President Biden’s Labor Secretary nominee Julie Su, who played a role in California’s controversial labor law AB 5, is a serious concern for American workers and the gig economy. Su’s history of supporting reclassification of independent contractors could undermine the flexibility that gig workers value. It’s essential for President Biden to reconsider his choice for Labor Secretary to align with the needs of the 21st-century economy. Market Institute Senior Fellow Norm Singleton takes a closer look in a new article at Real Clear Markets.
“When West Virginia Senator Joe Manchin announced he would oppose President Biden’s Labor Secretary nominee Julie Su, he effectively killed the nomination. Every Republican is expected to oppose the nomination, and Manchin could be joined by other “moderate” Democrats and independent Kyrsten Sinema in opposing her. Fortunately for Su and her supporters—and unfortunately for American workers—President Biden is able to keep Su acting as Labor Secretary since she was Deputy Labor Secretary before Biden nominated her for the top job. Whether or not the Labor Department rule actually allows an acting Secretary to serve indefinitely is a subject for another article. Regardless of the legality and constitutionality of Biden’s actions, the fact is that Julie Su should be opposed by every worker, consumer, and owner or investors involved in any way with the modern “gig” economy.
Su, whose appointment as the Deputy Labor Secretary was confirmed on a partisan basis, is controversial because of concerns over how she handled allegations of fraud in the allocation of COVID-19 relief funds when she was Secretary of California’s Workforce and Labor Development Agency. More significantly, Su helped draft California’s labor law AB 5. This law makes it easier for government bureaucrats to reclassify independent contractors and freelancers as full-time employees by replacing the former standard with a flexible ABC or 1-2-3 test. It was opposed by “gig” economy companies like Uber, Lyft, and DoorDash whose workforces are composed of freelancers and independent contractors.
The bill was also opposed by many freelancers and independent contractors who enjoy the flexibility the gig economy provides workers, flexibility that may not be available to them if they are reclassified as employees and their employers are forced to follow the whole range of federal, state, and local regulations governing employer-employee relations.
Su, like other progressives, believes the gig workers are incapable of making decisions for themselves because they are easily misled by the big corporations. This is why workers need a nanny state busybody like Su to force them to act in their own best interests.
Patrice Onwuka, policy analyst at the Intendent Women’s Forum, summed up the effects of the California bill: “Californians across hundreds of occupations and professions lost their incomes, businesses, and a livelihood.” Not learning from the California experience, the Department of Labor has proposed new federal regulations on independent contractors. These rules would cause as many as 64 million American workers to lose access to flexible work. Many of those impacted by these regulations are women seeking flexible work schedules to help them balance the demands of career and families. Others attracted to the gig economy are young people seeking ways to supplement their income. The regulations are thus another example of progressives harming the very people they claim to care most about.
The proposed regulations mirror California’s law by requiring that federal bureaucrats apply an “ABC” test to determine if a worker is an employee or an independent contractor. This test seems to give a great deal of discretion to federal officials. Therefore, if the Labor Department is headed by someone who has had a history of favoring strong governmental regulations of the labor market, the rule will be enforced in a manner that does maximum harm to the businesses whose workforces consist of independent contractors and freelancers. This will not only impact those businesses and their workers, but the millions of consumers who have come to rely on the gig economy.”