Week 3: Regulating the Gig Economy

I’ve yet to come across a forecast that suggests that income inequality will narrow as we move into the Fourth Industrial Revolution. For many, myself included, rising income inequality is a moral issue. But for everyone, it is a practical issue. As Klaus Schwab noted in The Fourth Industrial Revolution, “Ensuring that swaths of the globe are not left behind is not a moral imperative; it is a critical goal that would mitigate the risk of global instability due to geopolitical and security challenges such as migration flows.” 

One of the great challenges of the future of work, I believe, will be ensuring that the economy of tomorrow works for everyone — and this is what I plan to focus on in the coming weeks (with a possible narrowed focus on the gig/sharing economy). 

In our own country at least, cities seem better equipped than the federal government to respond to the changing economy. This summer, New York City has moved forward with legislation to regulate Airbnb listings, cap the number of Uber licenses issued for the next year, establish a minimum wage for for-hire vehicle drivers, among other new laws aimed at these players in the gig economy. This is partially in response to up to several suicides of taxi cab drivers facing financial troubles due in part to the rise of app-based car services. 

Though much has been written about recent regulations on the gig economy, I share this piece from Smart Cities Dive, which gives a wide look at the role of cities. The significance of New York City’s recent laws is summed up here:

During the press conference on the new ride-hailing laws, New York City Council Member Brad Lander said the new laws represent the first time a living wage for workers in the gig economy has been set. He said that other cities should follow suit.

“As we’re starting to see the future of work, freelance work … we’re saying we’re seeing the ways the world of work is evolving, more and more people categorized as freelancers, as independent contractors, they’ve got to earn a living wage too,” Lander said. “I’m proud that we’re becoming the first city in the country that says, ‘Independent workers have got to be able to earn a living wage.'”

Many other cities around the world have passed laws to regulate Airbnb, and many U.S. cities are looking to follow NYC’s lead with for-hire vehicle companies. And next up for New York City: The Council is considering a surcharge on cab rides to establish a health insurance fund for drivers. 

On the flip side, there is a case to be made (aside from the cases being made by the companies themselves based on their own self-interest) that these regulations could stifle innovation:

Regulating the gig economy represents a unique and difficult opportunity for city governments, which must balance their desire to encourage innovation and disruptive technologies, while also trying to ensure the levers of government keep up with that progress and have checks and balances where appropriate.

Are these regulations a step toward curbing rising income inequality? Or are some of them tantamount to, as one NYC Council Member said, “regulating Netflix to help Blockbuster”?

2 thoughts on “Week 3: Regulating the Gig Economy”

  1. I’m so conflicted on this too…profoundly seeking to stem the rising equality gaps, yet worried that we are fighting the wrong battles. Love the Netflix/blockbuster analogy. Even wonder whether the taxi medallion prices are a market that government should protect. Look forward to discussing.

  2. I agree that it’s so striking how all of the predictions are about widening income inequality, which is already such a huge problem. For me, it’s hard to imagine how income inequality would narrow without pretty profound social, political, and economic changes.

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