Freelancing Is Good. Congress Can Make It Great. | The American Spectator

Our technology-driven economy places work opportunities at our fingertips. Yet our outdated federal and state labor laws are decades behind how millions of Americans earn a living today.

The House Workforce and Education Committee is set to mark up two bills aimed at supporting independent contractors in America. The Modern Worker Empowerment Act and the Unlocking Benefits for Independent Workers Act, both introduced by Rep. Kevin Kiley (R-Calif.), will modernize our federal labor laws to respect self-employment and gig workers and offer them access to benefits they desire without sacrificing flexibility. 

In 2023, an estimated 70 million people freelanced, and about half of them were women. These freelancers, gig workers, and self-employed professionals choose to be independent contractors. They control when, where, how, and for whom they work. 

Flexibility is a top reason that over 80 percent of independent contractors said they prefer this work arrangement over traditional employment. They are balancing work with caregiving for children or aging parents, managing personal health conditions, gaining an education, or pursuing entrepreneurial endeavors. 

In 2023, nine out of 10 female workers who shifted from full-time employment to independent contract work said they prioritized flexibility. Take, for example, Cynthia Clampitt, an Illinois freelance food writer who needed a flexible schedule when she became the primary caregiver during her mother’s final years. 

In yet another 80-20 issue, over eight out of 10 women and overall voters say the government should not force people to work 9-to-5 jobs. 

The tradeoff for flexibility is that independent contractors do not receive employer-provided benefits such as health insurance, family benefits, paid time off, retirement, and disability insurance. Federal and state laws prohibit it. Companies and organizations that do offer benefits to them risk misclassifying those workers and could be sued or penalized by the government. 

This arrangement works for many freelancers. The vast majority of independent contractors and gig workers are earning supplemental, not primary, income. They may already have access to employer-provided benefits through their traditional job or a spouse. Still, a significant proportion do not have access to benefits, or they find coverage very expensive to secure. By wide margins, voters indicate the government should make it easier for independent contractors to gain affordable health insurance and other benefits.

Policymakers have approached this problem in two ways. The first is the mass reclassification approach. By imposing restrictive or ambiguous worker classification standards, they create insurmountable hurdles for workers to remain independent. Unions and their political allies support reclassification as a way to boost their union ranks and coffers.

California’s Assembly Bill 5 (AB5) law is an infamous example. After imposing a strict test, self-employment plummeted by 10.5 percent, and overall employment fell by 4.4 percent, with no increase in traditional employment. Entire professions were wiped out, leaving women like Jessica Tucker, a freelancing transcriber, “struggling to put food on the table.” 

The Protecting the Right to Organize (PRO) Act and the Biden Department of Labor’s independent contractor rule, finalized in 2023, would both effectively reclassify millions of independent workers nationwide against their wills and nationalize California’s hardship. 

There is a better way forward, as I recently testified before the Senate Health, Education, Labor, and Pensions Committee. First, reform labor laws to harmonize the independent contractor definition across federal agencies with a clear and simple test (such as the standard implemented by the previous Trump Department of Labor at the start of 2021). Second, clear away legal hurdles for portable benefits. 

Portable benefits are workplace benefits that are attached to a worker instead of a specific employer. One or multiple companies, organizations, and individuals can voluntarily pay contributions into a person’s benefits account. These accounts can be administered by third parties, but workers are in the driver’s seat, selecting the benefits they need, such as healthcare, disability, and retirement benefits.

Red and blue states are creating voluntary portable benefits programs for their freelance and gig workforce. In 2023, Utah pioneered a framework for government and private entities to offer flexible benefits services to independent contractors. Stride, a portable benefits provider, partnered with Target-owned delivery service Shipt to launch Utah’s first program. In 2024, the gig company DoorDash partnered with the state of Pennsylvania to launch a portable benefits pilot program. Alabama, Tennessee, Georgia, and Wisconsin have also passed portable benefits laws this year.

Congressional action is needed. Congress must make clear to other federal agencies that the presence of benefits is not a determinant of employee classification. Otherwise, companies could be penalized for misclassifying these workers. 

For long enough, policymakers have teamed up with established interests to fight technology. Cabbies fought ridesharing, hotels fought homesharing, and labor unions are fighting the gig economy. Instead of fighting against progress, policymakers can fight for flexibility, entrepreneurship, and worker freedom. The Modern Worker Empowerment Act and the Unlocking Benefits for Independent Workers Act are two bills that will help to keep freelancing great.

Patrice Onwuka is the director of the Center for Economic Opportunity at Independent Women and co-host of WMAL’s O’Connor & Company.