The US workforce is thriving despite misguided labor laws

The Department of Labor has a pending rule that would make it more difficult for workers to engage in freelancing, contracting and gig work.

When my family and I moved to rural America from Armenia in the mid-1990s, we found that it stood true to its reputation as the land of opportunity and abundance. Work was readily available, and my parents also found opportunities to pursue other sources of income through self-employment, contracting and starting their own businesses.

We should be grateful for how our labor markets continue to create an abundance of diverse work opportunities to serve our varying wants and needs. While some willing workers do struggle to find the right fit for their talents, one promising feature of the American economy is that it’s doing a good job of delivering a wide range of options for most people. 

For many families, like it was for my parents, the availability of side hustles — or gigs — outside of the traditional employment arrangement is important to help meet financial goals.

These non-traditional employment arrangements — commonly referred to as “independent work” — have a mixed reputation in some policy circles, but they should help us to abandon the notions that “a job” can only be provided by “a company,” which was never quite right. We’re all constantly creating work opportunities for one another. 

When you hire a music teacher for your child, you’re providing a job opportunity for someone else. The same is true when you order handmade pottery on Etsy, request a ride from the train station, or hire a graphic designer on Fiverr to make a logo for you.

Skeptics point out that not every such job is as fruitful as a traditional nine-to-five (though many are). What they forget is that these non-traditional jobs already existed, but thanks to rapid technological strides over the last few decades, the set of job providers has greatly expanded to include ordinary individuals. Today, about 10 to 29 percent of U.S. workers (depending on the way the workforce is measured) engage in independent work as their primary source of income, and up to 39 percent use it as supplementary income. That’s almost 60 million people benefiting from an expansion of non-traditional work opportunities.

A recent Upwork survey found that 83 percent of independent workers engage in these jobs to earn extra income. Responders span a diversity of occupations and industries. About 51 percent provide knowledge services such as marketing or computer programming, 37 percent provide unskilled labor services and another 31 percent sell goods. About a quarter of them are creating influencer-style content. The same is true specifically for gig economy workers on app-based platforms such as Uber, Lyft and DoorDash.

According to a Morning Consult poll, the top two reasons people choose this work are “the ability to choose when to work” and “the ability to have more than one income.” One worker put it succinctly: “It’s the best way for me to make extra money on my own time.”

Of course, there are also drawbacks. Independent work as a primary source of income often means being left out of the purview of traditional employment-based benefits and protections. This has led to battles at the federal and state levels to reclassify these workers as employees who would ostensibly have access to benefits. The Department of Labor has a pending rule that would make it more difficult for workers to engage in freelancing, contracting and gig work. California enacted Assembly Bill 5 in 2019, creating a stringent set of regulations to prevent the growth of the independent workforce.

Independent workers tend to push back on these reclassification policies. In California, legislators later felt compelled to correct the bill and exempt over 100 occupations and industries. Workers pointed out how they were losing income opportunities — especially in the creative community of musicians, fine artists and singers, as well as for freelance translators, writers and photographers.

According to the Bureau of Labor Statistics, 79 percent of independent workers prefer their current work arrangements and only 1 in 10 would rather be W-2 employees. The majority are supplementary earners who already have full-time jobs, meaning that reclassification policies— which would make their contract relationships illegal —  would likely eliminate their valued side gigs.

For these reasons, some policymakers are turning to new solutions that would better serve the workforce. Bipartisan reforms that would enable flexible or portable benefits packages are emerging.

At the national level, there’s Sen. Mark Warner’s (D-Va.) Portable Benefits for Independent Workers Pilot Program Act. A portable benefits bill was signed into law in Utah earlier this year. The big idea is to allow independent workers to maintain their work arrangements but also increase their access to workplace benefits and protections.

Let’s be thankful for a country where it’s become a little easier to find different ways to make ends meet or earn extra money. And let’s hope that any forthcoming policy changes protect these opportunities.

Liya Palagashvili is a senior research fellow with the Mercatus Center at George Mason University.