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The innovations of the last 30 years have transformed the way many of us live and work. Thanks to smartphones and the internet, millions of people, every day, use “transaction platforms” to exchange products and services with individuals in their own communities, or around the world. We sell through Nextdoor, find a driver on Lyft, or rent a house on Airbnb.
These platforms make person-to-person connections possible, and those voluntary interactions make people’s lives better. For many, they create a new option for earning income by providing goods and services that others value and pay for.
This revolution has been great for many independent contractors — especially women. But it contributed to confusion about who counts as an employee and who may work as a contractor under the Fair Labor Standards Act, a federal statute enacted in 1938.
In 2019, California enacted a law incorporating the “ABC test” for determining who could work as a contractor. This effectively required most contract workers to cease their work or be converted into employees.
Some months later, the U.S. Department of Labor sought to resolve questions with a new and clear set of criteria for determining who qualifies as a contractor. This rule protects the right to continue such work for those who choose to do so.
At the same time, some lawmakers in Congress came to support the “PRO Act,” which would federalize the ABC Test – outlawing much contract work and allowing unions to target these workers for unionization.
Flexibility in how we work is attractive to millions of people — including many who are unwilling or unable to commit to the traditional 40-hour work week. That may be for any number of reasons: time constraints, a desire to create their own schedule, type of work involved, or other reasons. It’s estimated that more than 40 million Americans of all ages, skills, and income levels comprise the “independent workforce.”
The Mercatus Center’s Liya Palagashvili responded to the Department of Labor proposed rule with an excellent look at why women in particular find independent work so valuable:
Reports by consulting group MBO Partners published in 2016, 2017, 2018, and 2019 similarly find that women prefer platform or gig work, freelancing, or other forms of independent work because those work arrangements allow greater flexibility. For example, in its 2018 report, MBO Partners finds that the primary motivations for women to engage in independent work are flexibility (76 percent) and the ability to control their schedules (71 percent).
Palagashvili also notes that independent work encourages greater participation in the workforce by women – especially in areas such as professional freelancing and direct selling:
Using tax data, Brett Collins and coauthors find that, while independent work is more common among men, the participation in independent contracting since 2000 has grown significantly more among women than among men. Economists Lawrence Katz and Alan Krueger also find that between 1995 and 2015, the growth in alternative work arrangements was driven primarily by women. … Allan King finds that industries that allow for greater variability in the distribution of work hours allow women to better coordinate work activities with home activities, thereby increasing female labor force participation.
It’s estimated that there are 59 million people in the independent workforce, with more than 15 million working as full-time independents. Of those, 46 percent are women. Clearly, the convenience and flexibility available in this sector make it the right choice for many.
That flexibility is very important to people like Aimee Benavides, who talked to Forbes about how she can order her work based on her own priorities – not her employer’s:
“Just because employment starts out flexible, it doesn’t mean it will stay that way,” Benavides says. “Once you are in an employer-employee relationship, you lose your bargaining power.”
There are other benefits to independence, she finds. Benavides believes that her status as an independent business owner allows her to negotiate workplace protections for herself that traditional employment would not allow.
“If someone cancels me within 24 hours of the appointment, I can still charge them my fee,” says Benavides. “If you are a W-2 employee, no one is going to pay you if they cancel your shift. You don’t have a say. By being an independent contractor, you get to negotiate those terms. If they say, ‘We don’t pay a cancellation fee, I can say, ‘I charge one, so if you want to work with me, those are my conditions.’”
Many women who have had negative experiences in traditional workplaces also choose independent work. According to freelance writer JoBeth McDaniel of the American Society of Journalists and Authors, “many journalists choose to freelance because we encountered discrimination, harassment and bullying in staff positions.” For those concerned about the glass ceiling, sexist management, and unfair workplace expectations, the ability to define one’s own work terms is extremely attractive.
With millions of Americans choosing the independent workforce, it might seem surprising that some politicians are trying to dramatically limit the right to do so. Yet California’s adoption of the controversial “ABC test,” and the vote by the House of Representatives to apply that destructive rule nationwide show that the threat is real. This damaging approach would hurt millions of workers around the country — many of them women who have good reasons for choosing independent work.
Click here to join the fight to protect the right of people to decide for themselves how they will work.