Labor Law & the Gig Economy

I spent this morning at a Hamilton Project event focused on “Modernizing Labor Law in the Modern Gig Economy.”   The event hosted the release of a new report from researchers Seth Harris and Alan Krueger, and included two very esteemed panels of experts and discussants.  They all grappled with the thorny question of how do we update our labor laws, and our social contract more broadly, to adequately protect and support new ways or working.  The report presents a preliminary proposal for tackling this issue—create a new work category of “independent worker” that covers those who work through intermediaries (such as Uber or Lyft) and provides them with protections such as the right to organize, tax withholding, and employer contributions to payroll taxes.

The proposal was met with some skepticism by most of the commenters who argued that we don’t yet know enough to effectively regulate and manage these new ways of working.  And, of course, relying on Congress to develop forward-thinking and sophisticated new regulations may not be an idea that has legs now.

I had two takeaways from today’s discussions.  First, I worry that the hype over Uber and its brethren may distract us from addressing larger issues related to independent work.  As a related Hamilton Project working paper noted, those who work independently via intermediaries are still as small part of the overall 1099 Economy.  Today, the online gig economy may employ around 600,000 people.  This is a large and growing segment, but the overall independent workforce could be as large as 30-50 million workers.  So, while we should address the impact of new business models like AirBnB and Uber, we also need to discuss other parts of the 1099 Economy—like, to give one example, the roughly 20% of manufacturing workers now operating as independent contractors.

Lastly—while the prospects for new federal rules appear limited, we can expect lots of action at the state and local level.    In the field of economic development, we may even begin to see something of a competition as regions compete to be the “best place” for independent workers or, conversely, a place that focuses on supporting those in traditional full-time jobs.  Regardless, we can expect that the future of the independent workforce will remain a hot topic for some time.

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