Why Uber is becoming the next partisan lightning rod
The company's spat with New York City is indicative of the new challenges of the sharing economy
Come 2016 and the presidential election, what you make of the "sharing economy" may become another partisan hill to die on.
Republican presidential hopefuls have embraced the on-demand ride-service company Uber, in particular, as a symbol of inventive, red-tape-defying entrepreneurial gusto. Democratic candidates are more wary, as anxiety builds that Uber and its ilk herald a new era of job insecurity.
Things will heat up today, when New York City institutes a plan to cap the number of drivers Uber can have in the city, pending a study of traffic congestion. Uber's lobbyists and supporters have already been trading increasingly ideological blows over the plan with the office of Mayor Bill de Blasio, an ardent progressive.
Other potential partisan blow-ups include San Francisco's decision last week to keep a time limit on how long residents can take on renters with Airbnb, which is basically Uber for homes and apartments. Last month, the California Labor Commission ruled that drivers for Uber are employees, not contractors — a decision that will significantly increase the company’s operating costs. And there's a major class-action lawsuit against the company in the works.
So what should we make of this? Technological innovation is certainly part of it: Apps like Uber, Airbnb, Feastly, and Instacart have vastly decreased the logistical challenge involved in everything from getting a ride somewhere, to finding a place to stay while traveling, to getting groceries. But a lot of the more traditional companies like restaurants and taxi cab services are already adopting similar approaches, and bringing easier access via online technology.
A bigger part of the sharing economy's success is probably a more "sociological" innovation. A lot of the logistics of our economy rely on conceptual categories: We know what a "restaurant" is versus "a neighbor cooking us dinner," and we know what a "taxi cab company" is versus "someone giving us a ride for reimbursement." We know what "employees" are versus "contractors." And we use those conceptual categories to organize our economic life together: Restaurants have health regulations, taxi cab companies have various licensing and safety requirements, companies are obligated to give "employees" a certain suite of benefits, etc.
The sharing economy has produced a new breed of company that effectively slips into the gray areas between those conceptual categories. Is an Uber driver the equivalent of a taxi cab employee, or just some dude (or dudette) offering a ride for money? We don't know yet, and because we invented all these categories in the first place, there's no actual right answer to those questions.
In one sense, this upending of the conceptual categories in our economy is a good thing. It's given people a way to make money using what used to be free time or capital — like their personal cars, kitchens, or apartments — that used to just sit there. But in another sense, it's really bad, because it basically boils down to cheating. Sharing economy firms are able to slip out of obligations and operating costs that the more traditional firms they compete with still labor under.
That said, this is also an opportunity to retool the categories and regulations that govern our shared socioeconomic compact. The very fact that Uber and its like exist and are able to make such a killing by mixing technological innovation with regulatory arbitrage is probably evidence those categories could stand to be revisited.
The best approach would be to reduce the need for categories like "employee" or "contractor" altogether. Benefits traditionally provided via our jobs — health insurance, retirement accounts, childcare, workers compensation, and the like — could be centralized and provided by the federal government instead. National laws could also establish paid leave and vacation, and tighten overtime requirements. This would equalize the playing field between sharing economy firms and traditional firms by alleviating the extra burdens that fall on the latter. It would also maximize the freedom of workers to move between forms of work — stable and long-term, or more freelance and artisan — without hassle or logistical worries.
The same philosophy of keeping the conceptual umbrella as big and broad as possible could apply to other regulations as well. Leaner sets of requirements could could make a broader range of bigger and smaller participants, from the Feastly provider to a full-scale restaurant, interchangeable from a regulatory standpoint. Or possibly a clear-cut tiered system, where obligations increase as the firm in question increases its size and workforce.
Some matters could be handled at a more local level. Individual apartment companies could decide for themselves whether their tenants can participate in Airbnb-like services. Or there could be joint screening processes between tenants and apartment companies. The latter could advertise what they provide, and presumably companies that provided the most streamlined and effective processes would get the most renters. National laws could establish a universal set of rules for such systems. Or local state and municipal governments could too, with each choosing a different approach and balance of priorities. After all, there's no right answer to "how much of a community feel do you want?"
And of course in some instances the old regulations will just need to be imported wholesale onto the new sharing economy. It's hard to see which taxi cab regulations Uber shouldn't be following too, for instance — though the process of negotiating the rules will, again, be an opportunity to trim the regulatory fat. The key principle is that everyone in that industry, Uber and taxi cab companies alike, should face the same set of rules or tiers of rules.
This isn't the first time our economy has gone through this sort of shift. The initial arrival of the Industrial Revolution produced a "gig economy" similar to the one we're seeing now, rife with temporary work and employment insecurity. Then the consolidation around factory work and benefits produced the prosperity and job security of the mid-century. But now that system is coming undone.
What we really need is a socioeconomic compact that can handle the fluid shifts between "gig" and "non-gig" alike, and that can adapt to whatever history throws at it.