Pro-Worker, Not Pro-Union

The recent United Auto Workers strike against General Motors not only set the political world abuzz but was a through-the-looking-glass moment in American politics. The leading Republican presidential candidate for 2024, former president Donald J. Trump, dramatically embraced the union cause, alongside other prominent members of his party. This pro-union bear hug built upon last year’s railway strike, during which Ted Cruz, Josh Hawley, Marco Rubio, and other conservative senators sided with unions in a vote over paid sick leave. Afterward, Cruz declared that the GOP was now a “blue-collar party.” But beyond flashy press conferences and occasional high-profile show votes, this new vein of conservative populism has yet to put forth a cohesive approach to American labor policy.

In tension with these populist tides are the traditional Lincoln–Coolidge–Reagan pro-business impulses of the Republican Party. It remains the political home — at least for now — of capital and business interests, with about 60 to 70 percent of corporate CEOs continuing to identify as Republicans. Despite a recent high-profile dispute with the Chamber of Commerce, Republicans still receive the vast majority of its election endorsements.

For its part, the political Left continues trying to fit the square peg of 20th-century labor policies into the round hole of a 21st-century economy, pushing for one-size-fits-all minimum-wage rules and even proposing European ideas such as sectoral bargaining, which would allow unions to influence entire sectors of the economy at once.

In the years ahead, starting with the 2024 elections, both Democrats and Republicans will be jockeying for working-class votes. While cultural issues will likely continue to play a role — perhaps even the predominant role — in the everyman-versus-elites dynamic of modern American politics, the party that most effectively articulates a cogent modern labor policy will be best positioned to attract support from the working class. The best way forward for the Right is a labor-policy agenda that is neither reflexively pro-union nor pro-business but rather pro-worker and pro-flexibility.

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It would be hard to overstate the importance of flexibility to workers in today’s economy. Close to 60 percent of workers report that workplace flexibility, such as work-from-home policies, are more important than salary or benefits. While it might be tempting to narrow the import of these findings to the professional salaried class, surveys of hourly and shift workers show that over 80 percent of them view the ability to influence their work schedule as key to job satisfaction.

Independent contracting, gig-economy work, and similar arrangements can therefore be attractive options for many working-class Americans. Over 60 percent of those employed in gig work list flexibility as the main reason they pursued it. Contrary to narratives on the political left, these workers generally pick their careers not by necessity but by choice, with over 70 percent saying that it was their first option. Despite this, progressives are increasingly hostile toward contract work. The American Rescue Plan, promoted and passed by Democrats, lowered the Form 1099-K reporting threshold for third-party payment services from $20,000 to $600. This change will disproportionately affect contractors and the self-employed — who tend to rely on third-party payment platforms such as PayPal or Venmo — by drowning them in paperwork.

A worker-flexibility agenda would reduce the administrative burden on independent workers by raising the $600 threshold for all Form 1099 income. Six hundred dollars makes little sense in modern America. When the threshold was established in the 1950s, $600 represented about 14 percent of the median household income; today, it is about 0.8 percent.

The war on contracting and self-employment extends well beyond the tax code. Democratic proposals such as the Protecting the Right to Organize Act attempt to reclassify many independent contractors, from truck drivers to gig workers, as employees. Doing so would substantially raise labor costs for businesses while hurting workers, many of whose positions would be eliminated. Given that contractors overwhelmingly prefer their current contracting arrangements, it would be both economically and politically wise, not to mention conservative, to protect them.

What the Right has often overlooked in this debate is that the protection of independent-worker status can be coupled with a revamping of worker-benefit options. Lack of benefits is frequently cited as the main drawback of independent work. Republicans could burnish their pro-worker credentials, while protecting businesses from reclassification and other draconian left-wing policies, by proposing a flexible benefit setup for contractors and gig workers that has features similar to a SEP-IRA. It would use a system of employer contributions while giving workers the ability to make pre-tax contributions of their own. The funds could be used for benefits such as paid sick leave, unemployment insurance, or even health insurance, some of which could be purchased through newly created worker-benefit exchanges that act as brokerages for the benefits.

Benefit-flexibility concepts can be applied as well to retirement savings, even those of noncontract workers. The current system largely relies on employer-based retirement plans, but many workers find it difficult to roll old retirement accounts over to new jobs. That has led to a proliferation of abandoned “orphan” accounts. Automatic portability for retirement accounts would make it possible for more workers to take their accounts with them to new jobs.

Also due is a nuanced rethinking of noncompete agreements in labor contracts. While libertarian notions of the freedom of contract have long led right-leaning policy-makers to resist the imposition of restrictions on contractual arrangements, recent years have seen more free-market proponents question the efficacy of noncompetes with respect to their impact on worker freedom and earnings.

Noncompetes were once seen exclusively as a practice of the corporate C-suite, but they have proliferated to all levels of the workforce. Just under 40 percent of American workers have signed at least one noncompete in their lifetime, including one in ten workers earning less than $40,000 a year. Such clauses appear to reduce wages, but their biggest impact is on worker flexibility. They bind workers to jobs that they otherwise would seek to leave, or sideline them from the workforce.

The government’s approach to this issue has been misguided. The Federal Trade Commission recently proposed an across-the-board ban on noncompetes, provoking broad opposition from the business community and rightly raising eyebrows about the proposal’s legality.

But more-nuanced policies are available. They include limiting the breadth of noncompete agreements or permitting them only for certain workers — for example, back-end noncompetes that are offered and signed by higher-wage workers as they leave a job, or noncompetes for C-suite executives at public companies. States as red as Alabama and as blue as Massachusetts have limited noncompetes in different ways, demonstrating the cross-ideological nature of the issue.

It’s also worth noting that courts usually enforce a noncompete agreement only if it is “reasonable” — a murky legal standard that makes noncompete litigation one of the least predictable areas of law. Businesses value certainty and clarity; the current system provides little of either. Carefully drawn limitations on noncompetes could provide better bright-line rules for businesses and in turn reduce litigation and compliance burdens.

A focus on flexibility for workers could also lend greater predictability to their nonwork activities, such as spending time with family. Those in shift or hourly employment would benefit especially.

One recent controversy among labor advocates has been just-in-time scheduling, the practice by which employers change employee schedules on the spur of the moment to accommodate fluctuations in demand and keep workforce costs down.

Our current laws around overtime likely encourage this practice. Overtime is expensive and businesses usually want to avoid it at all costs. In fact, that was its original point: Overtime was created during the Depression to act primarily as a penalty that would incentivize employers to fill or create more jobs rather than increase the hours of their current workforce. The rate of pay for an employee was now required to rise sharply if he or she worked more than eight hours in a day or more than 40 in a week. This New Deal heritage persists even though its rules about wages and hours are mostly one-size-fits-all across industries (with a few exceptions, of course, such as those for airlines). This monolithic and uniform setup prevents both employers and workers from pursuing arrangements that are more flexible and dynamic.

Just-in-time scheduling and similar strategies help employers avoid overtime. A potential policy response is to tie compensation and overtime rates to scheduling predictability. The George W. Bush administration proposed that employers be allowed to average overtime over two weeks. Businesses favored the plan because it would have reduced overtime costs by giving them the ability to spread an employee’s hours across two weeks rather than just one. The proposal went nowhere, however, because, although it would have helped businesses, workers would have gotten nothing in return.

A work-flexibility agenda could combine a two-week overtime period with a rule that employers must tell workers their schedules well in advance. It could be an opt-in system, in which workers would be able to accept the diminished overtime opportunities of two-week averaging in return for greater scheduling predictability. Alternatively, many workers — those without families, for example — might choose to remain in the current system and reap the higher pay potential of the traditional overtime threshold of 40 hours per week. This type of bifurcated workforce could allow employers to sustain just-in-time scheduling where needed and at the same time offer many employees greater work–life balance.

While this idea may not fully resolve every concern regarding just-in-time scheduling, it could allow more flexibility for many workers. In the end, scheduling issues are best resolved industry by industry. Allowing various sectors of the economy to experiment with such a model would do the most to help both workers and businesses, by allowing them to find the optimal solutions for their circumstances.

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Americans’ priorities in the workplace are changing. What is needed in response is a pro-worker labor agenda that avoids the far-left economic policies that most labor unions — and the political Left writ large — endorse. By embracing an agenda of worker flexibility, conservatives can empower individual workers and entrepreneurial businesses without having to abandon their traditional deregulatory, market-based instincts.

This article was adapted from the winter issue of National Affairs.