By Jeff Wald, Co-Founder & President, Work Market
Throughout the campaign and during his few first weeks as President-elect, Donald Trump has been relatively quiet on matters related to the on-demand economy. He shouldn’t be — over 53 million Americans are freelancers, approximately one third of the U.S. workforce.
There’s been a lot of speculation about how Trump, a pro-business, anti-regulation, populist President-elect, will impact on-demand, and we believe that his administration could have a transformative effect on this space.
The current state of the on-demand economy
Right now, on-demand is in a state of complete regulatory uncertainty. Misclassification of workers continues to be an issue — class-action lawsuits hang over leading brands like Uber, Amazon, FedEx, and more. Most businesses simply don’t have a clear understanding of what the rules are, or how they’ll be implemented.
Also, most independent contractors (ICs) in the on-demand economy aren’t able to buy into to the social safety net. They struggle to access workers comp, along with disability and employment benefits.
What changes can we expect from a Trump administration?
What, exactly, will Trump do? Unfortunately, we know very little about what his plans are. The only specific on-demand related policy that Trump has endorsed is the anti-union right-to-work law. Right-to-work is in effect in 26 states, prohibiting labor contracts that force employees to join a union or pay fees.
Aside from that, we haven’t seen any clear signs of what direction a Trump administration will take. However, from what we know about Trump, it’s clear that he has three guiding principles for his presidency:
How will Trump put these principles into action?
What will occur in 2017
Here’s what I think the Trump administration absolutely will do in 2017 that will directly affect on-demand labor:
- One thing that Trump and Republicans can agree on is reducing regulation. In fact, Trump’s been very clear that his goal is to reduce federal regulation by 70%. When possible, he will take executive actions to do so.
- In 2010, President Obama started a task force to root out misclassification in the labor force, aimed at stopping employers from unfairly categorizing workers as independent contractors when they should be considered employees. We believe that this will not be a priority of the Trump administration nor Republican congress, and that they will scrap this task force and cut funding to the 35 state departments that have been working to reduce misclassification.
- The Trump administration will also have important effects on the social safety net — notably, there will likely be a reduction in unemployment insurance and disability benefits — areas that the federal government can control, and a Trump administration will almost certainly roll back some of these safety nets.
- One of the most important yet least talked about matters regarding the on-demand economy concerns the National Labor Relations Board (NLRB). The NLRB’s mandate is to enforce U.S. labor laws, particularly regarding unfair labor practices and collective bargaining. There are 5 spots on the NLRB board, and Trump will be able to fill two vacancies immediately and another by the end of 2017. The NLRB has made some important rulings on cases relevant to the on-demand economy (like the Browning-Ferris decision, which greatly increased the risk of co-employment), and these decisions are likely be vacated.
- Consider the possibility of a Trump administration removing worker classifications entirely. No W2’s, no 1099’s, no classifications at all. This may sound radical, and perhaps it is unlikely, but it wouldn’t be out of character for a President-elect that is unabashedly pro-business and anti-regulation. Instead of adding a third classification as many have suggested, Trump is likely to be more interested in scrapping the classification system as a whole, rather than adding to it. He could very well do this in 2018.
- Regardless of what changes are made to worker classifications, there most certainly will be tax reform during the Trump administration. A core tenet of Trump’s campaign has been to simplify the tax code, and pursuing this will have major implications for the on-demand economy. For example, tax reform is likely to be a revenue-neutral plan, and being revenue-neutral means removing deductions. Right now, many independent workers write off much of their expenses against their income. If they lose the ability to do so, they may want to raise their prices to make up for it. Whatever shape it takes, tax reform is sure to have a profound impact on every aspect of the on-demand labor market.
- Lastly, either through an executive order or through Congress, it’s likely that Trump will work to reduce state licensing power and create more competition across state lines. There are 51 licensing authorities in the U.S., and we envision Trump wanting to take a more harmonized approach, which would certainly result in more innovation in the on-demand economy.
How Work Market can help
There is no doubt that the Trump administration will rewrite labor laws that have an important effect on the on-demand economy. These are times of regulatory uncertainty, and thousands of companies are relying on Work Market’s simple, automated solution to help them best utilize on-demand labor while complying with labor laws.
No matter what direction Trump and his administration takes, Work Market’s software helps companies looking to make the shift from rigid W-2 labor to a variable-cost model, unlocking new levels of productivity, engagement, and growth. Learn more about Work Market and how it can help with your goals and challenges heading into 2017.
The GSD Management channel is brought to you by Work Market, the leading labor automation platform. Work Market empowers businesses and skilled professionals to unlock new levels of productivity, engagement and growth across the entire lifecycle of work. Learn more at www.workmarket.com.