Congress Should Not Follow California’s Example With PRO Act
This week, the House will vote on the so-called PRO Act, which the National Law Journal calls “the most significant labor law reform since the World War II-era Taft-Hartley Act and the 1935 Wagner Act . . . which first granted private-sector employees the right to form and join labor organizations.”
One of the very controversial provisions would mimic California’s controversial Assembly Bill 5, enacting tough restrictions at the national level limiting the freedom of Americans to work as independent contractors.
Pacific Research Institute’s Kerry Jackson characterized AB 5 as being “the worst piece of legislation to be passed and signed in California not just in recent memory but going much further back than that . . . it’s anti-worker, anti-job, anti-entrepreneur, and anti-freedom.”
A recent Los Angeles Times article noted that California is now the “de-facto policy think tank of the Biden-Harris Administration.” Congress and the Biden Administration would be wise to listen to the millions of gig workers who were outraged by AB 5’s passage and chart a different course. This is especially important if Washington is serious about helping the economy fully recover.
Millions who lost their jobs during the Covid-19-fueled recession found a much-needed lifeline in the gig economy. While confined to home during lockdowns, new gig entrepreneurs could use technology to sell their services or goods they made at home – and keep food on the table for their families.
Remember, gig workers are not employed by gig economy companies, but are actually their own bosses.
As explored in the new study “The Small Business Gig,” gig economy platforms lower the transaction costs of a deal, creating mutually-beneficial exchanges that enable buyers to purchase products or services at lower prices, while ensuring a profitable outcome for the gig worker.
Whether earning extra cash renting out an extra room through Airbnb, selling homemade products through Etsy, or providing services through TaskRabbit, Fiverr, or Care.com, gig economy companies do not provide the good or service. They provide the technology platform that facilitates the transaction.
Proponents of the PRO Act’s tough independent contractor provisions claim that gig economy companies are exploitative. But proponents aren’t really looking out for workers. This is another example of the government picking winners and losers in the economy.
In pushing the PRO Act, Congress and the Biden Administration are doing the bidding of labor union bosses – who provided big money and manpower to help Biden and Democrats win in November – and traditional economy companies turning to their allies in government to stop new competition. Both have lost big as the nature of work and our economy are rapidly changing.
Gig economy workers like the ability to be their own bosses, set their own schedules, and work as much as they choose. An ADP Research Institute survey found 70 percent of gig workers are independent workers by choice, while Gig Economy Data Hub research found that more than two-thirds were satisfied with their gig work arrangement.
When AB 5 was passed in California in 2019, it was workers who were the most outraged. They didn’t want to work traditional, 9-to-5, wait for the whistle to blow union jobs. Rallies were held at the State Capitol and across the state as independent workers in many fields harshly criticized state lawmakers for denying them the freedom and flexibility of gig work.
Thankfully, voters drove a big stake in the heart of AB 5 last November, when liberal California passed Prop. 22 to create a new arrangement for app-based, gig-economy workers that preserve worker freedom in a landslide vote. Congress would be wise to listen to these Californians, not the guardians of the status quo.
Gig work is becoming an increasingly important part of the economy. A 2018 Gallup survey showed that 36 percent of Americans had some type of gig worker arrangement. It’s the future of entrepreneurship in California and the entire country and is essential for the next generation of small business growth.
Congress should be encouraging gig work, not trying to deny job opportunities for millions of Americans.