People like to say that your daily life shouldn’t be affected by the resident of 1600 Pennsylvania Avenue. Millions of Americans will not be able to say that if Joe Biden is elected and if he follows through on his commitments to big labor. All of his policies related to employment will affect Americans’ right to work in their preferred arrangements. Freelancers, in particular, will feel the pinch.
More and more Americans have started freelancing, joining what is known as the gig economy. According to Upwork, 59 million Americans work as freelancers. This is up 2 million year-over-year, and there is an 8% increase in the number of people working as freelancers full-time. If you have joined the gig economy either for your primary income — like many writers, artists, and technology professionals — or for extra cash — like driving for Uber — Biden’s labor policy will likely affect you.
Biden is a fan of a California law called A.B. 5, which struck a blow to the heart of the gig economy. This bill was a union-backed effort, not a worker-led movement to improve their working conditions. It employs an “ABC test” for determining whether an employee is allowed to work in a contract or a freelance position.
The B prong of the test was particularly problematic. To meet this requirement, the contractor must perform work outside the usual course of business for the hiring company. Even with carveouts for approximately 50 particular industries, issues still came up. For example, creative professionals like writers, illustrators, and photographers were exempted but limited to 35 submissions a year. Many people who work this way exceed 35 submissions a month.
The outcry from freelance workers was loud and clear. Modifications to the law have eliminated things like the submission limits and carved out additional industries. The law is still a problem, and Uber and Lyft have threatened to leave the state if they are required to classify drivers as employees rather than contractors. Last week, an appeals court ruled that the rideshare companies are likely in violation of the law. They can appeal to the California Supreme Court.
California Bill Threatens to Destroy Uber, Lyft, and the Gig Economy
Joe Biden wants to make this type of law federal with the PRO Act. It employs the same ABC test as A.B. 5, impacting millions of workers nationwide who take on freelance or gig work. The Act has already passed in the House, largely along party lines. If Democrats win the Senate and eliminate the filibuster, it will pass through Congress, and Joe Biden has pledged to sign it.
The PRO Act also has several other business-killing provisions like making workplaces easier to unionize. There are also serious privacy concerns. It requires companies to turn over personal contact information for their employees to the union leadership when a National Labor Relations Board election is imminent. Additionally, it forces employees to join unions and pay dues in right-to-work states, where union membership in a unionized workplace is currently voluntary. Compliance alone will be costly for employers as it requires changes across the entire Human Resources function.
There are many reasons individuals choose to work in freelance or gig positions. According to Upwork, 48% are caretakers, and 33% live with someone who is disabled. A full 75% of people who left an employer to work as a freelancer report making the same or more in salary, and the freelance economy increased 22% last year to $1.2 trillion in 2020.
Half of all freelance workers are Gen Z, and 44% are millennials. Perhaps instead of solving the daycare issue, Democrats may want to consider letting people work in whatever arrangement they prefer. Instead of “fixing” healthcare with expensive one-size-fits-all approaches like Obamacare, they may want to create plan design choices, which will allow these workers to purchase an appropriate plan.
Upwork reported that 86% of freelancers were optimistic about the future of being self-employed. All of that optimism is at risk under a Biden administration. Democrats like to say that President Trump is backward-looking, hearkening back to the 1950s. The Trump administration is not trying to kill economic innovation.
Instead, Democrats are trying to impose an industrial union mentality on a large service and technology economy. Most of the victims of these changes will be people under 40. If you love a freelancer who loves freelancing, let them know before they vote.
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