National review
Labor Secretary Marty Walsh wants more employees in the workforce
Labor Secretary Marty Walsh has said he believes that more workers in the gig economy should be classified as workers. The problem is that Secretary Walsh is trying to relitigate the battles of the 1930s when he should look at how the work and the priorities of the workers have developed. The secretary seems to think that gig economy workers are being exploited by the platforms they work with and are not receiving their fairness about benefits. From this perspective of the world, it is best for workers to get an employment contract that provides access to a plethora of government-mandated benefits, including health care and working time restrictions. Taking a step back and thinking about what people want from work, however, shows a different point of view. The employment contract is just a way of working that is increasingly inconsistent with the wishes of employees. In essence, the employment contract creates a subordinate relationship with the employer – so subordinate that the law calls it the master-servant relationship. The employer buys your time and is entitled to ask you to do what they want with it (within reason). That’s why, for example, if an employee hits their van against you, you will sue their employer, not them (unless the employee was involved in what the law calls a “joke” that isn’t related to the company Needs of the employer). That doesn’t sound very empowering, does it? The employer’s power over the worker explains why a wide variety of labor and labor laws were passed in the 1930s to reduce employers’ power. Labor law gave unions the right to negotiate contracts for all workers, and labor law burdened employers with implementing a variety of social policies required by the government. However, the 1930s was a different time. Many jobs could be done by anyone with minimal training (they were literally “work jobs”). The Great Depression meant that there were many people willing and able to do a particular job. What the employees wanted was job security and some restrictions on what employers could ask of them. They were willing to sell their time and labor without any strings attached. The times have changed. Many jobs require special skills that give the worker more power. Workers also have different requirements than those of workers in the 1930s. In the private sector, most of them see no need for unions. The rise of the gig economy offers alternatives. For example, people who value flexibility in hours had been held back by the master servant economy (they had to settle for rare part-time arrangements that employers often refused to offer) but suddenly found new opportunities in the gig economy. This was particularly the case with parents who cared about meeting their children’s needs over the safety of a 40-hour, 9-to-5 work week. Employment itself has also changed. The idea of a vertically integrated company with career advancement and lifelong jobs has faded in most sectors. Nowadays companies organize themselves according to different principles and do not outsource essential services to other companies or freelancers. Many employers do not want to work in a master-servant relationship, preferring contractual terms instead. Gig economy platforms are the most obvious example of this, but any company that offers, for example, extended leisure or tuition fees that encourage workers to leave the company operates under different conditions than what is currently assumed by labor law. However, the idea that a master-servant relationship with an employer is somehow best for the employee remains widespread. This was the motive for various attempts, notably the California AB5 bill, to forcibly convert gig workers into salaried employees. These attempts have resulted in many traditional freelance jobs that survived the legislation of the 1930s being converted into employment. This helped bring down the California attempt. Voters recognize that some people do not want employment and are interested in freelance work – which would not exist in a world only with employment. So many people were affected by AB5’s broad brush that California voters voted against AB5 by a large majority in an election initiative. However, Secretary Walsh’s remarks suggest that the Biden administration may attempt to repeat AB5’s mistakes. For example, the PRO Act, which President Biden has touted as an integral part of his infrastructure package, aims to qualify all gig economy and freelancers for union formation, a first step towards AB5 and the establishment of a master servant relationship neither the workers nor the platforms want. Rather than trying to force everyone into an outdated model, Secretary Walsh and his department should study how the work has changed and make proposals to the President to be sent to Congress to reflect those changes.