Why Do We Have Labor Protection?

Timothy B. Lee has this to say about labor protection:

The bottom line is that conventional labor laws are based on the assumption that employers dictate employees’ hours and working conditions, and so we need things like mandatory breaks, sick leave, and safety regulations to ensure employers don’t take advantage of workers. But in an on-demand economy model, rules designed to “protect” workers don’t necessarily do that. Uber drivers can take breaks whenever they want. Uber doesn’t care. So a rule requiring employees to take breaks after working for a certain number of hours simply reduces drivers’ freedom for no good reason. If Uber drivers are going to be subject to employment law, there needs to be a legal category for employees who genuinely set their own schedules.

This just-so story about labor laws is not correct. It fits into a neat one-off individualist story for why these laws exist and what they hope to accomplish. This makes it helpful for a Vox-style explanation and even for economics textbooks. But it’s totally detached from historical reality.

Modern labor protection, and social insurance for that matter, is the provenance of organized working class movements. The goal of these movements was to increase the share of income going to working class people and to enhance their well-being and security more generally. It was not just about balancing some power relationship between the worker and the boss. It was about securing for working class people a certain kind of life.

Hours restrictions were not pushed by labor because of some wonky estimation of the relative bargaining strength of labor and capital. They were pushed because the labor movement believed that the good life meant adequate time for rest, leisure, and family. Paid sick leave (which doesn’t really exist statutorily but did find its way into most all collective bargaining agreements) was installed as a kind of income-smoothing insurance that gives workers the ability to stay home sick without missing a beat in their paycheck. Paid vacation and breaks operate similarly.

Lee’s analysis falls into that old libertarian trap that corrupts almost all of our economic discussion in this country. Under this trap, laissez-faire economic arrangements operate as the baseline and then economic rules that diverge from those arrangements come in specifically to correct some market problem (here the outsized power of a boss in a specific kind of employment relationship).

In reality, of course, laissez-faire is not the baseline and divergent economic rules don’t exist only to correct identified defects in laissez-faire. Instead, economic rules of all sorts are created to affirmatively carve up the national income and to establish the terms under which production, consumption, and economic life more generally will proceed.

If you believe, as labor generally does, that economic life should proceed such that normal working class people generally have predictable schedules, predictable (and adequate) income, and paid leave for various life events, then it doesn’t matter that new-fangled app-based employment systems have come on to the scene. That changes exactly nothing about your perspective on the proper aim of our economic rules. You still think that the rules should (one way or another) be constructed so as to facilitate the good and comfortable life as you see it.

Now you can call this anti-freedom (as Lee does) because it means workers who deeply prefer some other economic arrangement are effectively prevented from having it. But this is not a charge freshly relevant to the app-based worker economy. It’s a charge that’s been lobbed at all economic arrangements forever. “What if they want to work on-demand without minimum wages and paid leave” is just an updated version of “what if they want to work 60 hours a week at normal pay.” Some people have always been persuaded that non-laissez-faire economic rules were freedom-infringing, while others have always correctly observed that they are no more freedom-infringing than any other economic rules.

Here, if Uber is legally placed under conventional employment rules, those who’d prefer to work for Uber under an independent contractor arrangement are out of luck, but likewise if it’s placed under independent contractor rules, those who’d prefer to work for Uber under a conventional employment arrangement are out of luck. A preferred choice is being taken off the table for some set of people no matter what route you go. If you try to solve this by letting the parties decide whether to have an independent contractor or conventional employment relationship, you can declare that you’ve achieved actual true freedom, but in reality we know that will just mean Uber and similar companies offering take-it-or-leave-it independent contractor arrangements, effectively eliminating any other choice for would-be app-based drivers.

Of course, you don’t necessarily have to share in these particular views of what a good economic life looks like. And, even if you do share in those views, you don’t have to believe that reasserting the employment-based model is the best way to achieve the good economic life (I personally think there are better ways, and that there have always been better ways). But if we are going to have this debate, it’s important that we actually do so on accurate terms. Backfilling narrow rationales for labor protection that you can possibly say no longer apply is helpful for reaching certain conclusions, but it’s dishonest about the historical reason labor protection exists.