What is the most serious labor problem facing us today?
Millions of unemployed Americans likely come to mind. How about the 1.5 million working moms who left the workforce as of January because of the pandemic school closures? Maybe the seven million jobs that remain unfilled even as workers choose to stay out of the labor force? They are earning more through stimulus checks and generous unemployment benefits.
The Biden administration is denying that unemployment benefits are discouraging work, but going all-in on a more periphery issue that supports their union-boosting agenda: reducing independent contracting work and flexible jobs.
Is misclassification a big issue?
In a blog post recently, the Department of Labor hammered misclassification of independent contractors as “one of the most serious workplace problems in our economy today.”
They discussed why misclassifying workers as independent contractors to avoid providing benefits and paid leave is harmful to workers.
We take issue with the administration promoting this as a widespread problem. DOL provided no empirical evidence to back up their claims. Opponents of independent contracting are targeting gig economy companies such as Uber and Lyft as well as platforms that employ independent contractors to provide services such as delivery programs like Amazon Flex. They simply seek to vilify companies that employ independent contactors.
This public statement comes as Secretary Marty Walsh commented last week that he aims to reign in independent contracting. He suggested that many gig economy workers should not be independent contractors, but classified as employees. The department then rescinded a Trump-era rule that would have gone into effect this year to provide protections for independent workers and establish a less stringent standard to determine whether a worker should be classified as an employee or an independent contractor.
This administration is targeting the preferred and, in some cases, necessary flexible jobs that over 50 million freelancers engage in. Nearly half of independent contractors have said that personal circumstances prevent them from working in a traditional job. Independent contracting allows them to earn an income around their schedule.
About half of freelancers are women, and flexibility has always been the top reason they engage in gig work, but it is even more critical due to the pandemic. Women are caring for a sick spouse or overseeing their children’s virtual learning. They may have their own health conditions that impede them from working in a 9-to-5 job.
This effort to stamp out independent contracting and rubber stamp the employer-employee model is purely a union-boosting strategy. Independent contractors cannot be unionized, but employees can. Membership in private-sector unions has plummeted and unions are looking to the White House and Congress to push more Americans into organized labor.
President Biden is prioritizing a special interest over the needs of many American workers. These workers will suffer when they lose incomes, contracts, and jobs as California contractors experienced when the legislature passed AB5. Workers should be allowed to choose which work arrangement best suits their needs, not be forced into one model of work.
The real issue of concern is the government’s disincentives to work
President Biden and Labor Secretary Walsh have been playing defense following a lackluster April jobs report last week. Only 266,000 jobs were added, falling far below the one million jobs expected and bumping the unemployment rate up to 6.1 percent. This is despite 7 million vacant positions. Anecdotally, employers across the country, particularly in the restaurant industry, are reporting that they struggle to fill open positions because workers say they are earning more from unemployment benefits and stimulus checks than if they returned to their jobs.
The administration is trying hard to downplay the situation. When asked, President Biden said “they don’t see much evidence of this,” but then had to backtrack and tell the American people in an address:
We’re going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits.
Secretary Walsh explained separately,
“I think that people aren’t coming back to work because their job isn’t there… unemployment insurance is a temporary fix… But, you know, we’re still dealing with a global pandemic.”
Seven million vacant jobs is a sign jobs aren’t returning?
States are taking the matter into their own hands and ending unemployment benefits to nudge the unemployed back into the workforce. Good for them.
The Biden administration has plenty of pressing labor issues on their plates. Instead of robbing workers of flexible opportunities, they should be focused on encouraging work and pushing policies that will help businesses increase opportunities for all.