In her flagship economic policy address, Hillary Clinton threatened to “crack down” on independent contractors, the backbone of the gig economy, because she believes they are being “exploited.” She also promised organized labor “a seat at the table” in the White House during a speech at the AFL-CIO, not long after the union opined “working people in the gig economy share a single common designation: employees” and are entitled to “minimum wage, overtime, unemployment insurance, workers’ compensation, and family and medical leave.” This is a dangerous alliance for individuals in the gig economy.
The gig economy should be treated with regulatory humility, not shackled with depression era regulations. Political advisors on both sides of the aisle agree that outdated labor laws do not make sense for the gig economy. Instead of making inflexible and brash threats, it is crucial for Hillary and her supporters to understand the data behind what some have called “the future of work” and the “fourth industrial revolution.”
Participation in the gig economy is highest among the young and poor. Someone who is well off is not as likely to put in extra hours working in the gig economy than someone who is struggling to make ends meet or is between jobs. This is intuitive, but the data is there to prove it. JP Morgan Chase & Co analyzed data from financial transactions in the gig economy and concluded: “Participation in labor platforms is highest precisely among those who experience the highest levels of income volatility — the young, the poor, and individuals living in the West.”
Similarly, Arun Sandararajan, a leading sharing economy scholar at NYU, said the most important finding in his study was that “peer-to-peer rental marketplaces have a disproportionately positive effect on lower-income consumers across almost every measure.” And Alan Krueger, an economic advisor to President Obama, found in his research that forty nine percent of Uber drivers are between the ages of 18 – 39, compared to only twenty eight percent for taxi drivers.
It is clear that the young and poor are benefitting from the new jobs created by the gig economy. But Hillary said the gig economy is “raising hard questions about what a good job will look like in the future.” Is that true? And the AFL-CIO said they are committed to “ensuring new technology – and new forms of employer manipulation – do not erode the rights of working people” and “if employers get away with pretending their workers aren’t employees, your job could be next.” Are the young and poor being “manipulated” into working bad jobs? Is your job next?
No. In the same study, Kruegar found that 87 percent of drivers surveyed chose to drive for Uber “to have more flexibility in my schedule and balance my work and with my life and family.” JP Morgan found that “landing a platform job is often easier and quicker. Likewise, individuals can, and do, generate additional income on labor platforms in a timely fashion when they experience a dip in regular earnings.” When schedules are tight and other sources of income go down, the ease with which individuals can find work in the gig economy helps them get by. And the independent contractor designation is the key to gig economy flexibility.
Hillary’s comments and the AFL-CIO’s bold prophesying demonstrate how out of touch they are with the nature of work today. Major gig economy services did not emerge until 2008, but independent contractors have been on the rise since the early 1990’s. The gig economy is not “a new form of employer manipulation,” rather it is the product of an increasingly independent workforce. The 9-5 work day, minimum wage, overtime, workers compensation and paid leave create an inflexible work environment. Classifying individuals in the gig economy as employees and instituting these inflexible regulations will undermine the very reasons why so many individuals are turning to the gig economy as an alternative source of income. To see whose job is really in jeopardy, Hillary and the AFL-CIO should look in the mirror.
Data aside, to insinuate gig economy jobs are not “good jobs” or workers are only doing the gigs because they are “exploited” or “manipulated” is elitist nonsense. No one is being forced or “manipulated” into working in the gig economy. Individuals are free to choose for themselves if, when and how they want to work. But Hillary should know this; she does it on a regular basis. Since 2000, the Clintons have earned $198 million giving speeches, private consulting, and other non-employee work, according to Jared Meyer, a research fellow at the Manhattan Institute. It is okay for Hillary to work as an independent contractor, but she believes everyone else needs her stamp of approval before they can do the same.
The gig economy empowers individuals to be their own boss. This is not something that should be stifled, but a Hillary Clinton administration promises to do just that.