COVID's Entrepreneur Explosion, Freelancers and ABC Test ✒

People from these industries had little option of WFH. They could either wait for the unpromising end of the pandemic or invest their life saving on themselves and launch a company. 

Digital Dominance

If COVID’s economic carnage created the need for millions to start a business, technology provided the tools. Widespread video communication, social media, e-commerce, cloud computing and DIY websites make it cheap and easy for anybody to launch a global company from their basement. 

Shopify saw a near 80% increase in new stores in 2020. Digital-payments giant PayPal had a 40% rise in business accounts over the same period. According to a Salesforce survey, a whopping 70% of new startups are either technology companies or digital-first from day one.

Every recession seeds a bumper crop of startups. As the maxim goes, necessity is the mother of invention. The 1930s, wracked by the Great Depression, gave us television, commercial airlines and air conditioning. The silver lining to the devastating COVID crisis could be its astounding impact on the economy similar to that of the Roaring ’20s after the first World War and the 1918 flu.

ABC is a three-part rule to reclassify the workforce as either an employee or independent contractor (IC). As explained by the state of California, where it was first implemented, the three parts are:

• The worker is free from the control and direction of the hiring entity in connection with the performance of the work.
• The worker performs work that is outside the usual course of the hiring entity’s business.
• The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

If freelancers or ICs pass the test, they can continue working independently. If they fail it, they’d be classified as employees for the purposes of labor law — which means they may no longer be able to operate independently.

The rule affects more than a third of the U.S. workforce (59 million Americans) consisting of independent contractors, solopreneurs, franchisee owners, part-time freelancers, and occasional app-based drivers.

The Debate: 

Supporters of the test, including President Biden, say it will protect workers from being exploited by companies that intentionally misclassify full-time employees as independent contractors. Companies do this to pay fewer taxes and offload some business costs onto the individuals. The law would not only make this misclassification illegal, but also help ICs legally form unions (which earlier they couldn’t do) and receive employee benefits and minimum wage.

Opponents say the bill will lead to more people losing their jobs or incomes. If he fails the test, an Uber driver would then become an employee of Uber, a freelance writer would become an employee of a publication she writes for, and a franchisee would become a full-time employee of his own company. Experts suggest, this would bring about colossal economic harm to minority communities, since more than 30% of franchises are minority-owned.

What happened in California. 

Women business owners were reeling. Lawsuits were filed against the state by trucking firms, franchises, and freelance journalists and photographers. As a result, 59% of Californians voted in favour of exempting rideshare and delivery drivers from the law. 

In January, a majority of EU politicians backed a legislative initiative to develop a bloc-wide directive on the issue. Unions in France, Germany and Ireland have already won rights for workers to disconnect. Is it time that workers in the rest of EU were protected too with a legal right to disconnect from work? What are the practical challenges to implement this law and would applying a blanket rule on all companies work in favour of the economy? Can we ever pacify the battle between personal space and work progressr? Read here. 

• Only 2% of Black households have a net worth over $1 million compared to one in every seven White households with similar wealth - per McKinsey report. 
• Tide partners with NASA to create a fully degradable detergent to wash astronaut spacesuits and save water.
• Google is closing its dedicated start-up space in London known as Campus.
• George Clooney, Kerry Washington and Mindy Kaling are teaming up to open a film school for teenagers in Los Angeles. 
• Move over the FST scale, Google is working on a new way to measure skin tones to eliminate racial biases in its products.
• Post-Brexit, meat production dwindles in the UK due to labour shortages and new customs systems. 
• Despite the pandemic, Over 5 million people worldwide became millionaires in 2020, number of HNIs grew by 24% - per Credit Suisse research. 
• In Venezuela, daily wages and grocery shopping with cryptocurrencies to protect against the hyper-inflated and sanctions-marred economy.