About 4 years ago

08/28/2015 - Partisans Differ On Pros And Cons Of The Gig Economy

By:  Carson Chandler

The new “sharing economy” is doing more than just creating riffs among neighbors, some of whom are hostile to the notion of the house on the corner becoming a de facto La Quinta or the lady up the street running a small cafeteria out of her dining room. The economics of companies like Airbnb and Uber are at the heart of a new partisan divide over labor and technology.

Republicans such as Sen. Marco Rubio have championed Uber, for one, as a free-market force that challenges existing regulations that guard taxi and livery services. Rubio is not alone among conservatives who are now embracing sharing companies. The list of Republican congressmen, governors and mayors praising Uber continues to expand. While the issue affords them an opportunity to recite their usual anti-regulatory and anti- big government dogma, an added bonus is that these services are especially popular with Millennials, a key demographic long-missing from the GOP’s tent.

Democrats, meanwhile, have had a harder time accepting the exponential growth of the “gig economy.” A leading liberal think, the Center for American Progress, warns that companies like Uber, Airbnb and TaskRabbit may provide workers with job flexibility but little else. The Democratic-leaning organization, which has close ties to Barack Obama and Hillary Clinton, said sharing companies rely on a labor pool of subcontractors to avoid providing traditional benefits. The absence of stable, predictable jobs is further exacerbated because sharing platforms also avoid expenses such as employment taxes, overtime pay and workers’ compensation, not to mention all the corporate taxes not flowing into state and local coffers.

As a result, CAP is one of many left-leaning think tanks and thought organizations calling for sharing economy companies to provide these “basic protections”. And predictably, Democrats want increased government oversight and authority over the technology companies as part of these same reforms.

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Peer-to-peer companies have argued against regulations, however, by insisting they aren’t actually employing anyone, but merely serve as communications platform connecting users. And, their conservative allies have been quick to defend them. Arthur C. Brooks, president of the conservative American Enterprise Institute, penned an op-ed for The New York Times contending that state and local governments have met the shared economy with antagonism. He said that Uber, Lyft and Airbnb are services that “enliven dead capital” and provide much-needed income to average citizens. (More blunt conservatives have simply said Democrats want to protect entrenched, union-dominated industries.) Brooks was quick to point out that “zero regulation” is no good to anyone, but that laws and regulations must be updated so consumers renting a spare bedroom are afforded the same protections they might have if they spent the night at the Hilton. Other beltway policy groups like R Street have echoed similar sentiments – calling for insurance companies to offer updated policies that provide adequate coverage for Uber and Lyft drivers.

Ultimately, the great divide between conservatives and liberals on the sharing economy will require both groups to acknowledge that change is inevitable and both groups need to find middle ground. “Level the playing field” – that favorite cliché overused in all government hallways – does not mean retaining the status quo on one side while opponents acquiesce on the other.

Traditional transportation and hospitality companies will have to adjust to a very different marketplace that makes obsolete some of the regulations (many of which they advocated) that have created lucrative fiefdoms for a few while keeping competition at a minimum. Sharing companies and their political allies, meanwhile, will have to agree that regulations are needed because they protect consumers and the public welfare – regardless of the technology behind the respective service.