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‘Sharing economy’ convenience comes at a price

New York Teacher
'Sharing economy' convenience comes at a price
Uber Drivers Network NYC

Drivers unhappy with Uber wage-related policy changes protest outside the company's office in Manhattan last fall. 

Need a ride? Uber will send you a driver. A maid? Try Homejoy. Somewhere to stay for the night? Airbnb has you covered. By connecting suppliers with consumers via apps and online marketplaces, the companies of the new “sharing economy” specialize in getting you what you need when you need it.

But the convenience they provide comes at a cost for workers: As independent contractors rather than employees, workers in the sharing economy have no guarantee that they will make even a minimal living.

For example, although cleaners on Homejoy charge customers $25 per hour (plus a $5 cleaning-supply charge) and workers on TaskRabbit set their own hourly rates to complete a wide array of odd jobs, those amounts don’t cover travel time, the companies’ cut, or any other overhead costs, and workers still need to string together enough appointments to keep themselves afloat.

Nor do these workers receive any of the benefits provided as part of traditional employment arrangements: Taxes are not withheld from their earnings, and they don’t get Workers’ Compensation or unemployment insurance, retirement benefits, paid vacation or paid sick leave.

The struggle to cobble together enough hours to make ends meet has led some workers to construct dangerously grueling schedules. Take Jennifer Guidry, a sharing economy worker who was featured in The New York Times in August. A Navy veteran and former accountant, Guidry now earns her living as a driver for Uber, Sidecar and Lyft, and by gardening and assembling furniture for clients who find her on TaskRabbit.

Guidry’s goal, she told The Times, is to earn an average of $25 per hour, but even working a marathon 19-hour stint — from 10 a.m. Saturday morning to 5 a.m. Sunday morning — she earned just $263, a little under $14 per hour.

These poor conditions don’t just hurt workers in the sharing economy. They also threaten to drive down standards for workers in comparable jobs in the traditional economy.

Already, according to economist Dean Baker, the co-director of the Center for Economic and Policy Research, Uber and Lyft have taken a large portion of the taxi business, depressing wages for drivers of traditional cabs.

The problem isn’t the sharing economy itself, Baker said. It’s the lack of protections for workers in the sector and the lack of other regulations that we often take for granted.

“Like other innovations, the sharing economy offers great potential benefits for both consumers and service providers,” Baker said. “But as has been the case with earlier innovations, it is necessary to adopt an appropriate regulatory structure.”

But better regulation and worker protections are just part of the solution. Workers also need to unionize, said Kate Bronfenbrenner, the director of labor education research at the Cornell University School of Industrial and Labor Relations.

“The only way to make it so that the sharing economy is not a bad economy is to make sure that it’s not a cheap alternative filled with bad jobs,” she said.

But will the traditional union model — typically off the table for independent contractors — work for them?

Bronfenbrenner thinks that collective bargaining should remain these workers’ goal. That’s because, she explained, many so-called “independent contractors” aren’t really independent at all.

“There are so many workers who are called independent contractors, but what flexibility do they have to determine their pay?” she asked.

Uber is a case in point: The company sets the fares that drivers charge. It’s no surprise, then, that drivers have filed a class action arguing that they are misclassified as independent contractors. Over the summer, a group in southern California formed the California App-based Drivers Association in conjunction with the Teamsters. In October, Uber drivers held the sharing economy’s first strike.

But that doesn’t mean traditional unions will be attainable for other workers in the sharing economy, cautions Elaine Bernard, the executive director of Harvard Law School’s Labor and Worklife Program. Cooperatives, worker centers and other forms of worker organizations should also be on the table, she said.

“Uber would say they’re a new business model,” said Bernard. “In the same way, we need new models of worker collective organizing that are about building workers’ power, not simply signing contracts.”