We’re in the midst of one of the most exciting and bi-polarizing elections in history, but will it have an effect on the sharing economy? Without a doubt as candidates have praised or voiced concern over this economic model.
The sharing economy has grown in the past couple of years, making up about 5% of the 10 sectors evaluated by PWC. Elements such as deregulated employee models and rapidly changing technology is paving the way for a larger takeover in the next decade. Whereas the term “sharing” seems aligned with values of offering people resources, the real sharing economy is closer to capitalism. If capitalism is the freedom to succeed as an entrepreneur with the least government interference possible, then the sharing economy is the epitome of this philosophy.
“Crack down” on independent workers
Presidential candidate, Hillary Clinton, views this movement to peer-to-peer marketplaces as a threat to the American workforce. Issues such as being a full-time employee, health insurance, workers compensation and a fixed schedule are up in the air with the “gig economy,” as she puts it. What is important to remember, however, is that small to medium sized businesses are a crucial part of the economy too. Let’s delve into what companies should and should not do according to some candidates.
Clinton has positioned herself against companies such as Uber by saying that they rip off contractors who should be employees and that she will “crack down” on independent contractors. Cracking down on independent contractors doesn’t seem like the right solution as they are merely trying to make ends meet following a downturn in the job market post-2008 housing mortgage crisis. Before the existence of the sharing economy, it was difficult for house cleaners and drivers, for instance, to make a decent living by working for themselves. Online platforms which have evolved by improvements in technology allow for smooth transactions linking buyers and seller, sellers and buyers and uniting an entire world via an inclusive economic model. Many people are now able to support themselves and their families.
If Clinton is elected, she will change policies to protect people working in this economy. Although companies might feel a pinch, at least people working in it will have access to benefits. Could it be a win-win after all? Or will she, like so many politicians once they reach the white house, alter her promise? Clinton is motivated by her ties with labor unions, but, bringing up a lot of good points about how many employers are forfeiting benefits that used to be included with employee packages.
If it makes money, why not?
Lucky for us, Donald Trump, has not yet commented on the issue so we can move on. The republican who has supported the sharing economy most vocally is Ted Cruz. In a letter to the Federal Trade Commission, the Texas Senator details the economic benefits of a sharing economy fueled by innovation. Having led workshops on the topic, Cruz urges the Commission to allow “permissionless” integration of competition within the industry and steer away from regulations that would stifle innovation and halt economic progress in states. From a small business perspective, this makes sense. Startups that are individually funded might not be able to make the switch to full employees. The point is to have different stipulations for different levels so businesses can grow organically.
Sanders uses Uber but thinks you shouldn’t
In the news lately, Bernie Sanders was quoted as bashing Uber for classifying their workers contractors instead of employees. His criticisms are aligned with Hillary’s in protecting the little guy against these multi-billion dollar corporations. According to a report from the National Journal, 100% of Sanders’ driving expenses are with Uber, so he obviously likes the service but isn’t happy with its policies. Some news sources have bashed Sanders for taking a “Do as I say not as I do approach” but it would be really hard nowadays with on-demand car services being the norm. If Sanders is elected, he would follow Hillary’s lead and implement regulations on classifying Uber drivers as employees instead of independent contractors.
Uber and its San Francisco competitor, Lyft, showcase how innovation has rapidly changed the way people get around. I’m not a fan of Uber but I use Lyft and have spoken to drivers who are making a good living from their rides around the city. Not everyone wants to be an employee. Fear of regulations include fixed schedules and lower hourly rates. Classifying independent contractors as employees scares some drivers. It could mean lower wages and less flexibility -- crucial components of why people become independent workers in the first place.
Opinions about the sharing economy vary from support to those who view it as an oxymoron. Aspects of good business practices, however, apply everywhere -- not just those in this economy. It’s hopeful to hear candidates bring up these topics. The dialogue needs to continue if we are to ever fully reap the benefits of this economic model.