No need to reclassify sharing economy workers?

New report from Australian think tank says the market will figure it out

Technology trends and news by Ronny Kerr
April 14, 2016
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One of the most contentious issues in the sharing economy is the question of labor. But is it such a big deal?

The Grattan Institute, an independent public policy think tank in Australia, released a new report this week analyzing the peer-to-peer economy and its effects on law, government, and the economy. But when it came to whether governments should establish a new class of workers for the paradigm created by companies like Uber, the Institute thinks doing so would be unnecessary:

Peer-to-peer platforms will mostly improve an already flexible labour market. Governments should not create a new labour category for peer-to-peer contract workers. But they need to strengthen rules that prohibit employers misclassifying workers as contractors. Some platforms should be obliged to provide work safety insurance, much as labour-hire firms are today.

Largely funded by the Australian government and Australian universities, Grattan’s quest in the report seems to revolve around recommending simple but effective laws, encouraging as free a market as possible, and making sure everyone pays their taxes. So it would make sense to recommend not creating a new worker class.

But signs from the sharing economy point to a more complex situation.

On the one hand, you hear the typical narrative from companies like Uber, Instacart, and Handy that their labor force (the ones driving the cars, delivering the groceries, performing the dirty work) is completely satisfied with their status as independent contractors. They love the flexible hours, so the story goes, and the new way of making money in their free time.

On the other hand, there are claims of just the opposite. Actually, there are not just claims, but lawsuits.

For example, Uber faces a California court date this June for a class-action suit that says the company has misclassified its drivers as independent contractors and should be held responsible for covering driver expenses, such as fuel and vehicle maintenance. Another suit brought against Uber in New York argues that the company has been engaging in a price-fixing scheme with drivers, while some analysts have debated how fair Uber’s pricing model is to both drivers and consumers.

In any case, the mechanics of the new platform-labor relationship don’t appear as cut-and-dry today as Grattan would argue, even just in the case with Uber. And even the Institute admits that the platforms may need to offer additional provisions, such as insurance.

I’ve wondered myself whether the peer-to-peer economy will force the creation of a new class of workers—not quite freelancers and not quite full-time employees, but somewhere in between.

Handy (a site where you can hire on-demand handymen and cleaners) is like its sharing economy peers in that all the individuals doing the actual work are independent contractors. And yet, when I spoke to company CEO Oisin Hanrahan a couple months ago, he admitted it wasn’t a “perfect solution.”

“We want to get to a world where we can give folks access to benefits and training, but not in the 1099 world,” he said.

Though I’ve leaned in that particular direction, we’re still in the midst of changes ushered in by sharing economy companies, so it will be a long time before we see the full extent of reactions from both the labor force and government regulators.

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