The end of the “sharing economy?”
Real talk: Uber is a fantastic service.
Living in Washington, D.C., I’ve come to appreciate the availability of drivers who know the city well enough to not get me stuck in a quagmire when I’m making a quick trip across town. It’s a rare thing, and 9 times out of 10, a true D.C. cabbie will do the job (at 50 miles an hour through Chinatown in the bike lane, but who’s complaining?)—but what if there’s no cabbie in sight?
Call an Uber, silly.
The Uber ride share service has taken America by storm, and for good reason; the unmitigated hassle of calling a cab company, finding an available car, and arranging a ride has been re-privatized using a single app and a network of drivers who are itching to take you where you need to go. It’s usually cheaper than a cab (at least in my experience) and less dicey with regards to routes and payment. Everything is handled through the app, and if your driver takes you home via Timbuktu, you can complain and earn yourself a refund. (Try complaining to a cabbie—you’re likely to get the cops called.)
It’s easy! It’s wonderful! It’s under fire from California bureaucrats!
In a ruling filed today, the California Labor Commission held that a San Francisco-based Uber driver is an employee, and not a contractor, as Uber has argued multiple times, before multiple commissions and courts. Saying that Uber is “involved in every aspect of the operation” of its ride hail operation, the Commission awarded Barbara Ann Berwick $4000 in expenses.
Uber is appealing, but what does this ruling mean for the booming “sharing economy?”
Ride-hailing apps like Uber and Lyft (which is also fighting the “employee or contractor” battle in various courts), alcohol delivery services like Klink, and personal assistant operations like Favor have been spoiling patrons for a while now, and the appeal of these services is one of pure convenience, coupled with a budding desire for choice in how we handle everything from travel to mundane tasks like grocery shopping.
Progressive government bureaucracies hate choice, but they love control—especially when it means complicating things for entrepreneurs trying to think outside the box.
Medium explains why this ruling could turn into such a disaster for Uber and other share-focused companies:
While the CA Labor Commission’s ruling only affects Uber (and a single driver) at this point, a broader move to classify these types of platforms as employers would have serious consequences for the continued success of current sharing economy firms. It could also put an end to the type of innovation and entrepreneurship that has been a hallmark of the sharing economy, and the way it is shaping how individuals connect and exchange with one another.
For Uber, as well as other sharing economy firms, designating drivers as employees rather than contractors would involve enormous costs. These firms would be on the hook for items such as overtime pay, unemployment insurance, workers’ compensation for job-related injuries, Social Security benefits, and family leave. Uber, Lyft, and Sidecar could also be forced to reimburse drivers for operating expenses, which could include ordinary maintenance, repairs, as well as the cost of fuel, tolls, and other costs related to driving.
Governing bodies trend against what they don’t understand. Maybe that’s why this sounds like a great scheme : raise the costs of operation, take drivers off the road, increase prices for customers, and create the sort of false scarcity that could eventually tank what was once a great service.DONATE
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