Authored by Gerard Scimeca via RealClearMarkets.com,
Foolish policies over the past few years have placed Americans’ economic freedom in a vise. Inflation alone has severely limited consumers’ choices on everything from groceries to education to buying a new (or used) car. A government responsive to the people would of course act to mitigate these offenses by aligning its policies to expand economic opportunity. The Biden Administration is choosing instead to strangle Americans’ choices even further with bureaucratic red tape.
New rules being considered by the Department of Labor (DOL) would devastate many Americans that work as independent contractors by drastically changing the criteria for classifying this type of work, thus forcing affected workers to become full-fledged corporate employees. Biden’s nomination of Julie Su to serve as Secretary of Labor only heightens the threat posed by this proposal. Julie Su’s anti-independent contractor record means the DOL’s new leadership will most likely pursue this rule aggressively. Such a broad and radical restructuring of worker classifications would impact every corner of the economy and significantly limit the freedoms of millions of Americans.
Such a move would significantly impact those working as independent contractors in the financial services industry. A recent report released by NERA Economic Consulting sheds light on the extent to which this rule change would upend peoples’ livelihoods. The report shows that over half a million people across the country are currently working in this capacity. These contractors own and operate around 130,000 financial advisory and insurance brokerage firms which together employ approximately 330,000 people. These relationships would be irreversibly damaged if bureaucrats stepped in to turn the industry on its head.
This rule change would not only upset the hundreds of thousands of people who already work in the industry, but it would also disrupt future economic growth. The NERA study shows that over a four-year period (from 2015 to 2019) independent contractors in the financial services industry created an astounding 54,000 new businesses and 174,000 new jobs. Cutting off this source of entrepreneurial spirit would have ripple effects across society and “substantially reduce the supply of these services” for Americans in need of financial advice. By ignoring this reality, Biden’s DOL is blatantly prioritizing a political agenda above worker freedoms.
Proponents of increased government intervention deliberately ignore the choice that these Americans have made. People working in the financial services industry are not involuntarily thrown down the independent contractor path as many in Washington seem to believe. Many firms, in fact, offer a choice of employee or independent status to help attract a variety of talent and accommodate a wide range of lifestyles.
Agents and advisors choose the independent contractor route for many different reasons; however, the NERA study shows that the opportunity to start a business and have a degree of ownership is a major priority for these individuals. Some prefer independence over security, and for these people being an independent contractor best aligns with both their lifestyle and their career aspirations.
The Biden Administration sees this freedom and choice as a problem. They cynically demand that these independent contractors embrace the heavy hand of government for “protection” or otherwise suffer exploitation. Yet they overlook another critical point in their efforts to ram through this agenda, which is that the financial services industry is already highly regulated.
State and federal laws require, for example, that companies closely monitor insurance agents and financial advisors selling their products. Under the DOL’s new rule, this requirement would trigger either the elimination of independent contractor status of many financial professionals or severely limit the services they provide. This is an ideal recipe for quashing economic opportunity and job growth, not to mention the personal aspirations of many thousands of financial professionals.
The DOL’s proposed rule change is yet another economically regressive measure that imposes greater barriers on professionals and consumers alike. Lawmakers that stand on the side of personal freedom, economic independence, and the entrepreneurism that drives economic growth must challenge the Administration on this disastrous approach. Stopping this rule change in its tracks would protect the millions of independent contractors that choose freedom, flexibility, and autonomy, as well as the millions more Americans in dire need of their services.