New labor laws hurt Latino gig workers
Independent work is alive and well, but perhaps not for much longer.
That’s because the Department of Labor’s new independent contractor rule would make it harder to be classified as an independent worker. It would likely lead to many of these workers being reclassified as employees or risk losing their livelihoods entirely.
This is complicated news for families and individuals doing their best to make ends meet — often through independent work such as real estate agents, painters, nannies and website designers.
Half of all immigrants are engaged in independent work. Low barriers to entry allow women, immigrants, younger individuals and those with lower incomes to make a living through independent work.
For Hispanics, a whopping 50% of whom report being independent workers, it’s a gateway to the labor market, earning part-time or full-time income through consulting, delivery services, nursing, ride-sharing, dog-walking — you name it.
Freelancing, contract work, app-based gigs and side hustles are increasingly prevalent in today’s workforce nationwide. Before the COVID-19 pandemic, 57.2 million U.S. workers were in the independent workforce. Since then, the estimated number of freelancers has skyrocketed to 73.3 million and is growing.
Latinas, practically eliminated from the workforce during COVID-19, are now enjoying a resurgence. One in 5 Latinas were out of a job during the pandemic, suffering the highest unemployment of any group of women ever.
Before the pandemic, Latinas were creating businesses at a rate six times faster than all other groups, including white men and Latinos, and some data suggest that trend has continued. Latinas are the fastest-growing cohort of entrepreneurs. They run nearly 2 million businesses nationwide but receive less than their white counterparts on business-related funding. Latina-owned businesses start small and stay small. A shift in policy would disrupt millions of lives and inflate costs for these business owners.
The reentry of Latinas into the workforce since the pandemic is closely linked with family dynamics. Latinas typically have more children, with their children being younger on average, and they are more likely to be single parents. In fact, they are three times more likely to be the sole heads of households compared with white women, and they also have the highest likelihood of residing in multigenerational households. Flexibility stands out as the primary motivator for workers who have children. This is why Latinas have so much to lose under this new rule.
This regulation would supersede the previous rule, allowing workers who either own their businesses or can work for competing companies to be considered contractors.
The presence of an adaptable workforce offers numerous economic advantages, especially for emerging businesses and expanding enterprises run by women. A recent Independent Women’s Forum report found that “to reclassify independent workers as employees and subject to regulations about sick leave, overtime and minimum wages could backfire on gig workers by eliminating the flexibility that they rely on and eliminating opportunities.
Unsurprisingly, the U.S. Chamber of Commerce, the largest U.S. business lobby, has publicly denounced the new independent contractor rule for creating “uncertainty and bias against independent contractor status.” Others have followed.
States and federal lawmakers should reject proposals to reclassify independent contract workers to protect the flexibility and opportunity that these workers need and desire. Rather than expanding government programs and reforms, policymakers should assess areas where existing laws have facilitated women’s economic advancement and where they have hindered progress.
The essence of the American Dream lies in the freedom to pursue one’s livelihood. We need an approach that allows women to construct lives and work arrangements that align with their distinct preferences and circumstances to live their version of the American dream.