Tag: Gig economy

California Knifes the Gig Economy

Richard Epstein
Richard Epstein
67
 

(Sacramento, Aug. 29) Car displaying Uber and Lyft fliers advocating California unionize the gig economy.

California state legislators embarked last week on the single most important regulatory misadventure this country has seen in many decades, seeking to redefine the obscure but critical legal distinction between an employee and an independent contractor. The employment relationship today is subject to massive regulation that is inapplicable to the independent contractor, who pretty much works on his or her own.

Like it or not, the employee receives many statutory protections, including the right to receive minimum wages and overtime, to join a union, to receive worker’s compensation benefits and unemployment insurance, and to receive paid family and sick leave. None of that mandated protection comes without significant costs. It has been estimated that reclassification of Uber and Lyft drivers as employees in California alone will cost the two companies an average of $3,625 per driver per year for a combined annual bill of nearly $800 million per year. Nonetheless, in 2018, the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court forged ahead with such a reform by unanimously holding that drivers who worked for a firm that supplied nationwide courier and delivery services should be classified by law as employees and not as independent contractors.

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Scooter Economy

Clifford A. Brown
Clifford A. Brown
6827
 

Have you ever wondered about the scooter economy? No, not that Scooter. We are talking about the electric scooters, which have largely supplanted undocked bicycles. The undocked bicycles were, themselves, a leap forward from docked bicycles. All of these transportation modes attack the “last mile” problem, with increasing efficacy. “Docked,” undocked,” “last mile,” what is all this about? Read on and marvel, or at least gain a nice break room, coffee shop, or dinner table story.

The last mile problem:

In transportation of persons, as in transmission of data, the last mile is the toughest challenge, and limits the efficiency of the entire system. Think back to when cable and telecommunications companies were racing to bury many thousands of miles of cable in literal pipelines. The pipelines shielded and allowed maintenance on the wire and fiber optic cables forming data infrastructure “pipelines.”

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It’s Time to Uncouple Health Insurance from Employment

Jan Bear
Jan Bear
3827
 

It’s a little-known fact in the great outside world — although probably widely known among Ricochet readers — that employer-paid health insurance is an artifact of the Roosevelt administration.

When employers were prevented by law from raising their employees’ salaries, they compensated by offering benefits, such as health insurance, to make it more desirable to stay on as employees.

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Economic Puritanism

Tom Meyer, Common Citizen
Tom Meyer, Common Citizen
1611
 

The PuritanIt’s likely — okay, certain — that the punditocracy writes too much about Uber and Lyft. It’s just that they’re so damn illustrative: their businesses are easily understood, innocuous, cartel-busting, accessible, and at-will almost to a fault. They have very little coercive power over their contractors, who work when they want, directly serve clients, and are compensated more when their services are most in demand. They’re fantastic introductions to microeconomics, just with smart phones and getting home from the airport thrown into the mix.

As such, it should come as little surprise that a socialist like Bernie Sanders hates these platforms, sufficiently enough to feature an anti-Uber piece on his website (though, interesting, insufficiently enough to not use it). Hillary Clinton has, equally unsurprisingly, made similar noises, with a little more prevarication, or — given who we’re talking about — lies. The common thread is that it’s just not right for people to work for the wages and under the conditions Uber offers, even if such people clearly disagree every time they vacuum their car, grab their keys, and launch the service’s partner app.

To my knowledge, Donald Trump has made no criticism of the gig economy and his tax plan would apparently make things easier for independent contractors in general. I don’t often say this, but good for Trump. It’s a travesty that some forms of employment are needlessly discriminated against, and stupid that it happens to be one of the more enterprising, initiative-driven ones.

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Uber, Lyft Leave Austin

Ricochet Editors' Desk
Ricochet Editors' Desk
3726
 

Via the NYT:

On Monday, the two leaders of the booming ride-hailing industry halted service in Austin, Tex., after losing a legislative fight over how they screen their drivers. The decision to leave an energetic city known for its young, well-educated populationoffered a stark illustration of how strenuously the companies oppose new rules that would require them to perform fingerprint background checks on drivers. Ending the service also meant that about 10,000 drivers would be out of work, Taylor Patterson, an Uber spokeswoman, said. “Folks are devastated,” she said. “People are saying, ‘I don’t know how I’m going to pay my rent.’”

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In Praise of the Sharing, Peer-to-Peer Economy

James Pethokoukis
James Pethokoukis
37
 

shutterstock_278653268Zipcar founder Robin Chase has an HBR piece, “Who Benefits from the Peer-to-Peer Economy,” where she discusses how workers are faring in the collaborative/peer-to-peer/on demand/sharing/gig economy, defining it as “marked by many platforms that engage a diversity of peers to contribute excess capacity which can be harnessed for greater impact … new platforms increasingly give the small the powers of marketing and distribution that were once reserved for the very large.” Same goes for manufacturing with 3-D printing, for instance, or MOOCs. But, she adds, policymakers must engage this new aspect of the US economy:

Governments need to recognize and prepare for this new third way of working which is neither full-time nor temporary part-time, but a new way of life. The Internet exists and everything that can become a platform will. Local and federal governments need to start tying benefits to people and not jobs, ensuring that labor is protected during this disruptive and swift transition. In a world struggling to cope with incessant disruption brought on by fast-paced technical innovation, climate change, urbanization, and globalization, Peers, Inc. is the structure for our times. It enables us to experiment, iterate, adapt, and evolve at the required pace. I’m happy this flexible new tool has come to exist. But while we are reaping the economic benefits brought on by individual contributions, we need to proactively share the productivity and innovation gains with individuals, too.

While I think the scope of the problem here has been exaggerated, Chase makes a good point, especially about tying benefits to people rather than jobs. Which is why mandating new benefits and employer costs is the wrong way to go. From my recent The Week column:

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On Creating New Government Policies to Deal with the Sharing Economy

James Pethokoukis
James Pethokoukis
1712
 

shutterstock_250766428Nick Hanauer and David Rolf outline a solution to what they (and Hillary Clinton, it seems) argue is a big, big problem right now: economic insecurity created by the growing sharing/on-demand/gig economy. Americans need a new social contract, one that brings more certainty and tangible benefits to all these part-timers and independent contractors. As they explain in Democracy Journal:

This is the new “you’re on your own,” benefit-free, race-to-the-bottom reality for millions of American workers. And as more new innovative businesses and business models are invented, this process will only accelerate. As the sharing economy kicks into high gear, more and more Americans will become independent contractors activated at the touch of a button on an app, working for a fleet of employers. … A robust set of mandatory universal benefits would put all employees and employers alike on an equal footing, while providing the economic security and certainty necessary for the middle class to thrive.

So what does this new social contract look like? It consists of two parts, what Hanauer and Rolf  have termed a “Shared Security Account” and “Shared Security Standards.”  here is how this system works:

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