Put entrepreneurs, workers and flexibility in next stimulus package

As Congress plans the fourth installment of a COVID-19 relief spending plan — which could cost taxpayers over $1 trillion — it should enact policies to increase employment and wages without adding to the national debt or putting additional burdens on job creators. 

Companies should be allowed to take care of entrepreneurs who contract with them. In early April, Republicans on the House Committee on Education and Labor put forth a recommendation to protect independent contractors during the pandemic and economic crisis.

Right now, if a company provides benefits to freelancers and independent contractors, it risks tripping on employment laws that would make the contractor an employee, incurring liabilities and regulatory burdens.

A recent survey from the Bureau of Labor Statistics showed that “79 percent of independent contractors preferred their arrangement over a traditional job.” Pointing to that finding, members on the committee recommended that “businesses should be allowed to assist independent contractors without risking the independent status that the vast majority of these workers prefer.”

They added that such a policy “would protect businesses from additional legal and regulatory burdens at a time they can least afford it, while preserving workers’ flexibility and earning opportunities when they need it most.” This stands in contrast to Democratic proposals that would make it harder for entrepreneurs to work as freelancers and independent contractors. 

Other members of Congress have been sympathetic to people who wish to earn a living independently. For example, Reps. Mike Johnson (R-La.) and Andy Barr (R-Ky.) wrote a letter to House and Senate leaders, saying “many gig economy workers are struggling to make ends meet.” They added, “Congress should reduce barriers that hinder them from making a living.”

The New GIG Act would make it easier for workers to be independent contractors under tax law as long as they meet a three-part test. Its method of drawing a distinction between an employee and a contractor ought to be extended to federal labor law as well. Though the tax law only change is not ideal, it is a step in the right direction.

Though entrepreneurs need help, Congress should not ignore employers and workers. The Working Families Flexibility Act of 2019 would allow an employee and their employer to choose paid time off time instead of overtime if the employee works more than 40 hours a week. These types of arrangements are available to many public employees and private sector employees earning over $684 a week, or $35,568 per year.

Rachel Greszler, a research fellow at The Heritage Foundation, wrote when this bill was introduced last year, “Since lower-wage workers are the least likely to have access to paid leave, this bill would go a long way toward increasing paid leave where it’s most needed.” This is especially true in today’s uncertain times, when workers need flexibility to balance work and the demands of family and home life. 

Congress should also make it easier for unionized employees to get raises and bonuses. Currently, collective bargaining agreements can act not only as a floor for wages but also as a ceiling. Provisions in some union contracts specify the amount an employee can be paid and do not allow employers to give individual employees better compensation than the agreement calls for. Employees who go above and beyond, especially those working on the front lines of the pandemic, deserve to get individual raises and bonuses and should not be limited by a union contract.

Another bill, the Rewarding Achievement and Incentivizing Successful Employees (RAISE) Act, would remove the wage ceiling of many collective bargaining agreements. 

Companies such as Target, Lowes, Walmart, Dollar General, and even the unionized grocer Kroger are all giving bonuses and increased compensation to their employees. While Kroger was able to give frontline workers a raise, it applied mostly across the board. The RAISE Act would allow unionized employers such as Kroger to go further and reward individual employees who merit special recognition.

Finally, in order for unionized employees to keep more of their pay, Congress should give all unionized employees the freedom to choose to pay union dues — or not. In 23 states, private sector employees can be fired if they refuse to pay union dues. 

The National Right to Work Act would protect the right of private sector employees across the country to choose whether paying union dues is a good investment, or if they want (or need) to keep their entire paycheck.

All of these ideas will benefit workers, entrepreneurs and job creators without the hefty price tag or mandates of the other proposals meant to respond to the current pandemic.  

F. Vincent Vernuccio is a senior fellow at the Mackinac Center for Public Policy, a research and educational institute in Midland, Mich. Follow him on Twitter @vinnievernuccio.