions, which could provide funds for gig and contract workers to purchase benefits like health insurance via worker-controlled benefit exchanges.
Not only would such an alternative sidestep a nationwide version of the draconian economic fallout that California experienced in the wake of A.B. 5, but it would also have a chance of appealing to lawmakers on both sides of the political aisle — not just the left. Most important, it would respect what gig workers and contractors themselves actually want and need.
