Gifts To The Future

Jane Jacobs | How Independent? | Terrible Coworkers | Aftershocks of the Donut Effect

Photo by Kira auf der Heide on Unsplash

Quote of the Moment

All of us, if we are reasonably comfortable, healthy and safe, owe immense debts to the past. There is no way, of course, to repay the past. We can only repay those debts by making gifts to the future. 

| Jane Jacobs

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How Independent?

The US Department of Labor has been trying since the start of the Biden administration to drop a Trump rule put into place in the lame-duck session (after the 2020 elections) on the classification of workers as independent contractors:

In March 2021, the Biden DOL issued a Notice of Proposed Rulemaking (NPRM) to withdraw the lame-duck independent contractor rule.  In May 2021, the DOL announced the official withdrawal of the rule.  In March 2022, a federal district court in Texas held that the withdrawal of the rule was unlawful, and restored it.  The DOL appealed the Texas court’s decision in May 2022, and later abandoned the appeal so that the agency could engage in new rulemaking regarding independent contractor status.

As reported by Leah Shepherd,

The DOL is proposing to rescind a 2021 rule in which two core factors—control over the work and opportunity for profit or loss—carried greater weight in determining the status of independent contractors. Under the new proposed rule, employers would use a totality-of-the-circumstances analysis, in which all the factors do not have a predetermined weight.

"We have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation's most vulnerable workers," said U.S. Secretary of Labor Marty Walsh. "Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages."

The 2021 rule, which is still in effect, made it easier for employers to classify workers as independent contractors, rather than employees. Under the FLSA, employees are entitled to minimum wage, overtime pay and other benefits. Independent contractors are not entitled to such benefits, but they generally have more flexibility to set their own schedules and work for multiple companies.

The Biden administration released a proposed rule in October that reverts to so-called totality-of-the-circumstances analysis, which relies on an ‘economic realities’ test:

The new proposed rule directs employers to include exclusivity as a consideration under the permanency factor, but it acknowledges that simply having multiple jobs does not weigh in favor of independent contractor status. Factors in the economic realities test may include:

• The amount of skill required for the work.

• The degree of permanence of the working relationship.

• The worker's investment in equipment or materials required for the task.

• The extent to which the service rendered is an integral part of the employer's business.

The target for this shift is to build a firm foundation for the gig economy, where theoretically ‘independent workers’ are in fact actually deeply dependent on one or a few companies — like a driver that works for both Lyft and Uber — but does not receive the benefits and protections afforded to other workers while taking on the cost burdens of actual independent contractors, like car leases, health insurance, etc. This is the core of the gig economy: venture-backed services firms like Uber and Lyft seek to shift the societal costs of their ‘essential’ workers onto the workers and society as a whole.

The proposed rule is open to public comment for 45 days following the 13 October release.

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Terrible Coworkers

Courtesy of ResumeLab, we learn that 86% of those surveyed have three or more terrible coworkers:

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Aftershocks of the Donut Effect

Peter Coy reports on some fascinating research from the National Association of Realtors:

For more than 30 years, American home buyers moved to places that were generally 10 or 15 miles from their previous residences. In the 12 months through June 30, 2022, that abruptly changed: The median moving distance soared to 50 miles.

The analysis offered by Jessica Lautz, the NAR vice president of research, points a finger at remote work:

“The moving distance likely soared because many employers solidified their in-office requirements, giving some remote workers the certainty to move farther from their offices, said Jessica Lautz, NAR’s vice president of research.

“In mid-2021, ‘people had the freedom and the ability with the low interest rates to say, ‘I’m going to make this move now,’’ Ms. Lautz said.

Lines up with the Donut Effect, which I’ve touched on here, here, and here:

The Donut Effect: the research finding that many people are moving from the urban center of superstar cities (NYC, LA, SF, etc.) to their suburban and exurban peripheries beyond normal commuting range.

Daryl Fairweather, chief economist at Redfin: Remote work is already affecting where people live. A record nearly one-third of homebuyers looked to relocate out of their home metro in the second quarter of 2022. That’s up from roughly 26 percent before the pandemic.

In expensive superstar cities, working-from-home workers will be more likely to move to the suburban fringe, where land is cheaper and the homes are newer.