[US] The Gig Economy Is Keeping America Open

17 APR 2020

While the COVID-19 pandemic presents dramatic economic and health challenges, the gig economy and the third-party food-delivery companies on its front line has effectively kept parts of America open for business. The Washington Times analyses the reaction this has ignited.

Gig economy businesses and their workers are facing an attack from Massachusetts Senator Elizabeth Warren and her allies in the labour movement. 

Senator Warren has written a letter to gig economy companies encouraging the CEOs to reclassify drivers and shoppers as employees rather than independent contractors, citing the economic vulnerability of workers amid the public health emergency. Senator Warren endorsed a similar approach in the PRO Act, a labour “wish list” that passed the House but has not progressed in the Senate. 

Senator Warren’s ideas reportedly have a rocky track record in California, the legislature put them to the test with the notorious Assembly Bill 5. The legislation, which took effect earlier this year, forces many companies in the state to reclassify independent contractors as employees. Thousands of workers who voluntarily built their lives and incomes around flexible independent-contracting opportunities were suddenly left empty-handed. 

Those in favour of the policy argue that the new criteria will reduce the “exploitation” of workers. The Washington Times asks why, if that is the case, has the state also provided policy exemptions to a wide range of professions, including real estate agents, hair stylists and construction contractors? Do these workers not warrant the law’s claimed “protection?” The existence of immunity reveals that supporters of the law are well aware of the disastrous consequences. 

The real motivation behind AB5 and similar proposals is simpler. Labour unions looking for new dues-paying members would prefer to see contractors forced to become employees even if the result is that fewer people have a source of income. The biggest victims are the drivers, delivery people and shoppers who have voluntarily chosen to work outside of the traditional employer-employee relationship. As the government continues to impose restrictions on gig economy companies, the employment situation for such workers grows increasingly uncertain.  

It is likely that gig economy workers will be resistant to labour organising. Union rules are the thing many “gig” drivers and shoppers seek to avoid. Gig workers value independence and flexibility, not rules which dictate where, when and how much they can earn or work. 

Gig economy companies and the opportunities they provide to workers have grown exponentially in recent years. And the impact of COVID-19 has made their existence demonstrably more essential.