This article originally appeared in NJBiz.
By Alida Kass
Some have called it the “motherhood” penalty.
Despite repeated legislative efforts to mandate “equal pay,” the gender pay gap as measured by aggregate wages earned by men and women persists. The reasons for the statistical gap are complex, but among the most significant factors is the choice by mothers to take time out of the workforce to be home with young children.
For many women currently in the workforce, there were not a lot of options when their children were born. It was often a binary decision: continue as a full-time employee or quit the job and stay home. A 2013 Pew Research survey revealed that roughly four in 10 mothers born in the 1950s and 1960s reported taking significant time off to care for children, with more than a quarter (27 percent) quitting their job altogether.
Numerous studies have further documented how that interruption in “human capital accumulation” translates into permanent wage loss for mothers. Many women in the workforce today are still feeling the wage ramifications of having exited the workforce for some period of time. The first job back often involves a significant pay cut – a recent study suggested a year of child-related work interruptions resulted in as much as an 11 percent wage penalty. And subsequent raises build on that lowered floor.
But young women today have more options. The expansion of the gig economy and the relative ease of contracting on a piecemeal basis has given young mothers the flexibility to stay in the workforce on their own terms. Employers aren’t supervising when and where they work – so they can work around shifting childcare schedules. And if the work product is good, everyone is happy. They stay current with developments in their industry, maintain relationships, and continue to accumulate human capital.
But legislation scheduled to move in the coming “Lame Duck” session, Senate Bill 4204, would strip women of that flexibility. Effectively eliminating the option to work as an independent contractor, it would force women back into the old binary choice: W-2 employee or nothing.
Advocates of the legislation talk up the value of the employee model: Benefits! Employment protections! Predictable schedules! But they fail to appreciate the flip side of these supposed advantages.
S4204 puts onerous conditions on the Independent Contractor relationship that makes the position effectively unworkable. Under the bill, employers must be concerned not just with the work product, but also with how many hours the Independent Contractor has worked and also the productivity for those hours. And it’s a riskier proposition for the employer to take on a less conventional hire. They can contract to address that risk with an independent contractor, but the relationship is stickier with a W-2 employee. And the more difficult you make it to terminate an unsatisfactory arrangement, the less likely it is to be tried in the first place.
And it’s not just mothers of young children whose freedom to work will be harmed by this bill. The contractor model provides a low-risk way for a variety of people to re-enter the workforce. Workforce participation among men has been dropping, for a host of reasons. In January 2017, that rate had fallen to 69.3 percent. Contract work can bridge the gap between full time jobs and help people from dropping entirely out of the workforce.
It’s also an effective way to improve the lives and skill set of marginalized populations. The gig economy gives marginal workers the dignity and purpose of a job, along with the flexibility and freedom to try and fail and try again.
S4204 is a regressive measure that would turn back the clock to the days when women had fewer choices in the workforce. Instead of trying to ban independent contractors, our Legislature should be looking for new ways to support working moms, entrepreneurs, and employees in need of flexibility in the workforce.
Alida Kass is president and chief counsel for the New Jersey Civil Justice Institute.