By: Tom Hebert
President Joe Biden’s $6 trillion budget proposal includes $7.5 billion for “worker protection” efforts, including a new campaign to force independent contractors to reclassify as W-2 employees.
This is part of the left’s government-wide, full-court press to destroy the gig economy and force every American to have a boss. If implemented, Biden’s plan would threaten the livelihoods of more than 58 million Americans that engage in freelance work.
A crucial part of the gig economy’s success is that it allows Americans to put food on the table without the rigidity of a traditional employment relationship. By classifying as independent contractors, gig workers are free to set their own schedule and work at their own pace.
As government-mandated lockdowns shuttered millions of businesses across the country, participation in the gig economy increased by 33 percent in 2020. Think of an Uber driver saving his earnings to start a business of his own, or a single mom selling crafts on Etsy to support her family. These are real Americans making ends meet and chasing their dreams, and will want these jobs around as we recover from the pandemic.
The Biden budget funds executive branch efforts to end “the abusive practice of misclassifying employees as independent contractors.” The only problem? Independent contractors overwhelmingly prefer to remain independent contractors. According to the Bureau of Labor Statistics, fewer than 1 in 10 independent contractors would prefer a traditional employment relationship to their current setup.
The data bears out for rideshare drivers as well. Democratic-leaning Benenson Strategy Group and Republican-leaning GS Strategy Group conducted a survey which found that 77 percent of drivers say flexibility is more important than receiving benefits, a margin of more than 3-to-1. Nearly 70% of drivers would quit if they had to take on a traditional employment role with Uber. Additionally, Americans consider rideshare drivers to be independent contractors and not employees by a 3 to 1 ratio according to a landmark Pew research survey.
The Biden Administration pledges to work with Congress to develop “comprehensive legislation” to force millions of independent contractors to reclassify as traditional employees. Big Labor’s crown jewel, the “Protecting the Right to Organize” (PRO) Act, would do just that by implementing California’s “ABC” test for independent contractors on a nationwide basis.
Under the ABC test, businesses must prove that a contractor is doing duties “outside the usual course of work of the hiring entity” and that “the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.” This significantly limits the ability of businesses to retain contractors who may operate within the scope of work sometimes performed by employees in similar circumstances. It’s an unnecessary distinction that prohibits most businesses from working with independent contractors.
The ABC test forced the mass reclassification of California’s independent contractors, more than 90 percent of whom opposed the ABC test reclassification before it was signed into law. The law was so unpopular that 59 percent of Californians voted for Proposition 22, a ballot initiative that exempted rideshare drivers from the ABC test.
Ultimately, the Biden budget shows that the Administration will use every tool in its arsenal to force the mass reclassification of American independent contractors, the vast majority of whom prefer the flexibility of freelancing to the rigidity of traditional employment. As our economy attempts to recover from the pandemic, the last thing we need to do is to kill job opportunities for millions of American freelancers.