Ringo Chiu via AP
Proposition 22 carves out an exemption for app-based workers, allowing companies like Uber, Lyft, and DoorDash to continue misclassifying employees as independent contractors.
The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
As Alex Sammon wrote in his recent profile of California’s Proposition 22 battle, gig economy companies like Uber, DoorDash, and Lyft are drowning California in $184 million of ad buys—more than any ballot proposition in U.S. history—to kill a state law which would finally provide workers with the basic rights and the dignities of full employment. Proposition 22 would essentially create a third category of laborer, besides employee or independent contractor, to apply to rideshare and delivery companies.
This third category would receive a handful of vaguely described rights, but nothing close to those of full employees. Most notably, these workers would be guaranteed a minimum payment, but only for the moments in which they are engaged in driving, not while waiting for rides or deliveries. Estimates show this provision could translate into workers earning as little as $5.64 an hour, allowing the wage theft upon which the gig economy is premised to continue.
Californians must reject Proposition 22. But the country must understand that this ballot proposition is just the dress rehearsal to a looming fight. Uber and Lyft didn’t come up with the idea of dodging labor law by creating their own category of worker. But one of the men who did stands a good chance of being nominated as the next secretary of labor.
Seth Harris was part of the Obama Labor Department before Obama was even inaugurated, having led the department’s transition team. A labor law professor and former counsel to then-Labor Secretary (and Prospect co-founder) Robert Reich, he rose to serve as acting secretary in 2013 and early 2014. Then he revolved out to the employer-side BigLaw firm Dentons.
Among other clients, Dentons has represented Walmart in union and NLRB disputes, helped a Louisville restaurant association kill minimum-wage laws for that city’s servers, protected management in multimillion-dollar pension cases, and defended executives from white-collar crime enforcement. The Public Policy and Regulation practice that Harris is part of has helped navigate businesses through Consumer Financial Protection Bureau and Securities and Exchange Commission rulemaking, represented Citibank in a derivatives regulation matter, and worked for other global insurance companies and banks.
Harris’s time at Dentons enabled him to cash in on his connections. During that period, he co-wrote a policy paper for the Hamilton Project on “modernizing labor laws for twenty-first century work.” At the time, the Hamilton Project was a sort of holding pen for Robert Rubin acolytes looking to enact corporate centrism. Big Tech, though still the new kids on the oligarchical block, were powerful enough to be taken seriously by 2015—and Uber and Lyft had some labor problems in need of the Hamiltonian glaze.
Harris and his co-author, the late Alan Krueger, found themselves arguing that drivers for Uber and Lyft don’t fit either of our existing categories of workers in America. Instead, they proposed, we need a new, third category of laborer, separate from employee or independent contractor. Their proposed category, the “independent worker,” would “not qualify for hours-based benefits, including overtime or the minimum wage.” Moreover, independent workers “would rarely, if ever, qualify for unemployment insurance benefits.”
Sound familiar?
The problems with the proposal weren’t hard to spot. AFL-CIO General Counsel Craig Becker punctured the argument in a panel two days after the paper’s release. Uber had posited that its drivers aren’t employees since Uber doesn’t set their hours, but “Uber, in a very highly sophisticated way, tracks exactly what the worker is doing for Uber. It tracks when they make the pick-up, when they make the drop-off. And if you look at what I would call a pay stub, it actually says how many hours the worker worked for Uber and hinges their compensation to those hours.”
Unsurprisingly, this argument fell on deaf ears. In a panel before Becker spoke, host Greg Ip asked the audience of D.C. insiders how many of them had actually driven for Uber. Not a single attendee raised their hands.
By the time of this proposal, Big Tech was already mastering its playbook of laundering their preferences through funding economists who produce work praising their companies. Harris’s co-author had consulted for Uber the previous year. Harris had also done plenty of huckstering for young, exploitative industries. When some states threatened to regulate fantasy sports leagues as a form of gambling, the industry’s trade group recruited Harris to run a self-regulatory agency, the Fantasy Sports Trade Association. As far as I can tell, the only piece of content the Fantasy Sports Trade Association has ever produced in five years is the press release announcing its own creation. A gambling-law professor observed, “The first step, when you run into a scandal like this, is we’re going to self-regulate. It’s a good (public relations) move.”
Harris should serve as a reminder that Big Tech’s interests in the executive branch stretch far beyond the antitrust agencies.
These days, Harris is a self-employed shadow lobbyist openly advertising his relationships with federal policymakers: “He knows how to talk with them about his client’s needs, and build coalitions and networks that produce results,” his private law firm website notes. Harris now sits on the board of the private student lender Meritize, which finances student tuitions at trade schools for as much as 25.78 percent APR. That’s four times the national average for a private loan to attend a four-year university.
To hear Harris tell it, his involvement with Meritize is about “shifting the financing model away from a backward focus on credit scores or income”—you know, the things a responsible lender looks at. Harris also bemoans that “Industries like allied health, industrial manufacturing, and medical technology are already facing challenges finding the skilled workers they need.” In February, he argued for the Harvard Business Review (!) that employers must help workers “develop the skills they need to fill tomorrow’s roles.” That’s right, in 2020, Seth Harris is still a skills gap guy. No matter how many times this zombie argument is debunked, it will always serve its purpose for hacks desperate to believe that inequality is not about corporate power.
But according to my sources, Harris is also well positioned to seek the labor secretary job, should Biden (hopefully) win in November. He held it before as an acting secretary, has impeccable Obama-era credentials, and has been a devoted foot soldier for the Biden campaign, listed as a “strategic advisor” in the media.
He should serve as a reminder that Big Tech’s interests in the executive branch stretch far beyond the antitrust agencies, even after last week’s historic report from the House Antitrust Subcommittee. Plenty of tech business models are built around regulatory arbitrage: The gig economy relies on misclassifying workers; payment apps like Ripple Labs (where Obama veterans Michael Barr and Gene Sperling have been shadow lobbyists) fill a job that the Federal Reserve ought to do; and so on.
No matter how awkward it would make relations within the broader Obamaworld, Biden must not nominate corporate revolvers, especially those who made their money defending exploitative industries, be they rideshare and delivery apps or banks or drillers. That won’t happen without a significant fight—the cash spent on Prop 22 proves that. But it is a fight progressives must win.
