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This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Not so long ago, our fates as future TaskRabbit handymen and Uber drivers seemed to be sealed. We were being told that freelance work in the “gig economy” would reshape careers, and even entire workforces in a way that resembles the days before the original industrial revolution.
That hype was due at least in part to the flexibility afforded to companies now more easily able to tap a worker with a particular skill only for short, discrete periods, without taking on the financial burdens of a full-time employee – having to pay a minimum wage or for overtime, for example, or provide insurance. That flexibility has contributed to the manic growth of firms like Uber, which was valued at about $72 billion before it went public earlier this year.
Then, last month, California – home of Uber, TaskRabbit, Lyft and many other gig economy players – threatened to ruin the party. The state’s legislature passed AB 5, a bill compelling companies to treat gig workers like conventional employees in terms of protections, and Governor Gavin Newsom promptly signed it into law.
This followed a move by New York City to implement a minimum wage for drivers at ride-hailing companies, and creates the potential for other places to follow suit. Now, nobody seems quite as certain about the gig economy’s golden prospects.
So, what’s the likely fate of one of the biggest trends impacting the future of work? For more context, here’s a set of links to deeper reading, courtesy of the Forum’s Strategic Intelligence feeds:
• The new California law resembles New Deal legislation – and it features an enforcement mechanism that should genuinely put companies like Uber on notice. (The Wharton School)
• Don’t sleep on California’s ability to shape the law elsewhere. From the country’s first ban on trapping fur animals to a crackdown on vaccine exemptions, the Golden State has had a broad impact – and that’s likely to be the case with the gig economy, too. (Christian Science Monitor)
• Companies have already landed on possible ways to skirt California’s law – by not classifying workers a “core part” of their business and by funding a ballot proposal that would create a new class of employee that only enjoys some protections. (MIT Technology Review)
• Lawyers for Uber have argued that the company is just a “marketplace” sitting between drivers and riders, so how could drivers be core to its business? If companies like Uber push too hard on such arguments to dodge laws like California’s, they risk reinforcing an image of Silicon Valley as a “font of cruelty” – and certain backlash. (Wired)
• Legislation like California’s may actually create significant downsides for workers, too – companies may now be able to restrict gig workers from earning money on a different platform, and they may also take more control of interaction with customers. Lyft, for example, has already told drivers it might restrict their time shifts and locations. (Harvard Business Review)
• California’s law isn’t the only threat to the gig economy’s traditional way of operating. Elizabeth Warren, who has a real shot at being the Democrats’ presidential contender in 2020, just released a labour plan that would enable gig-economy workers to unionize. (Mother Jones)
• There might be ways outside of regulation to reshape the gig economy for its workforce – some Uber drivers are pressing for better workplace protections by suing for access to company data showing how they can be mistreated and undervalued by the ride-sharing platform. (CityLab)
• According to one theory the gig economy won’t die, it will simply become more automated and gravitate to developing economies. (Richard Baldwin on the Policy Forum Podcast)
You can find Strategic Intelligence news and analysis feeds related to Employment, Justice, the United States, and hundreds of additional topics under the “Publications” tab in the Forum’s Transformation Maps.