8. The push for a "third category" of employment
Illustration: Aïda Amer/Axios
Gig companies are hoping a new form of employment will be the key to safeguarding their business models and avoiding a dramatic overhaul — or even collapse — if they’re forced to follow traditional rules.
Why it matters: This fight has pitted labor advocates, pushing for employment with full benefits and rights, against the companies that need workers to remain contractors so they can avoid the full costs of benefits and having to fully manage the workers.
Gig companies are hoping a new form of employment will be the key to safeguarding their business models and avoiding a dramatic overhaul — or even collapse — if they’re forced to follow traditional rules.
Why it matters: This fight has pitted labor advocates, pushing for employment with full benefits and rights, against the companies that need workers to remain contractors so they can avoid the full costs of benefits and having to fully manage the workers.
Flashback: In a 2015 paper for The Brookings Institution's Hamilton Project, former acting Secretary of Labor Seth D. Harris and economist Alan B. Krueger proposed that gig workers get their own employment category — a proposal that has since become an often-cited model.
- Harris, a member of the Biden transition team, and Krueger said “independent workers” should get collective bargaining rights and have companies pay half of their Medicare and Social Security taxes.
- However, they said workers should not be guaranteed a minimum wage and overtime pay, in part because of the challenges of tracking drivers' hours, especially while they wait for ride requests.
The other side: Measuring drivers' hours and paying them a minimum wage is absolutely possible, the Economic Policy Institute's Ross Eisenbrey and Lawrence Mishel pushed back in their own paper.
- In fact, the companies are already administering minimum earnings schemes in certain jurisdictions, they wrote.
- They also dispute that drivers are free to use time for personal tasks while waiting for a request, as they must promptly respond and should therefore be paid for their time.
The gig victory in California endorsed a much watered-down approach.
- Workers remain independent contractors, with the addition of funds companies will provide that workers can use toward some minimal benefits such as health insurance or sick leave.
- Collective bargaining is not included.
- It also doesn’t address the existing tension over the fact that these workers don’t get to set their own prices or have much say over their jobs. (Uber started to experiment with letting drivers calibrate their prices, but reception has been mixed.)