In the latest mishandling of the modern-day economy, the Biden Administration announced earlier this week a draft rule that will effectively put many gig workers out of work. As more and more people choose the flexibility and autonomy of becoming an independent contractor rather than an employee, the current administration is attempting to take us back to the 1930s when archaic labor laws were originally passed.
Since that time, our entire economy and way of life has changed dramatically. A majority of people no longer sit in a factory and make widgets. If anything, the Great Resignation has taught us that people no longer will put up with poor conditions, horrible managers, low wages, and a lack of meaningful benefits. It’s a big factor in why people choose gig work.
The new, proposed rule flies in the face of that by attempting to make many gig workers into full-fledged employees. On its face, that sounds great: give more workers healthcare, unemployment benefits, worker’s compensation, and so-on. The problem is that those things have an enormous cost, and current labor law around employees is fairly strict and inflexible.
The mistake that organized labor and other left-of-center groups make is believing that it is possible to force companies to pay people more and provide them better benefits. Companies generally choose to compensate people based upon the value of their contribution to the company. If that value proposition no longer makes sense, the company will simply stop hiring.
As California’s disastrous attempts at going after gig workers have shown us, forcing companies to change a large number of their contractors’ work statuses to full-time employee simply does not work. Workarounds, layoffs, and stunting the growth of new business models is the real result.
Instead of trying to shove our entire economy into a labor time machine, we should consider better ideas like portable benefits, a third classification model, and other means of providing more flexibility to workers, not less. The Biden Administration needs to rethink their pursuit of the same failed models of the past. After eighty-seven years, we can do better.
