Minnesota’s Economic News — W/E 1/27/22
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According to the Minnesota Reformer,
Uber and Lyft drivers have begun organizing themselves to press state lawmakers to force the tech giants to address long-standing driver complaints of meager wages, unsafe working conditions and a lack of transparency.
As part of the gig economy, Uber and Lyft drivers are not classified as workers. That means that they pay their own work expenses, and are not eligible for other protections available to workers, like minimum wage.
But that might change if labor unions get their way.
Workers say they want to retain the freedom they have as independent contractors to set their own hours but also want a guaranteed minimum wage, paid sick leave and access to a third-party appeals process for deactivation.
At the state and national levels, some action has already been taken to make it hard for companies to classify hires as independent contractors. The Biden administration, for example, announced a proposal to return to an earlier strict rule that is used to classify workers. And just a few weeks ago, Minnesota Attorney General Keith Ellison sued Shipt, the Target-owned delivery company, claiming it cheated workers by classifying them as independent contractors.
But if what happened in California is a preview of what’s to come, Uber and Lyft drivers need to be wary of such efforts to thwart independent contracting.
Sure, the gig economy comes with its own expenses, like drivers using their own cars or paying for their own gas. But it also comes with benefits that are nonexistent in traditional employment. Chief among these benefits is the flexibility for gig workers to set their own hours.
Whether gig workers like it or not, they face a tradeoff, with no perfect solution. They can either accept the flexibility that comes with the gig economy — together with the expenses and risk — or they can look for regular employment, which comes with no flexibility but has an added safety net.
It is, however, economically illogical to expect companies to provide gig workers benefits that are contingent on full-time employment with the flexibility that comes with gig work. As workers from California have found out, once the law starts requiring companies to reclassify independent workers as employees, jobs dry up. This is because it’s more expensive for the company to hire and retain workers than it is to use independent contractors. Even Vox — a medical company that championed California’s AB5 as a victory for workers — fired its gig workers and only rehired some back for full employment.
Uber and Lyft drivers cannot have their cake and eat it too. If they want the protection that comes with being a worker, they are best served by looking for such jobs in the first place. Forcing regulations on companies like Uber and Lyft will only eliminate existing work opportunities in the gig economy.
After all, with unemployment levels in Minnesota at a historic low, it’s unlikely that anyone is looking to drive for Lyft and Uber.
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