How to make the sharing economy more progressive
Is the advent of the "sharing economy" good or bad?
The sharing economy is the crude term-of-art for the new work-life model characterized by "on demand" platform services like Uber, AirBnB, Etsy, and Feastly. But it also arguably heralds a much bigger shift in the economy: towards more part-time work, more flexible schedules, more independent contracting, shorter stints at jobs, and more secondary incomes.
As for what to make of the sharing economy, there are basically two stories being told. On the one hand, it's the brave new world of an advanced, efficient, flexible, artisanal, 21st-century information and service economy. Everyone has more options to build their own personalized model for how work structures and interacts with the rest of their life.
The other story is considerably darker. Contract workers don't get health benefits, unemployment benefits, workers compensation, or 401(k) plans, and they aren’t subject to overtime rules or the minimum wage. Another way of saying "flexibility" is "unpredictability," which eats away at time for family or a second job. Participating in the sharing economy allows firms to duck these obligations to their workers, while still pocketing a hefty chunk of the wealth those workers produce. At the big-picture level, it could lead to a kind of modern "servant economy," where a wealthy upper class has even their most petty needs — child care, grocery shopping, cooking, commuting, and so forth — tended to by an on-call and poorly compensated underclass.
While the first story could be true, right now it looks like we're drifting towards the second one. But we don't have to.
Go back and look at that list of employer obligations again: health benefits, retirement benefits, workers compensation, etc. Our society has chosen to entangle all these things with having a job. But there's nothing intrinsically necessary about this setup. We can change it if we want to.
Most economic and health policy experts agree that attaching health insurance to having a job is a terrible idea. Most European countries make sure everyone has health coverage regardless of their employment situation, either through superior versions of ObamaCare's exchanges (Switzerland) or single payer (Canada and France). The same goes for retirement benefits: Social Security is a relatively good public system for providing people a steady income in retirement, but other countries still spend more. Social Security is superior to 401(k) plans and the like in every conceivable respect. There's no reason we shouldn't expand the program to take on the job private savings do now.
We have a system for helping out people who are unemployed, but it's incredibly stingy. (Even Denmark, which has a pretty demanding system of work requirements, spends oodles more than we do.) There's no reason we couldn't bulk it up and adjust the qualifications to bring in people in the sharing economy. The same goes for disability insurance, which is just workers compensation with different bells and whistles.
We could provide cash allowances to help out people with kids, as well as anyone caring for an ill or disabled family member. Again, other countries do a much better job than us on this score. And when we do provide these benefits, we do it through the tax code, which is extremely clunky.
We could even provide a universal basic income — a no-strings attached check to every American. We could never afford to make it equivalent to $15 an hour, but it would ensure a certain minimum income.
Why aren't we doing all this? To a certain degree, it's just a failure of imagination. It really hasn’t yet occurred to Americans — individual or collectively — that all this stuff could be disentangled from employment and provided on its own terms.
There's also a general political consensus that we couldn't afford such a system, which is nonsense. If you actually do the math, the federal debt is not a threat — the International Monetary Fund just released a report confirming the U.S. has enormous amounts of room left to safely borrow. Nor is there even any reason to borrow: we could afford a much higher rate of overall taxation than we have now without harming the economy. Finally, there's also a fear that more generous social policies will lead to idleness. But the European countries that already have these sorts of programs actually have higher participation in the labor force among prime-age workers than we do.
It’s also important to note that the existence of the "servant economy" requires serious levels of inequality. On the one hand, you need a large population of people with little free time, but lots of disposable income. One the other hand, you need people with lots of free time who desperately need more disposable income. Any collection of policies that seeks to ensure jobs in the sharing economy provide a decent standard of living will also seriously reduce inequality. It will move more money down the ladder, and it will force those at the top of the ladder to dedicate less time to work, and more time to taking care of those everyday needs for themselves.
The thing to realize is that the United States' web of social safety net programs, work laws, and legal and social expectations for what jobs can deliver was created mid-century, when manufacturing was a big part of the economy and people tended to stay at the same job for life. It's likely that time period was a one-off fluke, driven by particular historical and global economic circumstances that won't be repeated. That system relies on a job being a very concrete, steady, and easily identifiable thing. The sharing economy is dissolving all of that, blurring and breaking up the boundaries of what we understand a job to be.
We can adapt to the new world. But we're going to need to get over a few political and ideological hang-ups along the way.