New Rules For A New Economy

Great piece by Anand Giridharadas in the NY Times about the need for new labor laws in regard to the new sharing/on-demand economy. In the recent lawsuit against Uber and Lyft by the people who drive for them, a jury must decide whether these workers should be classified as employees or independent contractors. Other startups like TaskRabbit and Handy are facing similar legal challenges. The problem is the existing labor classes are not appropriate for this new way of doing business. As one of the judges, quoted in the Times piece, said:

“The jury in this case will be handed a square peg and asked to choose between two round holes,” Judge Chhabria wrote.

Uber and Lyft’s square-pegged workers don’t fit into the round hole of employee because they have no real supervisors, they work irregular hours of their own choosing, and they are free to work for anyone else, too. But they also don’t fit into the hole of independent contractor, like your accountant or neighborhood plumber, because they cannot negotiate their own price, aren’t peripheral to the business (but are central to it), and are subject to extensive control and monitoring.

It’s time for a new class of labor to be developed and regulated. This is one of the first challenges policy-makers and labor departments can tackle, but it will take thought and extensive research to figure out how to handle the creation of a new class of workers. It will, however, be worth the investment as the number of these types of “jobs” continue to swell, providing much-needed primary and secondary incomes to those who pursue them.

Click the thumbnail to read the Times piece:

New York Times

Government-Run Sharing?

Just came across Dean Baker’s opinion piece on Aljazeera America from yesterday in which he advocates for a publicly-run version of the “sharing economy.” In Baker’s own words:

In addition to a level-the-playing-field approach, we can also treat the sharing- economy companies to some new competition: a public option. The idea is that governments can set up public sites that would provide the same services as the sharing economy companies. The difference would be that the public sites would cut out the middleman. They would be set up to benefit customers and service providers, with the government charging only the fees necessary to cover costs.

While this sounds on the surface like something I’d be in favor of, having worked at one of these tech companies, I know first-hand how unworkable it would be to have government-run sharing apps. Full-stack product development, setting up initial networks, targeted marketing, and real-time empathic customer service are just not in the government wheelhouse. Governments regulate — that’s their wheelhouse. And that’s what they should be doing with a long-view on the sharing/on-demand economy.

Right now, many local governments across the globe are in panic mode — creating regulations in reaction to new technologies that have real-world impacts (Uber and AirBnB are the obvious players here, but there are so many others: TaskRabbit, Handy, Car2Go, MiniBar, PostMates, and on and on). Workers, customers, and even former employees are filing lawsuits against on-demand companies left and right. I see this as part of the natural process of establishing equilibrium. But it doesn’t have to be this difficult — or litigious.

The sharing economy is here to stay, and it will only continue to grow. There is so much potential for positive change from these emerging technologies. Bike-sharing is one excellent example, especially when implemented in an intelligent way. But regulators need to educate themselves on what’s out there and what the implications of each application might be, not only for health, safety, and labor, but also for other as-yet unknown impacts. Governments need to get one step ahead instead of ten steps behind.

They also need to stop clinging to the status quo, protecting entrenched industries just because they’re, well, entrenched. It’s time to weigh the benefits and drawbacks of the innovative versus the status quo, and figure out sensible and sensitive regulatory cocktails that benefit and protect the most citizens. This, of course, is no small feat, but I believe our governments are up to the task. They can do this better than they would ever be able to manage running a technology company, that’s for sure.

It’s time for governments to become innovators, not of technology, but of regulation.

Read Dean Baker’s piece here:

Aljazeera America

Aljazeera America

Uber’s Offices Raided in France & South Korea

This could’ve been avoided. But again, it illustrates that governments don’t have the proper tools to regulate apps. They don’t even know where to begin, so after sending “warnings” they use police force. Neither is effective.

Uber, for its part, is acting like a rebellious teenager. Except this rebellious teenager has more money than its parents, so it can kinda do what it wants.

So what’s the solution?

Governments need to develop the tools to work with start-ups. One place to start would be by developing partnerships, putting out RFPs, and trying to work in unison to mesh the rules and the innovations – and to change each where appropriate. In other words, governments need to begin acting a little more like start-ups. And start-ups, for their part, could use a little growing up (well, some of them, at least). It’s time for cities, states, and countries to embrace innovation while being smart about how to handle it. That would be the biggest innovation of all.

BBC News has the story:

BBC News