Thursday, May 13, 2021

Democrats' PRO Act could take down Uber

The Democrats Just Reintroduced a Labor Law that Would Destroy Uber — And It Could Actually Pass This Time | Foundation for Economic Education - Brad Polumbo: 

February 8, 2021 - "With control of Congress and the White House, Democrats are making labor policy one of their first priorities. Ironically enough, that’s actually bad news for independent contractors and gig economy workers across the country.

"The legislation at the core of their agenda is the PRO [Protecting the Right to Organize] Act, which Democrats ... re-introduced with sponsors including Speaker of the House Nancy Pelosi and Senate Majority leader Chuck Schumer. Among many other things, the bill would severely restrict the legal definition of independent contractors..... It’s modeled after a similar but highly controversial California bill, AB 5, that likewise forced the reclassification of independent contractors. 

"President Biden supported AB 5 at the time, and is on the record supporting the PRO Act, too. And now that Democrats control Congress, it could pass the House and find support from the White House. The only question would be whether it could make it through the closely-divided Senate.... 

"The PRO Act ... would make illegal any independent contractor arrangement where the worker provides services within 'the usual course of the business of the employer,' meaning jobs like Uber drivers, Doordash drivers, Instacart grocery deliverers, and more could not exist as we know them. There are roughly 10.6 million independent contractors in the US, accounting for 6.9 percent of all employment. Some of these workers might not be affected by the law and some others may get hired on as full-time as a result. But there’s little doubt that millions more would find themselves unemployed.

"For example, Uber alone employs more than 1 million drivers in the US. It’s nearly certain they would all lose their jobs under the PRO Act, because Uber already runs a loss, not a profit, and adding an independent contractor as a full staff member counts roughly $3,625 per driver. Basic math tells you that most of these workers would end up being let go; Uber could even go under. After all, the California legislation nearly forced Uber and Lyft to shut down operations in the Golden State altogether until a last-minute ballot referendum modified the law. 

"Uber is just one company and one example. But freelance workers such as journalists, photographers, florists, musicians and more all lost work in California under legislation similar to the PRO Act. 

"The authors of AB 5 and the PRO Act likely earnestly believed they were going to help workers.... But the ugly results of their policy naivete will leave many like them unemployed instead.... The Democrats’ latest labor proposal is a case study in unintended consequences, which inevitably plague big-government interventions into a vast and diverse economy.

"'Economic policies need to be analyzed in terms of the incentives they create, rather than the hopes that inspired them,' ... free-market economist Thomas Sowell once wrote. 'The programs that are being labeled for the poor, for the needy, almost always have effects exactly the opposite of those which their well-intentioned sponsors hope them to have'.... 

"Nancy Pelosi and Chuck Schumer clearly haven’t thought this through. If the PRO Act becomes law, it won’t help independent workers—it will eliminate their jobs or strip them of the flexibility that attracted them to the gig economy in the first place."

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