More than $ 15 billion was wiped from the value of America’s largest gig economy companies Thursday morning after the US secretary of labor suggested that some workers be classified as workers.
The share of ride-sharing pioneers Uber and Lyft and the food delivery service DoorDash fell 5 to 11 percent after Marty Walsh told Reuters he believed that in “many cases” employees should be treated as employees.
“In some cases [workers] are treated respectfully and in some cases not, ”he told the news agency. “And I think it has to be consistent across the board.”
Investors perceive the comments of the head of a department with significant influence on the interpretation of US labor law as a significant threat to companies whose business models rely on workers’ controversial “independent contractor” status. As a result, important costs – such as fuel and maintenance – can be passed on to the employee, and there is usually less protection and benefits.
“These companies make a profit and income and I don’t [going to] grudge everyone for that, because that’s what we’re talking about in America. . . but we also want to make sure that success trickles down to the employee, ”said Walsh.
He planned to meet with gig economy companies over the next few months to discuss the matter, Reuters reported.
“Uber believes we should have policies to improve independent work, not eliminate it altogether,” the ride-sharing group said after Walsh’s comments were reported.
“But more important than what we think is what drivers think. Study after study shows that the vast majority of app-based workers want to remain independent because it allows them to work when, where and how they want with a flexibility that no traditional job can match. “
Elizabeth Jarvis-Shean, DoorDash’s chief of policy, said the drivers – whom she calls Dashers – worked an average of just four hours a week, and called for a discussion of ‘modern policies’ around work.
“Dashers have overwhelmingly told us they value the flexibility to earn when and how they want,” she said.
Lyft did not return a request for comment.
The wages and hours division of the labor department is responsible for enforcing national criteria for whether employees are employees or independent contractors. The Trump administration tried to apply a looser interpretation of the criteria, but Walsh’s Labor Department has proposed repealing the changes and is awaiting White House approval.
Gig companies have aggressively fought against more local efforts to bring about reclassification, particularly in California. The companies have warned that switching models to classify workers as employees would lead to higher prices for customers and fewer and less flexible jobs for drivers. Employees should stick to shift patterns rather than the current ad hoc job sign-up, they argue.
Uber, both in the US and abroad, has lobbied for what it calls a “third way” of employment that lies between formal employee status and the less stable independent contractor arrangement. In the UK, the country’s highest court forced Uber to reclassify its ride-sharing drivers as ’employees’ – a UK-specific designation that offers certain benefits such as holiday pay and pension.
The U.S. Bureau of Labor Statistics estimated that there were more than 55 million gig workers in the U.S. in 2017, a number that is expected to have risen significantly since then.
During the pandemic, when demand for some handyman services plummeted, many workers turned to specially crafted government emergency programs to make ends meet.
“ If the federal government didn’t cover the workers in the gig economy, ” Walsh added, “ not only would those workers have lost their jobs, but they wouldn’t have had unemployment benefits to help their families move forward. . . .[and]we would have a much more difficult situation across the country. “
Walsh’s comments are the latest signal that the Biden government intends to prioritize the issue of workers’ rights. Speaking to Congress on Wednesday, President Joe Biden reiterated his support for the trade union movement, saying, “The middle class built this country. And unions are building the middle class. ”