(Reuters Breakingviews) - American freelancers could be in for a summer surprise. The Department of Labor under President Joe Biden has pitched a rule that would classify many gig workers as traditional employees, and Biden’s pick for the next secretary of labor backs such a policy. The proposal could secure benefits for freelancers. Yet those perks come at a price to them and the economy in general. As these gigs grow, a rushed rethink could do needless harm to millions of workers.
Julie Su, the president’s choice for labor secretary, has a history of redefining gig work. During her time as California’s labor commissioner, Su supported legislation that deemed many gig workers, including delivery and rideshare drivers, employees. If she is approved by the Senate, she could advance Biden’s proposal for a nationwide overhaul.
About 60 million Americans, or 36% of the total workforce, performed some kind of freelance work in 2022 and collectively contributed $1.4 trillion in earnings to the U.S. economy, job-listing platform Upwork said in a December study. Both sums stand to drop if reclassification makes it more expensive to hire freelancers – some 3.4 million workers and an income of $42.1 billion would be on the line, according to a 2022 paper published by the Chamber of Progress. That group works on behalf of the technology industry – and companies like Uber (UBER.N), Etsy (ETSY.O), and DoorDash (DASH.N) have a lot at stake. But they also have quite a lot of control over hiring practices in the end.
And while health insurance and retirement savings are valuable perks, gig workers view flexibility in the same way. Nearly two-thirds of app-based freelancers spend less than 15 hours per week doing gig work, according to a Morning Consult poll published last month. Half of the surveyed gig workers, meanwhile, make less than a quarter of their income from freelancing.
Gig work has also grown alongside traditional employment, not at its expense. The share of adults taking on freelancing rose 3% last year, matching the 3% jump in regular payroll employment, Upwork says.
The Labor Department can address some disparities by testing portable benefits, which allow freelancers to pay into certain perks across employers. Yet three-quarters of app-based freelancers prefer keeping their independence, Morning Consult found. With most gig workers happy as they are, a one-size-fits-all rethink threatens pointless harm to a growing corner of the economy.
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CONTEXT NEWS
U.S. President Joe Biden picked then-Deputy Labor Secretary Julie Su to head the Labor Department on February 28. Su served as the secretary for the California Labor and Workforce Development Agency before joining the Biden administration.
California Senator Dianne Feinstein returned to the Senate on May 10 after a three-month absence while she recovered from shingles. With Democrats holding 51 of the Senate’s 100 seats, Feinstein’s return could decide whether Su has the votes necessary to be confirmed.
In her previous role, Su supported legislation that classified some gig workers, such as rideshare drivers, as employees. The California law, known as AB5, went into effect on January 1, 2020.
A U.S. appeals court revived a lawsuit from Uber Technologies on March 17 that challenges the California law. The San Francisco-based court said the state must face claims that AB5 unconstitutionally targets app-based transportation companies and ignores other sectors.