Biden’s war on freelancers will hurt young entrepreneurs the most

Young people think about their careers differently than their parents. Now more than ever, they would rather work for themselves than for someone else. Approximately 60% of today’s teens want to start their own business someday.

This is great for America. Entrepreneurs play an important role in our economy. They solve problems, drive innovation and create new jobs. They develop new businesses that are essential to our economic growth.

But new rules just announced by the Biden administration will force these budding entrepreneurs into the 9-to-5 jobs they hate. A fundamental revision of the Fair Labor Standards Act starting March 11 will effectively ban entrepreneurs from working as freelancers.

This rule would not only crush the entrepreneurial spirit of many young people, it would also jeopardize a vital source of income for millions of current and future gig workers. For example, a recent study in Massachusetts predicted that this type of policy would result in the loss of 58 percent of all app-based jobs.

A group of freelance writers and editors has already filed the first challenge to the rule in court.

California’s failed attempt to introduce this type of policy should also be a red flag. The state reclassified gig workers as traditional employees several years ago, leading to job losses across the state. Small businesses such as theaters and music venues were also forced to close. You couldn’t afford to hire a freelancer full-time, or your staff couldn’t get a full-time job. Voters ultimately rejected the rule, with 58% of Californians voting to remove it.

Julie Hsu, who implemented the California policy, is now the Secretary of Labor in the Biden administration. The Biden administration maintains there are important differences between its rule and California’s failed rule, but the impact would be the same.

Policies need to be implemented to support the freelance economy, which makes it easier for young people to find work on their own terms. These opportunities go far beyond the app-based platforms we all know and love, like Uber and Lyft. Freelancers are essential to nearly every sector of the economy, from accounting to customer service to software development. The most popular field for freelancers is “professional, scientific and technical services”.

These fields are very promising for young entrepreneurs looking to carve their own path.

Advances in technology have lowered the threshold for starting a business. Access to national and even global markets through the Internet has made it possible for young entrepreneurs to launch startups with minimal startup costs.

Freelancing is attractive to younger as well as older workers because it allows individuals to set their own schedules. They can work whenever and wherever they want, while balancing work with responsibilities such as raising children and caring for elderly family members.

According to McKinsey, 58 million Americans, or about 36 percent of the workforce, currently identify as independent workers. And these workers contribute approximately $1.27 trillion to the U.S. economy each year.

Why would the Biden administration put these jobs at risk? Because these entrepreneurs would be better off taking traditional jobs with standard benefits and union participation. It’s from. But it also deprives them of the autonomy they value most. According to a study by the Bureau of Labor Statistics, 79 percent of freelancers prefer their current employment structure to traditional employment, which also takes away flexibility.

Instead, the Biden administration and Congress should codify freelance work that allows young entrepreneurs to maintain their independence while giving companies that hire them the option to extend benefits. We need to change current laws that make it nearly impossible for companies to extend benefits to independent contractors.

The easiest way to accomplish this is to establish what I call a “benefits savings account.” Allowing companies to extend special benefits bonuses to freelancers. Workers would use these bonuses to pay for their own benefits on a tax-free basis. This is similar to how companies can already pay full-time employee benefits as a tax deduction.

Creating a benefits savings account aligns with the interests of both gig workers and businesses. For gig workers, it provides a safety net of benefits while maintaining flexibility. For businesses, it can attract and retain talent, foster employee loyalty, and contribute to the overall well-being of employees.

Roughly 80% of gig workers say they want access to benefits like health insurance, and companies like Uber are willing to provide those benefits if we change our policies to allow it. I am passionate about

As we continue to see the workforce evolve, regulations must also adapt to support the ambitions and needs of the next generation. It’s foolish to try to force employees to fit a one-size-fits-all model of what a career should look like. Instead, we need to establish policies that protect workers and help the freelance economy and innovation thrive.

Karen Harned is president of Harned Strategies LLC. From 2002 until 2022, he served as executive director of the National Federation of Independent Business Small Business Legal Center..