After serving as Obama-Biden campaign manager and White House Deputy Chief of Staff and now living in San Francisco and working with the tech sector, I am hopeful about the Biden-Harris administration’s ability to put in place smart policies and regulatory stability to further unleash the industry’s vast potential — not to mention the effect their calm and measured leadership could have on our greater economy.
However, with new leadership comes new perspectives on many of the most critical issues facing Silicon Valley. While the bonds between the innovation economy and the Obama-Biden Administration resulted in national prosperity, the tech sector is now intertwined in nearly every facet of American life.
The resulting tension means the new Administration will take its role as regulator seriously and investors and businesses alike should not overlook how quickly President Biden will move on policy – especially as it relates to the future of work and getting the U.S. economy back on track.
There’s no question the gig companies had a banner year in 2020. Even with ride-hailing usage down dramatically, the strength of meal, grocery and just about everything else delivered combined with the victory in California of Proposition 22 has driven up market caps and positioned many startups for going public. Yet, while the West Coast may be feeling emboldened, the Beltway has another trajectory in mind.
Congress has been working on gig worker classification legislation named the PRO Act for months. The bill closely mirrors the maligned California Assembly Bill 5 that Proposition 22 mostly reversed. It’s broadly supported by labor and could see some traction this year. Labor is already working hard to line up support from the various Congressional coalitions, and at the same time gig economy companies are gearing up to fight it with their unlimited resources.
The question is – what will President Biden do? Long ago he voiced his support for AB 5 and laid out plans to solve worker misclassification during the campaign, but he’s also hiring and appointing staff to the Administration deeply experienced in tech. President Biden has been governing longer than most startup founders have been alive, he’s a master at understanding forces in Washington and how to reach a compromise. He knows that what’s rarely discussed during legislative debate is how the law will actually be implemented.
We shouldn’t be surprised if the Biden Administration convenes the Department of Labor and the industry to determine how companies actually enact worker protections.
Despite most bills being thousands of pages, they’re rarely prescriptive. Those details are left up to agencies. President Biden has oversight of the Department of Labor, which, if the PRO Act is passed, will be responsible for its implementation.
We shouldn’t be surprised if the Biden Administration convenes the Department of Labor and the industry to determine how companies actually enact worker protections. President Biden’s nominee for Labor Secretary, Boston Mayor Marty Walsh, while a staunch supporter of labor, is also well regarded by the business sector as someone they can work with and reach a compromise.
We just have to look to the states to understand why this outcome is so plausible. The gig companies already have Proposition 22 type campaigns underway in six states and are running legislation in a half dozen more. By the end of 2021 there will be law on the books codifying worker protections in nearly a third of the country, modeled on Proposition 22.
This kind of momentum is hard to ignore and labor knows it. Although labor is aligned in its support of the PRO Act, the alignment becomes blurry when considering state action. For example, many northeastern states have had a thriving black car and taxi industry for decades.
This means Labor’s position on gig laws in New York and New Jersey are quite different than places like Washington State or Illinois where gig workers are still relatively new and the ink is drying on regulations supported by Uber and Lyft just a few years ago. Labor is aligned as much as they can be and enough to support the PRO Act, but there isn’t a national movement and that leaves room for compromise.
This is all good news for the tech sector. It’s a fantasy to think that regulation wouldn’t eventually come to protect the very workers who power the gig economy. And that’s a good thing – tech has a moral responsibility to do right by its workers. However, those regulations shouldn’t and won’t be imposed on tech. Rather it will take weeks and months of campaigns and bills winding their way through the states and Congress, culminating with negotiations and compromises.
Or maybe even years of renewed regulatory processes. All of which will be overseen by a new President who has witnessed first-hand over his career how innovation can help the nation grow and recover.
After four years of Trump’s stubborn denialism, magic thinking and economic harm, Biden will promote policy rigor, public spiritedness and private sector ingenuity to work together for innovative solutions. It will be hard work and I promise you it won’t be pretty, but we should expect the dawn of a new era of U.S. tech-driven dynamism.