Post-COVID, Americans Don’t Want to Return to Lousy Low Wage Jobs

From today’s New York Times:

The hopes for a booming pandemic recovery — growth led by jobs gains in the millions every month — were dealt a blow in recent weeks by a disappointing April jobs report. Perhaps we will see better when results for May are released this week, on Friday. But, for weeks, many in Democratic policy and political circles have been queasy about addressing the connection between federally supplemented unemployment insurance benefits and the slowing pace of re-employment at this stage of the recovery from the pandemic. There is almost certainly a common sense connection: If you were a low-wage worker, why aggressively attempt to go back to work at a lousy, low-paying job, when you can make more money collecting unemployment benefits.

Still, Republican politicians are getting it wrong too. They are citing countless news reports that businesses are struggling to fill certain positions as both a reason to end federal unemployment benefits and as evidence that the extra benefits were too generous in the first place. They worry that the ability of some workers to stay on the sidelines of the labor market, unless employers offer wages that trump jobless benefits, could result in dangerous “wage inflation” — a potential increase in labor costs that, they believe, consumers will pay for in the form of higher priced goods and services.

That argument simply does not hold water either: Over the coming weeks and months as this aid for the jobless phases out, there will be a flood of anxious job seekers pouring into labor markets. Even if a significant share of workers are temporarily avoiding taking low-paying jobs while benefits remain generous, then there is no true “labor shortage,” as many economists and market commentators are calling it.

When Congress passed the CARES Act last May and the American Rescue Plan Act this March, it was hard, even impossible, for policymakers to forecast the demand for labor or the pace of the economic recovery. The pandemic was still stubbornly lurking. The economic (and humanitarian) risk of doing too little far exceeded the risk of being generous. And in spite of some recent comments from Democrats facing political pressure, the entire point of the enhanced unemployment checks, at least originally, was to tide Americans over until it was safe for more people to work again.

Now enhanced benefits are ending every day for the millions of Americans who have benefited from the Pandemic Emergency Unemployment Compensation, or PEUC, program, which extends unemployment insurance for 13 weeks to those who exhausted their conventional state and federal unemployment benefits. All extra federal supplements for the unemployed will end on Sept. 6, including the general $300 weekly benefit, as well as the Pandemic Unemployment Assistance, or PUA, program, which provides aid to those who were self-employed. (Some states are in the process of cutting them early.)

Republican-controlled states, as well as some more politically mixed states, are doing this because they presume there is a macroeconomic upside to millions of workers returning to lower-income jobs. They shouldn’t be so sure.

Read the complete article here.

Labor Secretary Says Gig Workers Should Be Converted to Employees

From today’s Forbes Magazine:

President Joe Biden positioned himself as the champion of the American worker during his campaign, as well as an ardent proponent of unions. On Thursday, Biden’s Labor Secretary, Marty Walsh, told Reuters that gig workers should be treated as employees.

This simple statement could become an existential threat to app-based technology companies, such as Uber, Lyft, Instacart, DoorDash and dozens of others that heavily rely upon gig-economy workers.

The tech companies are basically built on the backs of contract workers. However, these gig workers are not classified as employees. Without the designation, contractors don’t qualify for traditional benefits, rights and privileges that are afforded to full-time permanent employees.

This sector represents a significant part of the economy. About 55 million Americans work in the gig economy, comprising around 36% of the workforce. If the Biden administration decides to take action based upon Walsh’s plan, it could have devastating consequences. 

Walsh seeks to rectify the situation by reclassifying contract workers as “employees.” The labor secretary said, “We are looking at it, but in a lot of cases, gig workers should be classified as employees…in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board.” Based upon this news, shares of Uber fell as much as 8%, while Lyft took a dive by 12%. Doordash fell nearly 9% and Grubhub was down 3.3%.

There are concerns raised by opponents of the gig-economy structure who say, similar to Walsh, it doesn’t seem fair to workers. Venture capitalists, institutions and wealthy individuals have flooded capital into this sector. When the tech companies went public, the investors, CEOs and top executives reaped vast fortunes. Contractors serve as cheap labor. If they acquiesce to critics like Walsh, they risk losing multimillions or billions of dollars. 

While many people earn a livelihood driving cars, delivering food and offering creative services through on-demand companies, there is a dark side. The contractors work long, hard hours for little pay and no real benefits. Near-monopolies have been created that crush or drive out the competition. Look at what happened to the once-ubiquitous yellow taxi cabs when Uber came to New York City. 

Uber, Lyft, DoorDash, Grubhub and other similar gig-based companies are highly dependent upon independent contractors. They have a financial self-interest in classifying drivers or workers as contractors. This model enables corporations to avoid paying payroll taxes, FICA (Social Security and Medicare), disability, federal and state-level unemployment and health insurance benefits. They are not required to comply with minimum-wage laws nor offer vacation days. 

Read the complete article here.

Will rideshare drivers get paid less than minimum wage under Proposition 22

From today’s Sacramento Bee:

Proposition 22 proposes that gig drivers for companies such as Uber, Lyft and Doordash will get paid 120% of the area’s minimum wage for the time they spend picking up and driving goods or passengers, plus 30 cents a mile.

Proponents of the proposition argue under its calculation, the drivers will get paid closer to $25 an hour after expenses, much more than the state’s minimum wage. But the initiative’s opponents cite a much-published study from the UC Berkeley Labor Center, whose researchers said Proposition 22 will guarantee only $5.64 an hour.

Amid an onslaught of advertisements, Proposition 22 still has a fundamental question to answer: How much will the gig drivers get under the initiative. A Sacramento Bee review found that the answer depends on how expenses and time at work are defined. But it is possible that workers would earn less than minimum wage under the measure.

In 2019, Ken Jacobs and Michael Reich at the UC Berkeley Labor Center published a report saying the gig drivers using Uber or Lyft will only be guaranteed a pay of $5.64 an hour under Proposition 22. They still stand by the number.

Under Proposition 22, drivers could get a pay cut from what they are paid now, Jacobs said. “The guarantee they claim to have,” he said of the gig companies. “is a false guarantee.”

Under Proposition 22, drivers will not be paid for the time they are waiting to give a ride, nor the time they spend preparing and cleaning their cars. That time accounts for some 33% of the drivers’ working time, Jacobs said, citing a 2019 study that looked at Lyft and Uber rides in six metropolitan areas across the country, including Los Angeles and San Francisco. “It’s impossible to do the work without having the time waiting for work,” Jacobs said.

Another report, “Rigging the Gig,” by the National Employment Law Project and the Partnership for Working Families found that drivers working 50 hours a week will be paid $175 to $210 less a week under Proposition 22 compared to the current minimum wage.

Read the complete article here.

Salaried or Hourly? The Gaps in Family Friendly Policies Begin to Close

From the New York Times:

More large companies like Starbucks and Walmart are starting to see the value in paid leave and other benefits for parents, including hourly workers, though big disparities remain.

As the labor market tightens, employers have been competing for highly educated workers by trying to make it easier for them to do their jobs and also have families — benefits like egg freezing or reduced schedules for new parents.

Now, some employers are beginning to address the same challenge for lower-wage workers, starting with paid family leave.

On Wednesday, Starbucks announced raises and stock grants for all employees in the United States, along with new benefits aimed specifically at workers with family caregiving responsibilities: paid time off to care for sick family members and paid paternity leave for hourly employees.

It followed the announcement by Walmart this month that it was raising pay and adding family-friendly benefits. It gave full-time hourly workers the same paid parental leave as salaried ones and said it would help pay for adoptions, including for hourly workers.

Read the complete article here.