Unions the Big Winners in Regulating the Gig Economy

A man starts his first UberX ride in Canberra, Australia, on Oct. 30, 2015. Martin Ollman/Getty Images

Commentary

Unions neither trust nor understand the entrepreneurial spirit.

They strive for uniformity of outcomes, and trade on the fear that the worker might be exploited by an employer—it’s part of their business model, and it’s in their DNA.

The latest manifestation is the introduction by the Australian government of its “Closing Loopholes” bill on Sept. 4 which seeks to destroy contract hire, dictating that a contract hire worker (or contractor) has to be paid the same as a full or part-time employee; and minimum wages for “gig” workers, but only in some industries.

They also set out proposals for the Fair Work Commission to set minimum standards for truck drivers.

They claim the cost will be $9 billion. Business argues it will be larger. But this is just a dollar cost.

The cost to individual employees and the overall community is much larger than a nominal rise in wages and includes flexibility and satisfaction.

My Early Gig Work

A gig worker is someone who does contract work for a range of employers. The term comes from the entertainment industry where musicians would play a “gig” at a venue.

While gig work may equate to an hourly rate, normally it is performance-based.

I’ve been a gig worker most of my life since I started a lawn-mowing business in university. Not that I thought of it as a series of gigs at the time, rather I thought of it as a business—which is how I imagine many gig workers think of it today.

People get into gig work for a number of reasons. In my case it was convenience. I was at university and wanted a part-time job that left my evenings free. It ended up being quite a smart move as I ultimately built a small business I was able to sell.

No one forced me to do it, and the harder and smarter I worked the more I made. I started off at $5 an hour, like everyone else cutting grass who advertised in Brisbane’s Courier Mail paper, but was making $30 an hour by the time I sold the business a few years later.

Back then the best source for my clients was the hard copy Yellow Pages directory. Today, it would most likely be Airtasker, Freelancer, or possibly Gumtree, Google, or my own website.

Some platforms are just like the Yellow Pages—advertising hubs but with limited inbuilt e-commerce and order-taking features.

Others, like Uber or DoorDash, look like a business, and the contractors look more like employees than contractors, and it is these the government is targeting.

More Tax Dollars Is a Good Motivator for Change

This is a little odd as transport has long been full of gig employees, like taxi drivers who are paid a share of what they earn rather than a wage and drive vehicles dressed in a firm’s livery.

A man hails a taxi at Central Station in Sydney, Australia, on May 6, 2021. Mark Metcalfe/Getty Images

There have been some attempts in the trucking industry to treat self-employed truckies as employees during legal disputes.

Last year, in ZG Operations Australia Pty Ltd v Jamsek (pdf), the High Court held that as long as there was a contract that was clear and comprehensive, then irrespective that some of your actions were employee-like, you were a contractor.

This had implications not only in the employment market but for taxation.

Contractors get advantages that employees do not. For example, they can split income with an intimate partner, thus lowering their average tax rate. The Australian Taxation Office does not like this.

Obviously, the federal government doesn’t like it either.

Government’s Reasons Are Inconsistent

According to the Australian Financial Review, “The government has identified ride-share, food delivery, and the care economy as top candidates.”

And they have nominated companies like Uber in RideShare and Mable in the care economy as specifically covered, but are exempting Airtasker?

In trying to explain why Airtasker might be exempt, the newspaper notes that the company was among the top 10 donors to Labor at the last election, donating $140,000.

They also point to the fact that Airtasker does cover the care economy, and some contractors seem to be both on Airtasker and Mable.

You know there is not a lot of hard logic to the legislation when the minister responsible, Tony Burke, justifies the new laws on the basis of “safety.”

So raising minimum wages provide protection from kinetic force on the roads?

He further compounds the absurdity of the excuse by claiming that 13 drivers have died in road accidents “in recent years.” How many is “recent?” And who is being measured here—only delivery drivers, or personal carers and ride-share as well?

In the last 12 months, 1,234 people died on Australian roads of whom 247 were motorcyclists and 46 cyclists. If recent years mean two years, it is 0.5 percent.

Uber Eats delivery men ride bicycles through the Kabukicho entertainment area in Tokyo, Japan, on April 11, 2020. Tomohiro Ohsumi/Getty Images

Uber Eats was set up in Australia in 2012, so “recent” could even be 11 years, and the death rate is similar to those of other occupations that use the road, which is an inherently risky place to be no matter what our reason for being there.

What is surprising is that the government hasn’t attempted to spread the net more widely. Perhaps this is misdirection—pretend the legislation is limited, and then expand the boundaries once it is enacted.

Gig Work is Good Economics

There are good economic reasons for the gig industry to grow and prosper.

First, it is the standard business model for many trades, professional, and sales firms, whether with one employee or thousands. Your local solicitor or architect is doing gigs.

It is the entry-level of micro-business where the “operator” has no one to delegate to. This is an enterprise at work, and we know that its principles work to build wealthy economies.

Second, it most closely matches resources and demands. If my business does not need another full-time employee because we have only the occasional gap to cover, the gig worker comes in very handy.

Depending on the skill required for the work the gig worker is likely to earn more than an employee. There is a value to an employer in not having a permanent employee, and they will often end up sharing that with the contractor through a higher contract rate.

Gig work can also turn an underutilised personal asset, like a car, into a business asset, and allow the worker to turn excessive leisure time into income.

Many of the Uber drivers I talk to have downtime they want to use to save for something, like a house, and they have a first job and other demands that make their availability unpredictable. The idea that they can just click on the Uber system when they feel like it, is terribly appealing.

Gig work can also be useful when it comes to balancing family priorities. It can also provide an entry-level job to an employee who could not justify the same wage as someone more experienced, and who would not be employed if a one-size-fits-all level of remuneration and conditions applied equally across the workforce.

Surveys in the United States show that around 80 percent of gig workers are happier working for themselves than for a boss.

A Wider Union Net

Unions have been campaigning against self-employment for ages. The term they use is “insecure work.”

It’s a new cause for them, but casualisation in the workforce hasn’t changed for more than two decades, staying at around 20 percent.

No doubt the real lure is that if they can bring these workers within the employee net then the same technologies that created the new employment opportunities in the first place will also facilitate the unionisation of the workforce.

So here is a business opportunity to exploit, if they can change legislative definitions using a Labor government that owes them.

They also have trouble with the idea that incomes can be set by a market, rather than a rule. If I am paid less or even more, they suspect that someone is being exploited.

Ultimately, supply and demand do determine wages whether they are regulated or not.

Unregulated it works best raising them very effectively over time, meaning workers can actually price their worth fairly accurately, and that technology, rather than trade unions, is the main driver of increasing standards of living.

For a couple of hundred years unions have denied these realities, so it would be naïve to expect them to change.

Now they have a government that denies reality too. So that’s good for unions, but bad for the standard of living of the rest of us.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.