The Biden administration recently blocked a rule put in place by the Trump administration that would have made it easier for companies to classify workers as independent contractors instead of full-time employees. The administration is concerned about the misclassification of employees, which would prevent them from attaining benefits like paid leave and pay rates at or exceeding the federal minimum wage. The misclassification is a pervasive issue that impacts both the economy and workers. Worker protections under federal law create a safety net of security and benefits that provide ladders of opportunity into the middle class. Biden believes this safety net should be further strengthened as the economic recovery continues. The move is intended to support the creation of true employer-employee relationship and all of the opportunities that it provides.
Due to Coronavirus, the employment landscape has certainly shifted, maybe even transformed permanently. Survival has meant a combination of government relief, sacrifice, and ingenuity. Former brick and mortar employees have been forced to supplement their diminished incomes via app-based companies like Uber, Lyft, and Door Dash. Restaurants in particular relied on the services. Biden’s announcement hit the shares of app-based companies that rely on independent gig workers to operate. Companies that rely on independent contractors are seeking a way forward that allows their staff to remain independent with continued flexibility and control over their hours.
Door Dashers work fewer than four hours per week on average and they overwhelmingly describe how important the flexibility to earn on their own schedule is to them. Uber said the current employment system is outdated and forces a binary choice on workers to either be an employee with more benefits but less flexibility, or an independent contractor with more flexibility but limited protections. Uber believes that they can combine the best of both worlds by offering independent work opportunities to the hundreds of thousands of workers that use the Uber platform while also providing these workers with meaningful benefits. Lyft sees Biden’s block as an opportunity to refocus the conversation on what drivers need and want, which is independence plus benefits.
In addition to ridesharing companies, the trucking industry has opposed changing the classification structure – saying it would put owner-operators out of work. In this industry, independent contractors can earn more money than company drivers by taking home a larger percentage of the haul.
During 2020, as much as 25 percent of gig workers both in Hawaii and across the U.S. had been working overtime – some even putting in 51 or more hours per week. These numbers of hours would certainly meet the criteria for benefits. The profile of gig workers in Hawaii is middle aged (low- to mid-forties), college educated, married or single, and earning, on average, $807 per week. Instead of in-person work, online work appears to be a better choice for Hawaii workers to increase their income. The cost of living in Hawaii is certainly high and the purchasing power of the dollar is low. The people who predominantly meet the demographic for a Hawaii gig worker likely do not meet the criteria for government aid necessarily. Gig work here is probably an extra job necessary to keep these workers moving away from poverty rather than toward poverty as taxes and cost of living gravity wells are pulling. For now, it would be best if Biden restores legacy formal employment and allows the Coronavirus induced economies to grow together simultaneously. His mantra after all was Build Back Better.