Biden’s attack on gig work is an Uber mistake

If we thought the latest inflation numbers were bad, the Biden administration is about to make things worse. Last week, the Department of Labor announced a new rule that would curtail the use of contractors and freelancers – the heart of the "gig economy." 

Framed as "helping" these workers by forcing them onto payrolls, this rule will certainly be another example of "when help hurts" to come out of the Biden administration. 

The reality is this regulation will increase prices further at a time when inflation on necessities is crushing Americans. It will eliminate jobs, and, make no mistake, this act of faux benevolence will strip individuals and families of autonomy over their own lives. The rule is subject to a 45-day comment period, and the American people need to be loud in saying "thanks, but no, thanks." 

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This rule will drive up the cost of everything as the gig economy is far more than ride sharing and food delivery. Gig workers that would fall under the restrictions of this rule include plumbers, electricians, nannies, tutors, journalists, therapists and actors – pretty much anyone who offers their time and talent on their terms. 

Here’s how that’s going to happen. Everything has a cost, and the person who pays it is the consumer. When a business is forced to provide insurance and pension plans, paid vacation, sick days and disability insurance to employees, those costs are ultimately paid by the customer. Conversely, since independent contractors work for themselves, they don’t have to incur these costs and can pass the savings onto us. 

Peer-to-peer services help us all to maximize earnings and savings by connecting people looking for work with people that need work done. This increased efficiency eliminates marketing costs, transaction costs and losses from wasted time. Forcing Americans to become employees eliminates these efficiencies – raising the prices we pay. 

This isn’t a hypothesis. We saw how it played out in California two years ago when the state enacted AB 5, which mandated that independent contractors become employees As a result, jobs were cut in a range of businesses using contract and freelance workers including journalists, ESL teachers and nurse practitioners since the cost of full employment was too great. Even the arts in California weren’t spared as playhouses and orchestras were forced to cancel performances they could no longer afford. And several businesses like Wonolo and Vox Media left the state entirely.  

California’s harmful law extended to our supply chains, too. When the law took effect this summer for California’s 70,000 independent contractor truck drivers who were given the choice of finding an employer or a new job. This led to protests by drivers and shutdowns at ports. And since it became harder to find truck drivers and more expensive to ship goods, the Golden State’s citizens are expecting price increases on things like household goods. Of course, California’s actions are not just limited to the state, but are harming supply chains across the country. 

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Now, Biden wants to copy California’s mistake nationwide, putting more than 350,000 independent contractor truck drivers’ jobs at risk, further breaking supply chains. If it’s hard to ship stuff today, just imagine what happens when those truck drivers can’t operate. And many of the workers at the facilities that unload those trucks are independent contractors, too. 

It’s American consumers who will eat these new costs through higher prices every time we call a plumber, eat at a restaurant or even get our newspaper delivered. This isn’t complex; it’s basic economics. But this is what we can expect from a Secretary of Labor with not a single year of business experience and a president and administration with almost no background in business or economics. 

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Americans are suffering enough with 8.2% inflation and high gas prices. They certainly don’t deserve government regulations that will drive prices higher and kill jobs. And yet, that’s exactly what this new rule will do. Like the American Rescue Plan, the Inflation Reduction Act and the other spending under this administration, this proposed rule to regulate the gig economy will pour gasoline on a raging dumpster fire – the perfect metaphor for the Biden administration's misguided efforts to help. 

Carl Szabo is Vice President and General Counsel for NetChoice, and Professor of Internet Law at the George Mason Antonin Scalia Law School.