
Is the Sharing Economy Due for Extinction? - lutesfuentes
https://casetext.com/posts/is-the-sharing-economy-due-for-extinction
======
jacobheller
Really interesting article. One important newsworthy note from this article
that I think has been missed in some of the broader coverage: Washio,
Postmates, and Shyp have been sued by their contractors/employees, joining the
same club as Uber, Lyft, and Homejoy. This is an industry-wide issue, not
isolated to just a handful of companies, and has the potential to severely
damage this budding industry, as the author notes.

Whenever I take an Uber or Lyft these days, I always ask what the drivers
think about the issue, and the uniform response so far (obviously this is
anecdotal and not at all scientific) is that they like the flexibility of
being able to choose when to drive. For many, this is their second job they do
on weekends, nights, or early mornings. They are worried that they'll lose
this flexible source of income that are helping, for example, save for their
children's college education or pay their way through night school.

I'm not saying that this represents the majority view, or that the legal issue
should come out any differently, but I do worry that some of these workers,
happily employed as contractors, will lose out on this opportunity.

~~~
Chinjut
One supposes what they'd really like is to be able to enjoy both flexible
hours and typical benefits and worker protections. Unfortunately, we've set up
our stupid system so that these are somehow exclusive.

~~~
enraged_camel
The "stupid system" is set up this way for a reason: to prevent employers from
majorly fucking over their employees (and avoid taxes) in order to maximize
profits.

The reason a lot of Uber drivers don't mind being contractors is because they
already have full-time jobs that provide health insurance. But ask drivers who
drive during regular business hours (they will be more likely to not have any
other job) and they will probably tell you that they would rather be
employees.

~~~
AlexandrB
I think there's a stunning irony in the fact that America's privatized health
system causes problems for disruptive companies like Uber.

------
Animats
The "sharing economy" is Uber and some wannabees.[1] Airbnb isn't employment,
it's real estate rental. The other service companies are all tiny.

After a while, Uber is going to lose on the "independent contractor" thing.
Uber will end up owning the cars and hiring drivers as employees, at least
until the CMU crowd they hired makes automatic driving good enough. It will
still be a profitable business.

[1] [https://pando.com/2015/07/06/lets-face-it-uber-sharing-
econo...](https://pando.com/2015/07/06/lets-face-it-uber-sharing-economy/)

~~~
myth_buster
That link is paywalled.

------
patmcguire
There was a bit of talk a few weeks ago around about creating a new
classification, somewhere between W-2 and 1099, for people who aren't really
contractors but aren't really full time employees either, but I can't find any
of the articles.

~~~
nulltype
I think the real solution might be to reduce the number of classifications,
but I doubt it would be particularly popular.

~~~
patmcguire
From two to one? I know there are more, but almost everyone acting as an
individual is in one of the two cases.

------
lectrick
> However, this means that guarantees of minimum wage and paid overtime,
> family and medical leave, and unemployment insurance are also non-existent.

That's the real problem. The lack of a social safety net without being an
Employee of BigCorp.

~~~
prostoalex
At least in California self-employed individuals are eligible for disability
[http://www.edd.ca.gov/Disability/Self-
Employed_Eligibility.h...](http://www.edd.ca.gov/Disability/Self-
Employed_Eligibility.htm) and by extension family leave
[http://www.edd.ca.gov/Disability/FAQ_PFL_Eligibility.htm](http://www.edd.ca.gov/Disability/FAQ_PFL_Eligibility.htm)
if they choose to participate.

~~~
lectrick
California is always ahead of the game vs. the rest of the U.S...

------
eastbayjake
> “The jury in this case will be handed a square peg and asked to choose
> between two round holes,” [U.S. District Judge Vince Chhabria] wrote. “The
> test the California courts have developed over the 20th Century for
> classifying workers isn’t very helpful in addressing this 21st Century
> problem.”

I know the author is an attorney and thus interested in the law as it
currently exists rather than how it might be, but these articles about
reclassifying contractors always seem to treat the issue like the laws are
stone. The sharing economy is mutually appreciated by most of its contractors
and most of its customers, it creates value for society, and the solution is
that Congress and the California legislature need to revise these outdated
20th century labor laws to reflect current realities. We don't _have_ to fit
Uber into the classifications we currently have -- the law should change with
the times. And they don't have to cave entirely to the demands of Uber et al
-- there is a world in which state and federal laws are rewritten to recognize
these contractor jobs while adding protections and job guarantees (like being
able to charge your own price) without declaring all employees are FTE like
someone with a desk job.

~~~
jdmichal
> ... [T]hese articles about reclassifying contractors always seem to treat
> the issue like the laws are stone.

Once you're at the point of a jury, which is the context of your quoted
segment, then the law _is_ set in stone. Yes, I'm sure there are many
politicians contemplating changes. But the bottom line is that until that
happens, the current laws need to be treated as, well, law.

~~~
eastbayjake
Totally agree, my comment was mostly about the attitude in these stories that
sharing economy contractors _must_ fit into one of these 20th century labor
round holes. I just think government could fix this "problem" very quickly by
updating labor laws to more accurately reflect work in the 21st Century (e.g.
my Bangladeshi Lyft driver who's working full-time on an MBA and only wants to
drive nights until he graduates, and is more interested in the income than
benefits)

------
wtvanhest
There will be a nice opportunity for a law firm to understand these rulings in
every state to help service economy businesses scale quickly. With each state
ruling, there will be different standards, and acceptable language in
contractor agreements. As companies decide to scale quickly, they will need
someone to tell them how to structure agreements in a way that doesn't invite
lawsuits in each state.

------
lordnacho
I don't think the sharing economy as a whole will go away.

Homejoy is a bit special in that they sell something that you really only need
once, and that's if you know nobody who will recommend you a cleaner. (Why
don't they pivot, for instance into a moving company? Pays good money for
college kids if they happen to be free, cheap for people who need to move.
Location services lets you identify people who are near the opportunity.)

But the idea of a service where both buyers and sellers can find each other on
a casual basis is sound. It's just that we need to sort out what the terms
are. Should full-time Uber drivers get different protections from part-timers?
Needs a trip through the social/political grinder for an answer.

~~~
tvjunky
I think you have this a bit backward. The cleaning business is at it's core, a
recurring revenue business. Cleaning at regular intervals keeps the cost down
(time) and builds back profit if the first cleaning was discounted. Moving on
the other hand is something you don't need often and is harder forecast
revenue. In either case the employee/contractor problems exists.

~~~
Psyonic
I believe the point was if you like your cleaner, you could contract with them
directly the next time. Of course, there's probably some protection from going
through the service, so not entirely true.

~~~
tvjunky
Sure if you assume HomeJoy as a lead Gen model, loyalty on both sides could be
a problem. HomeJoy generally positioned their service like that. However, I
don't think that was the intent in the long term. If loyalty is a problem with
a service business then your customer acquisition has a flaw (high discount)
or you provide no additional value to the customer (quality control, customer
service, insurance, backup cleaners).Certainly the loyalty problem exists with
"traditional" services as well. The big franchises stay in business by first
providing good service and second loyal workers. Those factors plus acquiring
the right kind of customer provides the recurring revenue this type of
business needs to survive.

------
natrius
Consider where we are on the technology curve. We're a few years into general
purpose, networked computers being in everyone's pockets. We're a few years
away from those computers being capable of coordinating interactions between
their owners without middlemen using distributed consensus systems like
Ethereum. Once that technology is mature, this concern about whether the
workers are employees of the middleman will be moot.

Society desires the ability to offer and purchase services from individuals on
demand. These workers work for other individuals. The fact that there are
companies involved is a historical quirk that we shouldn't focus our policies
on. We need policies that support individuals offering their services to other
individuals, so employer-oriented policies are a distraction.

~~~
jellicle
Uh-huh. But there's no venture capital available for merely facilitating
paying interactions between people, unless you plan to take a large cut.

Uber is currently grabbing about 30% of the revenue stream that passes through
it, and experimenting with ever-higher cuts.

I would also point out that the modern corporation evolved to fill a
demonstrated need, and there's no evidence that the need (ability to command
and control large groups of people to work together to reach a goal) has
dissipated.

~~~
natrius
Lots of things get created without venture capital. Giving the world back that
30% cut of every ride would be a pretty huge favor. Governments, benevolent
donors, and open source developers are all in the business of doing people
huge favors.

------
nemo44x
We'd be fools to not use these productivity gains afforded by modern
information technology. The technology and creativity behind it have outpaced
our classifications of what a job is.

Uber and the like seem to be in a grey area - a middle ground. We'd be foolish
to throw away the gains and opportunities that have been created but we also
need to have a debate about what the "employees" role is in these types of
positions, what is owed to them from the company and how society most benefits
from these arrangements. We need to define a lot of things and determine how
they should work in a civilized society.

I don't have the answers but I believe it is clear something fair on all sides
needs to be considered.

------
kefka
I'm glad. The "Sharing Economy" does one thing and does it well:

It privatizes wealth while socializes risk.

And the risk to the employee is always covered up or misdirected. With Uber,
the big cost is insurance. However they count on people not to know. There's
also the issue that Uber sets your price for you, and none that you can
negotiate. Better yet, with less than 5 approval means you are "given" even a
lower rate.

With Fiverr eLance and oDesk, at least I can set my prices and negotiate with
potential clients. Yes, I pay the host company a cut, but that's well stated
and fair.

~~~
ahallock
Negotiating with clients on freelance sites is more involved than requesting a
ride on Uber, so I don't think that comparison fits.

~~~
nostrademons
But that's the distinction between contractor and employee, right? A
contractor "contracts" for work, i.e. they negotiate the terms and prices
individually. An employee is "employed" \- their employer tells them what to
do and gives them money in return. That's why two of the main tests in
contractor-classification lawsuits are "Can the contractor set prices?" and
"How much control does the employer have over _how_ the work is done?"

~~~
prostoalex
Don't think that's correct.

Lead-generation services like ThumbTack, RedBeacon or any "home warranty"
outfits solicit professonals such as electricians and plumbers at their own
pre-determined prices, yet at no point an independent electrician is confused
with a RedBeacon employee.

If someone posts a Craigslist ad asking for two movers with a truck and
mentions a specific budget, they're not automatically entered into a W-2
relationship.

~~~
nostrademons
The contractors on Thumbtack (at least) set their own prices. I've used them a
couple times and they always come back with a range of bids, sometimes
differing by up to 2.5x.

Ditto Craigslist; you may mention your budget, but the movers will quote you a
price, and there may be some negotiating back and forth until you find a price
that's mutually acceptable.

IIUC, Uber gives drivers a set rate per fare, and it's take-it-or-leave-it.

(And no, they're not "automatically entered" into a W-2 relationship - it's
not as cut and dried as that. But "ability to set prices" and "ability to
control how the work is done" are 2 of ~5 criteria used to determine whether a
contractor is really an employee, and they are two of the most important
criteria.)

~~~
prostoalex
Some might counter-quote, but the default behavior is to ignore the listings
where the bid seems too low.

By the same token an Uber driver can choose to "chase the surge" and only tune
in during high-demand time in a high-demand area.

~~~
kefka
And offering only during surge pricing at a set rate is somehow equal to
setting out a shingle with your desired price?

Right.

------
markbnj
Companies that use primarily contractors make regulators uncomfortable, and
their general antipathy to such ad hoc arrangements is pretty well known. It's
much easier to regulate and collect taxes from, and admittedly to protect,
people who work for large companies the government can exert control over. So
these challenges will keep coming as long as complainants can be found.

The fact that they can be found easily enough is also interesting, and I
suspect that what is going on here, at least to some extent, is that the
"early adopter" contractors who are more independent and seek fewer controls
are soon augmented as the business grows by people who are attracted to the
good things they hear about, but at the same time really aren't lone-wolf risk
takers, and really don't want to provide for themselves.

------
WalterSear
Can we call this what it is?

It's not the sharing economy. It's the sharecropper economy.

------
sixdimensional
I think there is a real opportunity here that is being missed, unless I am
missing something, especially for companies like Uber, Lyft or Homejoy. Things
like AirBnB, maybe a bit less.

These kinds of companies encourage the "micropreneur" \- the micro-sized
entrepreneur. I personally really like this concept as it frees some of us
from cubicle-land.

We should consider what are the "benefits" of full-time, W-2 salaried work vs
"everything else" (1099, etc.)?

Benefits of W-2 work (for a good benefit package):

\- presumed "stable", regular income at an agreed upon rate

\- regularly scheduled work hours (usually)

\- generally defined work role (position, title, responsibilities)

\- paid vacation time \- retirement plans, pensions, etc. (sometimes)

\- health insurance

\- life insurance

\- dental insurance

\- disability insurance

\- different tax classification

Those benefits are very nice, but in an "at-will" employment state like
California, they can go _poof_ and disappear quickly. And they are expensive
to pay for, for companies/organizations.

Here are a few points to consider:

\- If people have their own individual health, life, disability and liability
insurance, they can work as an individual with "benefits" independent of an
organization.

\- The benefits of "sharing economy" jobs have costs, but allow different
lifestyles. Controlling work hours, sharing of personal assets in exchange for
financial compensation on a micro-scale, feeling "self-employed", making a
living with diverse pursuits.

\- In my last job, the HR function was outsourced to a third party company
(Trinet) that pooled risk for all of the benefits above across all the
companies that outsourced HR to them. If it works for companies, why can't
that work for individuals too (aside from the obvious $$ concerns)?

The Health Insurance Exchange (US, e.g. "Obamacare"), for as many problems as
it has, tries to help address getting health insurance more affordably as an
individual vs. getting it through a company by pooling risk across the
population. I don't know of an insurance exchange for liability, disability,
dental, etc. insurances to try to help drive prices down in those areas.
Should there be one?

Cost sharing and enabling independent individuals, small business owners,
micropreneurs, etc. is one way to defeat this weakness. Cheating to avoid cost
does not work, but finding strong fundamental ways to innovate the system can
lower cost. If enough people band together to enable this way of doing it,
then they are the risk pool, and they can share costs. Somebody just needs to
help put together this system for them.

------
paulhauggis
It probably won't work long-term. What's great for the consumer is not so
great for the person trying to make a living.

It just surprises me that so many people have no problem undermining the
unions and essentially creating an economy with no benefits/regular pay.

