Pete Buttigieg unveils plan to protect gig economy workers and boost unionization

Key Points
  • Democratic presidential contender Pete Buttigieg unveils proposals to boost union membership and protect workers in the so-called gig economy.
  • The plan aims squarely at major tech platforms like Alphabet's Google and Uber and Lyft.
  • Buttigieg also calls out fast-food giant McDonald's, which he holds up as an example of a company that keeps "wages low by refusing to bargain with workers who technically work for small local McDonald's franchises."
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Democratic presidential contender Pete Buttigieg unveiled proposals on Friday to boost union membership and protect workers in the so-called gig economy.

"Our economy is changing. How we manage the changes coming our way will define not just the next four years, but the next century," Buttigieg wrote in an email to supporters announcing the plan, which the campaign is calling "A New Rising Tide."

The plan aims squarely at major tech platforms like Alphabet's Google and the ride-hailing companies Uber and Lyft.

Buttigieg also called out fast-food giant McDonald's, which he holds up as an example of a company that keeps "wages low by refusing to bargain with workers who technically work for small local McDonald's franchises."

The plan will double the percent of American workers in unions and codify new rules that prevent gig economy employers from classifying many of their workers as independent contractors, forcing them to provide better benefits.

Companies like Uber and Lyft would have to meet a high bar, known as the "ABC Test," to classify workers as independent contractors rather than employees. To do so, they would have to show that the employee is free from the employer's control, among other factors.

"Companies like Google should not be able to hire contractors — from janitors to food service workers to managers to software engineers — that look like employees, but who cannot bargain with Google because they technically work for a staffing firm or other intermediaries," the plan says.

Google, Lyft and McDonald's did not provide comment to CNBC. In a statement, an Uber spokesperson said that "what we repeatedly hear from drivers is what they value most about Uber is the flexibility to work whenever, wherever, and for whom they choose. We believe that independent, on-demand workers should not have to sacrifice security to enjoy that flexibility."

More than 15 million workers — including 10 million independent contractors, 1.4 million temp workers and 1 million contract firm workers — will have expanded rights and protections, according to the campaign.

The 37-year-old mayor of South Bend, Indiana, a rising star of the Democratic Party, wrote that his plan will address the stagnant wages that American workers have faced since the 1980s, even as productivity has risen.

According to Buttigieg, who along with many of his Democratic rivals is calling for a federal minimum wage of $15 an hour, the fundamental problems with the economy go beyond minimum pay.

"Our economy has been tilted towards the wealthy and away from the middle and working class because the people in power designed our laws and policies that way," the plan says. "That's especially true when it comes to workers of color and women, who have historically been undervalued and excluded in the workplace."

Emmanuel Saez, a leading scholar of economic inequality and the director of the Center for Equitable Growth at the University of California, Berkeley, said in an email that he supported the proposed policies "as one important avenue to restore equitable growth."

Buttigieg wrote that his policies will allow gig economy workers to join unions, dramatically increase penalties on large firms that interfere with union elections, force companies that hold mandatory anti-union meetings to provide equal time for union supporters, and give preferences in federal contracting to unionized businesses.

Buttigieg would also establish a national system of paid sick leave. Employers of workers who do not receive at least seven paid sick leave days would be required to pay the equivalent of one hour of pay for every 30 hours of work, to a maximum of 56 hours, into a state fund.

The plan also focuses on the disparity in pay between men and women, and would force large companies to publish data on how much they pay women and men in aggregate. For instance, the campaign notes, if a company pays all the men who work for it $100 million, and all the women $70 million, the government would report a 30% pay gap.

"Unlike other data reporting proposals, the total pay gap does not require the government to collect any new information, can be released immediately, and is hard to game," the proposal says. "Companies that employ mostly men, or that employ only men in their good-paying jobs, will have especially large pay gaps compared to their competitors."