No headlines say this. A few lines in some of the financial papers hint at it, explaining why every rideshare and gig delivery company just took a massive stock hit. Frankly, when it comes to hard news, it’s tough to go wrong with the financials.
On Wednesday the 5th, President Biden’s Department of Labor issued a reversal for the Trump-era “final rule” that defined most gig workers as non-employees under the Fair Labor Standards Act. In an interview, Labor Secretary Marty Walsh explained that this was designed to make gig workers eligible for the benefits everyone else gets. In reality, what it’ll do is force the contracting companies to limit worker hours, particularly during slow periods, so they aren’t suddenly required to pay overtime for someone who’s just sitting around doing nothing. For customers, it’s going to be just that much harder to get a ride at odd hours or to get food delivered.
It’s not as though the Administration is unaware of the impact of the policy change. When the minimum overtime threshold was raised during the last days of Obama’s tenure, WalMart (the perfect example) responded by raising wages and cutting staff in order to evade the new regulation. Earlier overtime laws resulted in a vast reduction of the number of full-time workers, replacing them with part-timers ineligible for potential benefits. These changes weren’t made because WalMart is particularly evil (although it’s arguable that they are), but rather because the laws were written in such a way that the loopholes were obvious.
One might well wonder why the Administration would take actions they know will only hamper both workers and businesses. After all, they’re Democrats; aren’t they on the worker’s side?
Well, no. Turns out, at least under Biden, they’re on the side of unions. Gig workers and WalMart employees aren’t members, so they get screwed. Most taxi drivers, however, belong to the National Taxi Workers Alliance, which is part of the AFL/CIO — and they want Uber gone, or at the very least lining up to pay union dues.
Morally, of course, it’s difficult to fault the apparent intent of the policy change. People who work more than forty hours a week ought to get overtime pay; that was settled decades ago. Except, in practice, what happens is that employers limit hours so they don’t need to pay more, and the employee ends up getting a second job. Until now, that job was often Uber, Instacart, DoorDash, or GrubHub. More recently, during the recent massive lockdowns, an awful lot of people lost their day jobs and switched to delivery as a means of making a living. The Labor Department estimates that there are as many as 70 million total gig workers, just under half the workforce — and of course they deserve some protection against greedy employers.
However, this new rule can only negatively impact full-time gig workers, who presently receive much of their compensation in the form of performance and productivity bonuses. The algorithms will be adapted to restrict work availability for those who want to go over 40 hours in a week. Extra work past that will have to be performed through a different company, which means that they’ll lose the higher wages they’d been getting in exchange for more part-time work.
For consumers, there is a small positive potential: The decrease in money available through the gig economy will drive workers back to low-paying traditional food service jobs. The present situation has fast food restaurants bidding up to $15 an hour for employees; with the change in worker demand, these numbers will begin to drop precipitately, and your neighborhood Taco Bell will again be fully staffed.
So yeah, you can get your tacos again. But it won’t help workers even a little.
The Not Fake News has begun a tracking project to help answer a simple question: Is Biden a better president than Donald Trump? At first this seems like a no-brainer; Trump, after all, was venal, corrupt, at best only marginally competent, and couldn’t speak in complete sentences. On the other hand, it’s starting to look like Biden matches him point for point on that measure. As a result, we’re working on an arbitrary scale, where we award points for good policy decisions and subtract them for bad ones. This move has cost Biden 40 points from his previous total (adjusted for time in office) of 720, bringing him down to 680. Trump is at 588.
If you found this entertaining or informative, feel free to support us, or buy us a coffee. We can use the morale boost — and the caffeine.