The Biden Administration is considering new rules that, if enacted, would force many workers currently considered “gig” or independent, into classification as employees. If this comes to pass, it will significantly impact many companies. While the news focuses on the effect on large companies of the sharing economy, small businesses around the nation will also be negatively impacted. And so will the services you have probably come to rely on.
Certainly, there has been a tremendous concern in our industry regarding the protection of both these workers and taxpayers from uninsured occupational injuries. But there are better solutions for that issue than what is being proposed. Mandatory injury funds, like New York’s Black Car Fund, could be instituted for gig workers, with a very small fee appended to whatever service they provide covering the cost of the insurance. That would alleviate exposure concerns without essentially gutting the system that provides the service.
The government’s proposal, however, is onerous and risks doing just that.
Let’s take a look at what the gig economy has done, shall we?
First, technology has enabled a true capitalistic “free market,” where people who have a need for a service can be placed in direct contact with those who have the capacity to provide it. It also provides a monitoring or rating service that enables competition and usually assures good service. For a good example, we need to look no further than comparing ride-sharing services with traditional airport taxi cabs.
Today, a highly rated rideshare driver is likely to help you load your luggage in the trunk, offer you a beverage, and inquire if your phone needs charging. The car will be clean, and occasionally, reading material will be available. A traditional taxi driver, however, looks over his shoulder, presses a button and the trunk magically opens, while you realize that “the luggage ain’t gonna load itself.” There are no other services offered, and you’ll be lucky if there is even any conversation between the two of you. To be fair, the few traditional cab rides I’ve experienced since the creation of Uber and Lyft have shown improvement. The cabs are generally cleaner, which means I don’t have to sit in someone else’s vomit. Also, the credit card terminals in cabs now miraculously work, whereas before they were always broken, and you had to pay cash. There is no doubt the competitive environment brought forth by the sharing economy has influenced the stodgier, regulated world of more traditional competitors.
The forced reclassification of gig workers will result in a significant reduction of services available from these companies. Yes, the occupational protection issue would be resolved, but the reality is that far fewer workers will be engaged in these types of occupations. There are currently an estimated 1.7 million rideshare drivers in the United States. That is the reason you can place a ride request virtually anywhere these days and know that Rhoshandiatellyneshiaunneveshenk, driving a silver Toyota Camry with license plate XYZ 123, will be arriving at your location in 3 minutes to pick you up. And she’ll probably have water and a charging cable available for you. If the company is forced to classify Rhoshandiatellyneshiaunneveshenk, who may just do this part-time and likes the flexibility it affords, as an employee there will be far fewer of her in that role available to serve your needs.
Of course, uncovered workplace injuries are not the primary concern of the federal government. More likely their focus is centered on the payroll taxes that are lost in the use of independent contractors. On that front, perhaps they should be more concerned with how they will repair gas-tax-supported roads after everyone is forced into electric vehicles. No worries. I’m sure they’ll think of something.
From the perspective of occupational risk protection, there are much better solutions available. Surely states could mandate, and insurance companies could develop, real-time “on the fly” coverage for gig workers who go on and off the clock throughout the day. After all, that is why God gave us Actuaries. Give them a calculator and let them do their thing.
Some carriers are already offering that coverage, but its purchase is voluntary. Better put those actuaries in touch with the regulators, and God forbid, legislators. That is where this particular issue will be resolved. Unless, of course, the feds step in with their one size fits all solution, which protects entire industries by decimating their existence.
At least those who pine for the return of long cab lines at the airport may be happy with the result.