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The Policy Choices We Make Now Will Help Determine the Future of Work

February 24, 2016

How do we promote innovation, technological progress and growing productivity while at the same time ensuring that the benefits of growth are shared more broadly than they have been for the past 35 years? In other words, how do we create good jobs in the future?

We must harness technology to grow the economic pie, of course, but this alone is not enough. We also must strengthen the individual and collective bargaining power of working people so we can claim a bigger share of the wealth we help create.

That means making the right policy choices to maximize the bargaining power of people who work in the on-demand economy. While the number of people who earn a majority of their income from work “on demand” via digital platforms constitutes only a tiny slice of the workforce today, some predict this kind of work could become much more prevalent in the future.

Making the right policy choices begins with ensuring people who work for on-demand companies enjoy the rights and protections of employees. Under current law, only workers who are defined as “employees” are protected by the National Labor Relations Act (NLRA) and enjoy minimum wage, overtime, unemployment insurance, workers’ compensation, and family and medical leave. Generally speaking, most protections against discrimination on the basis of race, gender, religion, age, disability and national origin are available only to employees and job applicants.

Encouraging on-demand companies to rely on a workforce of independent contractors who lack the rights and protections of employees is bad public policy, yet four states have passed legislation doing just that for Uber and Lyft drivers. Similar bills are pending in five other states.

Unfortunately, workers would be denied the rights and protections of “employee” status by several other recent proposals. One would exclude all platform workers—not just Uber and Lyft drivers—from the protections of the NLRA. Another would give on-demand companies the option to legally “experiment” with behaving like employers without being subject to the full slate of employment law. This idea recalls the supposedly temporary “safe harbor” that Congress passed in 1978, which has allowed large numbers of businesses to get away with misclassifying employees with impunity ever since.

In fact, this debate has much in common with the decades-long debate over employee misclassification. Federal Express, which violated the law by misclassifying its drivers as independent contractors, competes with United Parcel Service, a company that delivers packages with employees represented by a union. Public policy should not give an advantage to the Fed Ex model over the UPS model.

Nor should public policy encourage the “1099 model” over the “W-2 model” in the on-demand economy. Many on-demand companies treat their workers as W-2 “employees”—Hello Alfred, Munchery, Managed by Q, Bridj, MyClean and BlueCrew, to name a few. Other employers have switched some or all of their workers to “employee” status; for example, Honor, Instacart, Shyp, Eden, Sprig and Luxe. Every worker who meets the basic definition of “employee” should enjoy all of an employee’s legal rights and protections.

The reasons why businesses want to shed their responsibilities as employers are not new or limited to the on-demand economy. Since the 1980s, Wall Street’s pursuit of short-term returns in the name of “maximizing shareholder value” has pressured all kinds of businesses to evade their responsibilities as employers, and shift risk to workers.

Corporations have responded to these pressures by outsourcing and off-shoring jobs, by switching to workforces composed of “permatemps” and part-time workers, by using just-in-time scheduling and adopting the franchising model, and by misclassifying their employees as independent contractors. The new platforms that treat workers as independent contractors are responding to similar demands from venture capital investors for high returns.

For decades these various forms of precarious work have been the reality for a significant and growing part of the workforce, and especially for people of color, immigrants and women. Often the conditions of work meet the definition of an “employee,” and yet they still lack the bargaining power to improve pay and working conditions. Employee status by itself is no guarantee of decent work, but the rights and protections of employee status long have been the foundation on which we strengthen our bargaining power.

To address these problems, we need to crack down on businesses that commit payroll fraud by misclassifying workers. We also should create incentives for businesses to treat workers as employees. More broadly, we need to reduce the existing incentives for companies to shed their responsibilities as an employer—with respect to “employees” as well as nonemployees—in ways that weaken the bargaining power of workers and encourage various kinds of “precarious work.” If we do not find new and innovative ways to deal with these pressures that are ultimately driven by Wall Street greed, these problems will only get worse.

We also need to develop new and effective worker organizing models that adapt to changes in the world of work. For more than 100 years, America’s labor movement has built collective power for employees working in various kinds of precarious and vulnerable work, turning bad jobs into good jobs. Our efforts transformed entire industries so generations of workers were able to sustain families as part of thriving communities. These difficulties are not new or insurmountable. This is what unions do.

We believe there is no basis for the pessimistic view that good jobs soon will be a thing of the past, nor that most or all work soon will be precarious. Workers in the future can enjoy the rights and protections of employees, and workers with less marketable skills need not be relegated to cobbling together a living from various odd jobs. A better future can become a reality if we make the right choices now.

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