Regulating the Gig Economy, The PRO Act as an Example

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The growing impact of technology on policy is why OrionX started looking at global policy issues and rapidly changing technologies make it especially more complex to set policy or write laws that reflect their intent. A case in point is regulating the gig economy, enabled by digitization and new digitally-transformed business models.

Laws are Like Code

Laws are like computer programs. They translate intent into code. But translating the exact intent, nothing more and nothing less, to an exact recipe is very difficult. In software engineers, this called a bug. All programmers grapple with it, quality assurance (QA) processes and debugging tools try to find and fix them, and yet computer glitches are everywhere. Many of them are “known bugs” and many are hidden until the special circumstances that would expose them materialize.

Some laws/codes are well written: clean, clear, well-structured, cover all the unlikely cases. They are not so buggy. I have read my share of legal contracts and, let’s say, too many of them are not so well written at all. They leave too much for interpretation, are silent on possible fateful courses of events, or are they push it too far, unintentionally counterproductive. You’d need a judge to rule what the contract means regardless of what may have been intended. They beg lawsuits. Here is a very funny example of how contracts can be interpreted. And reinterpreted. But laws can hekp or hurt people so real-life cases are not funny.

Technology Makes it More Complicated to Set Policy

Sometimes the code is fine but times change and what the software does is no longer needed. In other occasions, new situations make the code incompatible with how things are done, making it the wrong tool for the task.

Likewise, laws may face situations for which they have no appropriate prescription. This is what new technologies can do, enabling new possibilities that were not fathomed by the law. Rapidly changing technologies make it more complex to set policy or write laws that reflect their intent.

How Do You Regulate the Gig Economy?

If you enjoy this kind of complexity, a case in point is the effort to regulate the gig economy. My perspective on this topic is that those participating in the gig economy are broadly split into two segments: those who actively seek it or those who are forced to pursue it, those who see it as liberating or those who see it as exploitative.  We said as much five years ago in our OrionX 2016 Technology Issues and Predictions:

5- The “gig economy” continues to grow as work and labor are better matched

The changing nature of work and traditional jobs received substantial coverage in 2015. The prospect of artificial intelligence that could actually work is causing fears of wholesale elimination of jobs and management layers. On the other hand, employers routinely have difficulty finding talent, and employees routinely have difficulty staying engaged. There is a structural problem here. The “sharing economy” is one approach, albeit legally challenged in the short term. But the freelance and outsourcing approach is alive and well and thriving. In this model, everything is either an activity-sliced project, or a time-sliced process, to be performed by the most suitable internal or external resources. Already, in Silicon Valley, it is common to see people carrying 2-3 business cards as they match their skills and passions to their work and livelihood in a more flexible way than the elusive “permanent” full-time job.

A Glance at The PRO Act

The PRO Act, which was introduced in 2019, has been making its way through the law-making process, and includes the so-called ABC test, first put to experimented in California, to determine if someone performing a task qualifies as an “employee”.

What follows is my understanding of the scene and a couple of links* for further reading.
Together, PRO and ABC aim to:

  1. boost collective bargaining/unionization and
  2. protect those forced into the gig economy by recognizing them as employees if that’s really what they are.

Both are important issues because growing economic inequality threatens stability, and new technology is changing the nature of work. Regardless of what political/social/economic philosophy guides you, they need to be addressed deliberately. Whether you decide to leave them be or take strong action, you must be able to explain why that is the right way.

Unionization is the more clear-cut part. Those in favor and those against tend to have made up their minds for good or bad reasons and can point to historical evidence to support their point of view. Not everyone can explain why this is a good/bad option or why alternatives do/don’t exist but there seem to be just two camps.

The gig economy part makes it all more complex. The Act changes the meaning of employment and the ABC test makes it easier and obligatory to categorize someone as an employee. While being recognized as an employee because you really are one is a good thing, being labeled an employee when you are not can be a very bad thing. In the first case you gain freedoms you deserve. In the second, you lose freedoms you deserve. Livelihoods are impacted in both cases.

So a third camp has emerged: those who are in favor of bigger and stronger unions but are against the ABC test as written. While many of them are passionate about the intent of the Act, they believe its consequences will cause unnecessary harm. They are starting to doubt, wondering that maybe these harmful consequences are in fact intended. Those in favor seem to have none of it, dismissing worries. Those against the whole thing seem to be enjoying what looks like an unforced error by a conflicted adversary.

What are the Right Questions to Ask?

What are the right questions to ask? Well, it is complex to change the meaning of employment when the “future of work” has been a topic for a decade, and when the avalanche that is the post-industrial economy is disrupting all manner of assumptions. So the questions to ask must include:

  1. What does 2050 look like? It’s easy to agree that a lot will have changed.
  2. How do we get there and how can we reduce the impact of such a big transition?
  3. Getting it right will determine national competitiveness for many decades. How can we make sure we get it right?

Key Question: What Does 2050 Look Like?

The transition from now to, say, 2050 is probably the most important responsibility of all governments/societies in the world. Massive changes are ahead driven by technology and climate.It can be an opportunity or a threat, depending on what we do. AI and “bots” are coming in the trillions. They probably won’t change the meaning of “work”, but they will change the meaning of “jobs” and much else, and not to our specification.

We’d better anticipate it and be prepared. The pandemic reminded us how important being prepared is.

Additional links:

* Sample media coverage: PRO Act And ABC Test: No One Knows What The Effects Will Be
Summary and text of the Act:

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