Why politicians need to stop fearing and start loving - the “Gig” economy

 

Originally published on LinkedIn:

Recently, Hillary Clinton issued a policy address that was critical of the sharing or, as she called it, the “Gig” economy.  NYC Mayor Bill De Blasio introduced a plan, which he quickly retracted under pressure from constituent ride sharing users, to greatly limit Uber and Lyft services.  City councils around the country are putting up bureaucratic walls and limitations to stop ride sharing (Uber and Lyft), short-term rentals (Homeway and AirBnB) and others services that are just starting to emerge.  I would encourage them (and all politicians) to stop fighting and start embracing the “Gig” economy. 

  • First of all it could become a huge voting bloc. A recent survey says 53 million Americans are freelancing.  This makes them a potential voting bloc that eclipses even many other large blocs, such as seniors (41.1 million Americans) and unionized employees (14.5 million).  In fact, they account for 34% of the work force --and are projected to grow nearly 50 million fulltime freelancers by the year 2020.    That is just the provider side, consumers love these services and, as Mayor De Blasio quickly found out, you don’t want to be seen as taking them away from the millions of Americans who enjoy and rely on them.

 

  • Many of America’s most vibrant, successful and innovative industries are based around the Gig economy and many of them have been around for a very long time. Certain sectors of tech, video, movie production and even some construction fields are completely based around it and have been for many years.  Even film and actor labor unions embrace the “Gig” economy as being better off for the workers when compared with the old system of being tied into a single studio. 

 

  • Millennials are likely to have a new job every 4.4 years, which means that they will have 15-20 different jobs over the course of their career. However, the pay-check to pension factory-worker-for-life mindset is still held by many politicians and strongly reflected in our labor laws, employer-attached benefits and workplace policies. 

 

  • The “Gig” economy helps change lives. All one has to do is chat with their Uber driver.  Virtually every time you will hear a story about how the Gig economy is helping people better their lives.   From mothers I have met who drive while their kids are at school, to people who drive while attending classes, to a particularly moving testimonial of the man I recently met who helped American Forces fight the Taliban in Afghanistan, Uber drivers are a prime example of the value of the Gig economy.   

 

What should policymakers do?

  • Improve the portability of 401Ks, health insurance, and other benefits. Attaching these benefits exclusively to one employer is holding workers back from exercising entrepreneurial freedom, including participating in the Gig economy.   Creating a hybrid system of plug-and-play benefits would help all workers.

 

  • Change the tax code to make freelancing more attractive. Perhaps a modest second income tax credit would be a good incentive.  Secondary income can be vital to freeing up the resources necessary for innovation or to help individuals either make ends meet or (hopefully) even get ahead.  I’d propose a modest $10,000 credit for the first $10,000 of freelance income to get people started on their new path to prosperity.    (of note at the national level, freelancing adds $715 billion to the US economy.) 

 

  • Some have proposed a new classification for people in the sharing economy that aren’t employees but may benefit from some employment policies like payroll withholdings, unemployment insurance, etc. Personally, I would be more inclined to move all employees to a system where work  force regulations aren’t employer-based at all but can easily be managed in a plug-and-play fashion.  This means that employees are not dependent on one employer to manage these items for them, which allows employees to easily go from full-time employment, to freelancing, to being self-employed, and back as desired.  It has the added benefit of not creating a false market segmentation of workers that work in the technology-facilitated gig economy and workers who freelance elsewhere-which would result in a bureaucratic hell.         

 

The Gig Economy isn’t creating massive public policy problems.  First and foremost, government policy makers should get out of the way and let the Gig Economy flourish.  Whether this is allowing ride-sharing or letting gig economy innovators innovate, they need the freedom to do so.  If it proves essential, they should develop smart light-touch regulation but only if it is essential and doesn’t create barriers to entry and innovation in these new markets.  

Not only is it not creating problems – it is helping solve them.  The Gig Economy is helping answer many of the hardest challenges we have in society -- unemployment, affordable housing and giving many new-found access to the American dream.

Chaz Cirame is the Founder and Principal of Cc: External Affairs, Inc.  He is also an avid consumer of the "Gig" Economy.