(RepublicanDaily.org) – The gig economy has been the subject of controversy in government chambers across the country for a few years now. At both the federal and state levels, lawmakers have worried about the welfare of workers employed under independent contracts, such as Uber drivers.
On the other hand, however, is the fact that companies like Uber, Lyft, and DoorDash have offered incredibly useful market innovations for consumers. Since they operate at a loss, they use casual working arrangements to get around the expenses associated with traditional employment contracts. This kind of cost-cutting has made it possible for their operations to continue.
The Biden Administration’s Approach
Of course, any nuanced discussion of this tricky topic is lost on the Biden administration. On Thursday, April 29, Labor Secretary Marty Walsh gave an exclusive interview with Reuters, during which he discussed the fair treatment of gig workers. Walsh bemoaned the fact that some casual workers were not treated fairly and proposed that in “a lot of cases gig workers should be classified as employees.”
Predictably, this quickly caused disquiet on Wall Street. Lyft’s share price dropped 10%, with Uber losing 6% and DoorDash dropping by 7.6%. This market lurch represents the pivotal importance of gig workers to these innovative firms; if they have to restructure their business model to accommodate full-time employees, they could go under.
Learning from California’s Mistakes
This wouldn’t be the first time a government had made a mess while trying to champion the rights of gig workers. California’s disastrous AB5, which was partially revoked last year, made it impossible for independent contractors in a range of industries to do their jobs. What Marty Walsh is proposing could end up causing a similar mess.
Some modern companies have revolutionized the services they provide, making life easier for millions of consumers. While their workers need protection, the Biden administration needs to find a way to provide it without stifling the potential for market innovation.
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