Champion the Self-Employed
This article is from a cover package of essays entitled Ten New Ideas for the Democratic Party to Help the Working Class, and Itself. Find the full series here.
Perhaps the largest group of Americans who have no home in the political status quo are the self-employed. According to the U.S. Census, this demographic includes 16.5 million workers, or about 10.4 percent of the total working population. But this is likely a significant undercount, because it fails to capture the full range of self-employment types, which includes gig work, side hustles that supplement traditional employment, contract work, and sole proprietorships (small businesses with no employees). A more comprehensive survey conducted by the National Bureau of Economic Research suggests that 15 percent of workers are best classified as independent; another from MBO Partners that includes in its count those who work independently only some of the time puts the share of self-employed workers as high as 44 percent.
And this cohort is swelling: Millions of Americans who were laid off or furloughed during the pandemic found new opportunities in independent work and never went back. Historically, self-employed workers were disproportionately educated, white male professionals who earned high incomes. But especially since the pandemic, this group has gotten younger, more diverse, more female, and lower earning. A 2024 study found that 18 percent of independent workers are Black—a higher share than in the workforce as a whole (13 percent). Today, the self-employed population looks remarkably like the traditional base of the Democratic Party.
As such, you might think that this growing army of freelancers, gig workers, and micro-business owners would be a key target of the Democrats’ messaging and policy making. In fact, almost the opposite is the true. The 2024 Democratic Party platform mentions “workers” 78 times and “union” 23 times, but “self-employed” workers and “independent contractors” just once each. As they try to understand why they’re losing the support of the multiracial working class—and formulate a plan to win such voters back—Democrats might start by focusing on what they can do to connect with and help the self-employed.
Democrats would have a good story to tell about what they’ve done for this group if they chose to tell it. In 2010, they passed the Affordable Care Act, which gave self-employed workers and small business owners access to affordable, comprehensive health insurance, enabling more workers to strike out on their own without fear of losing coverage. Joe Biden’s administration made investments in the economy under the American Rescue Plan, CHIPS and Science Act, and Inflation Reduction Act that led to an explosion of small business creation in recent years and a doubling of the Black business ownership rate between 2019 and 2022. On the campaign trail, Kamala Harris proposed to help small businesses by increasing the start-up expense deduction tenfold, to $50,000, and offering partially forgivable loans to entrepreneurs.
Democrats at the federal and state levels have also taken the lead in cracking down on corporate exploitation of the self-employed. A 2020 study from the National Employment Law Project estimates that between 10 and 30 percent of companies misclassify employees as independent contractors to dodge paying employee benefits. In early 2024, the Biden administration finalized a rule that imposes a stricter rubric to determine whether a worker is an employee of a company. In California, Democrats in the state assembly passed a bill in 2019 designed to reclassify many gig workers as employees, granting them benefits and labor protections.
Yet, confoundingly, Democrats almost never talk about how their agenda has helped the self-employed. In fact, they almost never talk about independent workers as a discrete group at all. Part of the reason is that no one is pushing them. Unlike labor unions, which represent a smaller (10 percent) share of the American workforce, the self-employed lack organized representation with which to pressure elected officials to see them as a defined group and pay attention to their needs. Democratic campaign professionals slice and dice the electorate in all sorts of ways to better understand important demographics, but seldom do their polls contain cross-tabs for “self-employed.” “It just hasn’t occurred to most of them,” says the liberal political analyst Michael Podhorzer. “When I ask progressives, ‘What percentage of the self-employed do you think are in economically precarious positions?’ they lowball it by at least half.”
Republicans seldom talk about self-employed workers either. Donald Trump made no promises specifically to them on the campaign trail in 2024. The closest he came was his promise to exempt tips from federal taxes. (Many gig workers who use digital platforms like Uber rely on tips.)
Republicans are masters, however, at promoting policies in ways that seem appealing to self-employed workers but, in reality, screw them. For instance, in 2017, Trump promised that his signature Tax Cuts and Jobs Act would help middle-class entrepreneurs. (“The rich will not be gaining at all with this plan,” he said of the bill, presumably with a straight face.) Indeed, the bill included a provision that allowed sole proprietorships and other so-called pass-through entities to deduct 20 percent of their revenue from their taxable income. But this ultimately was just another giveaway to the wealthy. As a 2024 study found, the wealthiest 1.5 percent of filers received more than half of all pass-through deductions. Filers with an income below $160,000—the large majority of sole proprietorships—received just 13 percent of the total pool of deduction dollars.
The real purpose of the provision was to push traditionally employed workers to quit and become contractors, relieving the payroll burden on big businesses, which would no longer have to pay employee benefits. Similarly, in the waning days of Trump’s presidency, his administration issued a rule that aimed to make it easier for companies to classify workers as independent contractors rather than employees. (The Biden administration later stopped it from taking effect—a measure they did little to advertise.)
In 2017, Trump also issued an executive order allowing collectives of small businesses and self-employed individuals to purchase group health insurance plans. This, too, sounded beneficial to self-employed workers but in fact was the opposite. These association health plans (AHPs) were not required to follow ACA rules, which meant they could omit basic benefits like mental health care and prescription drugs and deny coverage for preexisting conditions. AHPs were also notoriously susceptible to fraud and financial instability, often leaving members with unpaid medical bills when plans collapsed. In 2019, a federal judge struck down the rule, and last spring, the Biden administration formally repealed it, having previously made ACA insurance policies less expensive for the self-employed by getting Congress to put more money into the program.
Over the next four years, the Trump administration will undoubtedly try to pass off still more policies that hurt the self-employed as favorable to them instead. Democrats can use these occasions to expose his duplicity. But to win the support of self-employed voters, they need something more: a robust plan to help them.
Such a plan begins by understanding the two fundamental ways the current system mistreats the self-employed. The first is that the American social safety net is largely tied to traditional W-2 employment. Self-employed workers lack access to benefits like unemployment insurance, workers’ compensation, and overtime pay that federal law requires employers to provide their workers, as well as 401(k) retirement plans and paid medical leave, which most companies offer. As a result, workers outside the traditional employment system are left to buy costlier individual insurance and save for retirement without employer contributions. When they’re sick or can’t find work, they’re left in the lurch.
The second way self-employed workers are taken to the cleaners is through the array of federal rules and regulations that, over recent decades, has led to corporate monopolization of markets. For example, small online sellers have little choice but to ply their wares on Amazon’s online marketplace. By 2023, the tech giant was taking a whopping 45 percent of sellers’ revenue in the U.S through various fees—up from 35 percent in 2020 and 19 percent in 2014. It’s the same story for self-employed workers trapped on other exploitative digital platforms: Uber’s dominant market position allows it to impose high commissions, offer unpredictable pay, and shift costs onto drivers, leaving many earning less than minimum wage after expenses.
Monopolists squeezing independent workers is a problem in legacy industries, too. Big poultry producers exploit the independent farmers who supply them with chickens by enforcing one-sided contracts, controlling key inputs, and manipulating pay systems to maximize their own profits while shifting risks and costs onto the farmers. This system traps farmers in debt and dependency, leaving them with little autonomy or recourse against abusive practices.
Another prime example: Visa and Mastercard control more than 80 percent of credit card transitions and use this duopoly power to charge businesses exorbitant swipe fees. Small businesses, with their smaller sales volume, are disproportionately harmed by this abusive practice.
In November, the Senate Judiciary Committee held a hearing on Democratic Senator Dick Durbin’s proposed Credit Card Competition Act, which would guarantee that merchants have access to networks other than Visa and Mastercard. The bill, first introduced in 2022, is cosponsored by a small, bipartisan group of senators but faces precipitous odds of becoming law: Industry lobbyists funded by Visa and Mastercard have spent some $80 million fighting it. The bill is an object lesson in the challenges sole proprietors and small-scale entrepreneurs face in shaping federal policy without well-funded pressure groups or the strong support of party leaders. (The closest thing they have to a presence in Washington, the National Federation of Independent Business, is really a right-wing, Big Business–led astroturf group.)
Historically, self-employed workers were disproportionately educated, white male professionals who earned high incomes. But this group has gotten younger, more diverse, more female, and lower earning. Today, the self-employed population looks remarkably like the traditional base of the Democratic Party.
It’s time Democrats offered self-employed workers more. Fighting misclassification is only part of the answer. Most independent workers don’t see themselves as mis-
classified full-time workers—in fact, according to one survey, more than half of freelancers say that no amount of guaranteed money could persuade them to return to a conventional job. “Not only do most freelancers not have an obvious would-be employer who is misclassifying them, but for many of them, the freedom, flexibility, and ownership they get from freelancing is of the essence,” the organizer Sara Horowitz writes in her 2021 book, Mutualism: Building the Next Economy From the Ground Up.
One of the more sensible ways to help them is to finally sever the outdated tie between basic social safety net protections and traditional W-2 employment. As Steven Hill first proposed in the Washington Monthly in 2016, Democrats should advocate for a “portable benefits” model for independent workers. Under this approach, benefits like health insurance, retirement savings, paid leave, and other employment-related protections would not be tied to a single employer but would instead move with workers across multiple jobs. Each employer would pay an allocation for benefits (prorated based on the number of hours an independent worker was contracted) into that worker’s “individual security account,” which would be managed by the federal government or a private agency specializing in benefit administration.
Such “multi-employer plans” are common in industries like construction and mining. If employers were required to give identical benefits to both employees and independent contractors, the incentive for them to turn employees into contractors would be gone, making the question of worker misclassification mostly irrelevant. There’s been some progress on making portable benefits a reality: In May 2023, a bipartisan group of legislators, led by Senators Mark Warner and Todd Young, reintroduced the Portable Benefits for Independent Workers Pilot Program Act. This bill proposes a $20 million grant program through the Department of Labor to encourage states, localities, and nonprofits to test various models for portable benefits.
The other important step Democrats can take to help the self-employed is to continue promoting the fight against market consolidation. The Biden administration brought major antitrust lawsuits against Amazon for its exploitation of small-scale sellers and its monopoly over online retail; against Cargill and other top poultry producers over their treatment of independent chicken farmers; and against many other monopolists that abuse their power over contractors and small businesses. But the administration rarely presented its pro-competition agenda as a means to help the self-employed as a defined class of workers.
With Trump already promising to limit benefits for gig workers, there is a clear opportunity for the Democratic Party to position itself as the champion of the modern American workforce. Campaigning on portable benefits, antitrust enforcement, and other measures that help self-employed workers and micro-business owners could prove important in future elections.
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