A while back, a friend of mine posted this graphic on
Facebook. It’s a well-presented picture of the changing landscape for 21st
Century participants in the economy.
The next to bottom rung of this ladder resonated most with
me. For much of the last 15 years, I
have earned compensation by virtue of results I have achieved. No salary – just commissions or splits of
revenue or profit. So, rather than being
paid for my time, I was subjected to the forces of the market without an
employer as an intermediary.
Sometimes it’s more than a little nerve wracking. I spent five years as an intermediary
representing private businesses for sale.
In a good year, I would get five or six paychecks. In a not-so-good
year, three. It’s hard to plan your
future when you’re not sure what you’ll be making this year or next.
On balance I like the flexibility of being an independent
contractor. But, I am a professional
earning a good living. At the other end
of the pay scale, there are legitimate concerns. Our social insurance system has been built
around traditional employment. In the
sharing economy, workers are typically independent contractors. For some, that’s not an appealing
arrangement.
The online forum for Uber drivers (UberPeople.net) captured
this sentiment from a driver using the pseudonym Honkadonk, "Uber's
whole game … is to make everything some weird frayed-line, grey area where
nothing is their responsibility. It's ride share but Uber is "everyone's
private driver". We're IC but we have rules, answer to bosses, and can be
fired. We're illegal cabs but it's okay because we're not cabs. We earn $35/hr
except we f---ing don’t.”
Well, he’s right of course and Uber isn’t the only example. It is the basic nature of corporations to
shift liability to third parties. That’s
why we need regulation.
But, how much regulation? Smartphone
apps and the Internet reduce the ‘friction cost’ of doing business. It’s to everyone’s advantage to benefit from
the efficiency that’s created. The
challenge is finding the right regulatory balance so as not to stifle
innovation and the disruption that is native to the free enterprise system.
Plaintiffs’ lawyers and politicians continue to try to reinforce the
fraying social contracts of the last century.
An article written for the website Hill.com predicts that the National Labor Relations Board will soon tighten rules for independent contractors so
that even franchise owners – the millionaires who own McDonalds franchises, for
example – would be considered employees.
We would be better served if we endeavored to place this new reality at
the center of our values. After all, market
forces are unstoppable. It’s not the
consumers or the Uber drivers really being hurt by this new paradigm, it’s the
entrenched interests of taxi companies, unions and regulators who have the most
to fear.
We should be asking this question: how can we decouple the employee
safety net of unemployment insurance, workers’ compensation and social security
from the framework of full-time employment?
Like it or not, Obamacare has already done so for health insurance coverage.
The Wall Street Journal’s Lauren Weber has suggested a new status – the‘dependent contractor’ to which we might extend some of the same benefits.
For their part, Uber contracted with a Princeton economist to analyze
the relative pay of Uber and taxi drivers in key markets. The results show an Uber driver makes an
average of $6 per hour more than the average taxi/chauffeur/limo driver. Here is the chart they have published:
The Huffington Post followed up with an analysis of their own
suggesting that the fallacy of Uber’s study is that it doesn’t consider that
Uber drivers bear the cost of operating their own vehicles.
Fair enough. However, the line
of thought that suggests that the sharing economy is sucking jobs from
traditional 9-to-5 employment is off-base.
In a survey of its drivers, 78% reported being satisfied working for
the company. The survey also revealed
that many drivers (32%) consider their Uber gig as a fall back while they are
looking for a better job.
Would we rather have them depending upon unemployment compensation?
Whatever it is that draws workers to this kind of work and consumers to
this kind of service should be embraced not resisted. The only question…
WHO WILL LEAD?
