President Joe Biden made it official Tuesday: Julie Su is his pick to replace departing Secretary of Labor Marty Walsh. Su’s record of opposition to free enterprise and worker choice makes her a dire threat to the livelihoods of millions of freelancers and independent contractors across the country.
While Walsh may benefit from his shift to a new $3-million-a-year gig, his prospective replacement spells disaster for American workers. Senators should run, not walk, to reject Su for Labor Secretary.
Su has been Biden’s Deputy Secretary of Labor since 2021, when she was confirmed by the Senate on a strict party-line vote. Prior to that, she was California’s Secretary of Labor for more than two years, a scandal-tarred tenure fraught with damaging policies and implementation failures.
As the head of California’s Labor and Workforce Development Agency, Su oversaw widespread failures in the state’s unemployment insurance system. Under her watch, California distributed more than $11 billion in fraudulent claims, totaling 10 percent of all benefits paid out by the state during the COVID-19 pandemic. Estimates show that a further $19 billion in claims may have been improperly distributed.
Su’s tenure as top labor official in California during the pandemic eventually spurred an emergency audit of the state’s Employment Development Department (EDD). That audit criticized the EDD under Su as “inefficient” with “significant weaknesses,” resulting in massive unemployment claim backlogs and inaccurate reporting.
Even when Su was successful in implementing policy, however, the results were disastrous for Californians.
Su was a key architect behind California’s infamous Assembly Bill 5 (AB5), which forced independent contractors to reclassify as W-2 employees based on a vague three-factor “ABC” test. AB5 is deeply unpopular, especially among those it impacts most directly – nine-in-10 freelancers in California opposed the law.
The practical effects of AB5 are as drastic as its unpopularity suggests. Analyses of a forced shift from an independent contractor model to an employee model for app-based rideshare and delivery drivers in California found that the regulations could cause as much as a 59 percent reduction in trips, 90 percent reduction in drivers, and 110 percent increase in trip prices. Some freelancers were forced out of California entirely due to the new restrictions placed on their work.
Su’s AB5 was so unpopular that Californians in 2020 voted by a 17-point margin in favor of sweeping exemptions for app-based rideshare and delivery drivers, allowing them to remain as independent contractors. In surveys, three-quarters of these independent drivers in California said they support the exemptions.
Independent contracting is the preferred work configuration for a vast, diverse set of workers in the United States––from app-based drivers to big rig truck drivers to wedding band musicians, theatre troupes, and shopping mall Santas. Countless mothers and fathers rely on flexible work arrangements to provide supplemental income or allow them to better care for their families. Americans have repeatedly made clear that they desire flexible work more than ever, yet Su has been pulling in the opposite direction for her entire career.
Fifty-nine million Americans performed freelance work in 2021, representing more than one-third of the total workforce and contributing $1.3 trillion to the U.S. economy. If Su’s radical agenda is allowed to go national, the livelihoods of tens of millions of Americans could be at risk.
A study commissioned by Americans for Tax Reform and Tholos Foundation last year found that if Su’s ABC test were applied on a nationwide basis, 56 percent of the independent contractors who would be forced into W-2 employment status would pay higher taxes. Ninety-six percent of those workers who will have a higher tax burden––about 7.5 million workers––make less than $400,000 per year, once again violating Biden’s pledge to not raise taxes on anyone earning less than that amount.
When a previous highly controversial Labor Department nominee, radical academic David Weil, was brought up for confirmation in the Senate, a few brave senators bucked party lines to oppose him. Weil’s nomination to lead the DOL’s Wage and Hour Division eventually failed, with Sens. Joe Manchin (D-W.Va.), Kyrsten Sinema (I-Ariz.), and Mark Kelly (D-Ariz.) joining all Republicans in a 47-53 vote against cloture. Weil was the first Biden nominee to fail a floor vote.
Weil’s nomination rightfully went down in flames due to his radical stances against free enterprise and entrepreneurship and in favor of California-style ABC tests. The Senate should reject Julie Su for the same reasons.
Rowan Saydlowski is Federal Affairs Coordinator at Americans for Tax Reform.
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