David Henderson has a couple of recent posts analyzing possible upcoming regulatory changes affecting gig workers. Reading his posts triggered the little memory imp that lives in the back of my brain, and brought to mind an additional point worth making.
At the outset, however, I do want to give some credit to the Vox writer David cites, Rachel Cohen. David pointed out in his Hoover article that the vast majority of gig workers value the flexibility of gig work and prefer it over traditional employment. Cohen acknowledges this too, writing:
Some groups representing freelancers and small businesses also urged the NLRB against revising its contracting standard, worried they would lose their prized independent status. They pointed to government surveys, like a 2015 GAO report that found more than 85 percent of independent contractors and those self-employed appeared content with their status. In 2018, the Bureau of Labor Statistics reported 79 percent of independent contractors preferred their contracting arrangement over a traditional job.
The Small Business and Entrepreneurship Council issued a statement on Tuesday calling the Labor Department’s rule “out-of-touch with the modern economy and how people want to work.”
Even acknowledging this point is a breath of fresh air to read, at least from a Vox article. However, there’s another downside to the proposed regulations which deserved a mention – these new rules will cost a lot of people their jobs. In her Vox article, Cohen also writes:
One major legal entitlement employees enjoy is the right to join a union. Another is the right to be paid at least the minimum wage, and for businesses to pay a portion of their Social Security tax.
That is, one effect of this regulation will be to make people more expensive to employers as they move from contractors to employees. And as they get more expensive, we would expect the quantity of workers employed to decrease. I would expect a writer at Vox to be particularly aware of this point, and not just because it’s elementary economics that anyone who reports on economics issues should be aware of.
A few years ago, when California initially passed AB5, Vox released an article praising the new law as an unambiguous victory for gig workers. Unlike Cohen, the author of this article doesn’t even hint at the possibility that this legislation might have any downsides. But flowery analysis can only obstruct economic reality from view – it doesn’t prevent economic reality from taking effect.
Appropriately enough, “vox” means “voice.” Vox used its voice to describe AB5 entirely in beneficial terms, but as the old saw goes, actions speak louder than words, even at Vox. Remember those freelance workers mentioned by Cohen in her article? That’s what woke up the memory imp in my brain. After some quick Googling, I was able to rediscover an article I read just before AB5 was scheduled to go into effect in California. The key point:
Vox Media, a large digital media company with an array of niche sites, abruptly terminated hundreds of freelance writers in the state of California.
The company will cancel its agreements with about 200 contractors to comply with a new law that goes into effect on January 1, 2020. The law is known as California Assembly Bill 5—commonly referred to as AB5. The law was enacted to prohibit corporations from misclassifying workers as independent contractors instead of employees…Vox intends to replace the freelance writers with roughly 20 new part-time and full-time staffers.
The author of that article goes on to point out that not only was this devastating to those whose contracts were cut, it would also hurt Vox, too:
Vox will now need to hire people on a part-time and full-time basis and pay them expensive benefits. They will lose out on the 200 independent writers who offer knowledge, viewpoints and analysis that will be hard to match with 90% less people.
Given Vox’s own actions when regulation of this very kind is on the horizon, I don’t think it’s too much to ask of Vox writers to preach what they practice.
Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.
