Going Full Uber

Today, something a little different, but not too different — it’s about one of the public policy implications of an important change in the economy that technology has enabled.

As we all know, the freelance and gig economy has been growing. According to a report this year from Upwork and the Freelancers Union, more than a third of the workforce is freelancing. Many of us make at least part of our living in the gig economy and most of the rest of us depend at least part of the time on people who are gig workers.

In California, there has been a movement to apply to gig workers some of the protections that were put in place for the fast-growing number of American industrial workers 80 to 100 years ago — minimum wage, a fixed work week, unemployment insurance, assistance due to workplace accidents and the like.

In response to California’s law that requires Uber and Lyft to reclassify its contractors as employees who are provided with employee benefits, the company proposed its own reform plan for the gig economy. Dara Khosrowshahi, Uber’s CEO, wrote an op-ed in the New York Times on August 10, 2020, titled “I Am the C.E.O. of Uber. Gig Workers Deserve Better. Gig workers want both flexibility and benefits — we support laws that could make  that possible.”

In it, he proposed:

“that gig economy companies be required to establish benefits funds which give workers cash that they can use for the benefits they want, like health insurance or paid time off. Independent workers in any state that passes this law could take money out for every hour of work they put in. All gig companies would be required to participate, so that workers can build up benefits even if they switch between apps.”

The New York Times columnist Shira Ovide followed up with a story titled “Uber’s Next Idea: A New Labor Law …Uber’s “third way” would offer its drivers flexibility plus some benefits. It’s not totally crazy.” Hmm, not totally crazy? That doesn’t sound like an endorsement, but it’s also not dismissive. Something has to be done to equalize the protections for them with employees, while giving them the flexibility that Uber advocates.

In line with their approach, Uber and similar companies are supporting California’s Proposition 22 on the ballot this November to get them out from under the State government’s push to treat their drivers as employees. Not surprisingly, many progressive and labor groups oppose Prop 22. This picture illustrates the concerns of the opponents:

But there is a larger question here beyond benefits and rights for gig workers because the change in the nature of employee-employer relationships has been as significant as the growth of the gig economy. With increasing automation and more coming with AI, de-unionization and frequent layoffs among other trends, frankly, a job is not what it used to be. Moreover, the situation is not likely to improve since the long-term loyalty between employer and employee that was common decades ago is generally rare now.

It’s time to realize that the economy – not just for freelancers and gig workers – has changed a lot since the Progressive and New Deal reaction to the excesses of corporations a hundred years ago. The gig rights debate seems to be too limited and too much based on last century thinking which is increasingly inappropriate for our technology-based economy. 

Putting aside the limitations of Proposition 22, why not take the general proposal for gig contractors that Khosrowshahi described in his NY Times piece and expand it?

Why not go full Uber! (Something Uber itself may not like, after all.)

What does that mean? Gig workers need a better contract and so do “employees”.

Any individual — whatever the label — who is providing a service to a company would have a contract with that company which clearly states adherence to government laws and regulations on: minimum payment per hour, extra payment for more than a certain number of hours of work per week, expenses incurred performing duties on behalf of the company, safety, discrimination, normal workers compensation for accidents that occur while working on behalf of the company, and the right to form any association (union) they wish.

Khosrowshahi emphasizes the freedom and control over their lives that gig workers have. OK, maybe it is time to give employees that same freedom.

That brings up the other current disparities between gig workers and employees, especially health insurance, sick/family/vacation leave and unemployment insurance which are tied to employment status. Gig/freelance workers need this as well, but it is also time to disassociate these benefits from the companies where people work — all in the cause of the freedom that Khosrowshahi promotes.

For example, the money companies used to spend on health insurance premiums and the like would now be paid directly to the employees. The employees would get their own health insurance and not be limited to the third insurance plans their company has pre-selected. Government options could also be offered for health insurance. (Similarly, gig or freelance workers could have those premiums built in to their contracts, at a minimum being the percentage of a full work week that they devote to the company.)

In this way, there would be no windfall for corporations after they would be relieved of paying benefits to employees. The shift can be done in a revenue/cost neutral way, leaving employers, companies and governments financially where they were before the shift.

Providing protections for everyone who works for someone else, no matter whether that’s on a gig/freelance basis or “permanently”, will help everyone get some more freedom from the fear of economic dislocation. Also, they will finally have the freedom to pursue their entrepreneurial dreams as well, which could help grow the economy more than forcing them to be locked into jobs that don’t fulfill their potential.

Finally, governments will, in the process, have to adjust their understanding of the nature of work in this century, which is no longer what it was when most current laws and policies were put in place.

© 2020 Norman Jacknis, All Rights Reserved

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