The Labor Department’s new classification rules could give workers for companies like Uber and DoorDash more rights — if they ever take effect.
So reads the line, underneath the title, of a recent Vox article by Rachel M. Cohen titled “The coming fight over the gig economy, explained,” Vox, October 12, 2022.
What that line doesn’t even hint at is that if the Biden rules on gig work prevail, the federal government will disrespect one of the most fundamental rights people have: the right to choose whether to engage in contract work.
It reminds me of a story that Duke University economist Michael Munger likes to tell about his time in Germany. He saw an older lady with an empty shopping cart that she was returning to the store and, being the gentleman he is, he tried to take it from her to return and save her the trouble. He got into a tug of war with the lady until a policeman came along and explained that when you return your shopping cart, you get back the Euro that you had put in the slot to get the cart. She saw him as trying to steal from her rather than doing her a favor.
Similarly, millions of workers don’t see the federal government as giving them rights but as refusing to recognize their right.
Mike Munger had an excuse: he didn’t know the German practice. What’s the Biden Labor Department’s, and the Vox headline writer’s, excuse?
READER COMMENTS
Thomas Lee Hutcheson
Nov 19 2022 at 9:11am
“Right to engage in contract work” seems a sort of upside down way of looking at things.
We accidentally (becasue of WW2 wage controls) created a system in which we channel subsidies for things like health insurance through employers and in ways that make it more expensive for employers to pass on those subsidies to low wage or part-time workers. Forcing employers to pass on the subsidies to workers for whom it is financially disadvantageous, will or course reduce employers demand for those kind of workers. The effect is similar to a minimum wage.
The proper way to deal with this unfortunate historical accident is to make the subsidies available to individuals irrespective of employment status, ACA does this to some extent but did not go far enough in this regard.
Dylan
Nov 19 2022 at 9:42am
I recently took a salary position after being independent for a few years. When I took the job, I was really looking forward to the regular paycheck, the 401K, the good health insurance, no longer having to keep track of estimated taxes, not to mention the much higher overall income. And, while I appreciate all of those things, I find the lack of autonomy I felt when working on my own is hard to put a value on. It reminded me of a time, much earlier in my career, where I left a job but they asked me to continue on a couple of projects and bill them on an hourly basis. I’d been miserable in the job before that, but suddenly, even though I was doing the same thing, I was doing it on my own schedule and my relationship with my employer changed to feeling like we were on more equal footing. They went from being a boss to being a client, and I got to choose when and how I worked.
There was an EconTalk episode with Nassim Taleb from a while back where he talked about the same thing. He was a bit hyperbolic and compared workers to slaves, but the overall sentiment really resonated.
I’m at a point now where I would probably accept a decent cut in my overall compensation to be able to work my same job as an independent consultant than as a W-2 employee.
Thomas Lee Hutcheson
Nov 20 2022 at 9:17am
Good points and reinforces the idea that we should remove the artificial incentives for people to access subsides for health insurance through employers.
Mark Barbieri
Nov 19 2022 at 10:05am
From the VOX article:
How can anyone in good conscience say that they are giving someone more rights when (A) they already have the “right” to become employees, (B) they don’t want the “right”, (C) you are removing the “right” for them to choose to be independent contractors.
MarkW
Nov 19 2022 at 11:05am
What’s the Biden Labor Department’s, and the Vox headline writer’s, excuse?
Of course they know that they’d be taking away rights from independent contractors and forcing most of them into traditional employment relationships that most don’t want. But ‘promoting the rights of gig workers!’ is the best sophistry they’ve got. AND, unfortunately, it may be good enough. Most Americans are not independent contractors, wouldn’t want to be independent contractors, and so are easily convinced that folks who ARE independent are doing so only under duress because they can’t find a nice ‘safe’ job. So the majority is predisposed to swallow the line being promoted by Vox and the Labor Dept without much of a second thought.
As somebody who has worked outside traditional employment for decades, I can tell that my friends and acquaintances would find my existence unsettling. My income varies from month to month and year to year (in fact I often don’t take any income at all for the several months until it’s clear how the year is going to go). I have as many vacation days as I choose to take (and of course they’re all unpaid). I have to cut a large estimated tax checks to the feds every quarter. I hear them talking occasionally about getting ‘extra’ money from this or that and then splurging — this outlook is deeply weird to me. Convincing ‘normies’ that independent contractors actually really do like it that way is not an easy task (whereas getting ‘normies’ to believe that contractors are being abused/exploited is pretty easy).
Knut P. Heen
Nov 21 2022 at 7:23am
What is the purpose of a Labor Department if everyone is an independent contractor?
There are many groups that have a strong interest in keeping people in the labor class. Capitalists needs workers (not new competitors), labor unions needs members, labor parties needs voters, etc. Unfortunately, there is no group that have a strong interest in getting people out of the labor class (except the individuals themselves).
Brandon Berg
Nov 21 2022 at 8:23am
I suspect that the actual goal of these rules is to render Uber and similar companies economically untenable, resulting in control over these markets reverting to traditional firms whose workforces can be unionized more easily.
In other words, it’s not about what workers want, but about rebuilding the traditional backbone of the Democrats’ political machine.
Matthias
Dec 2 2022 at 10:34pm
There’s an interesting connection that people haven’t explored:
The German shopping carts work the way they do, because German regulations and taxes drive a big wedge between what labour costs and what workers get.
That means it’s more efficient in Germany to build a system that heavily nudges customers to return their own cart instead of making that a job.
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