From the Foundation for Economic Education, Timothy Doescher says that a key component of the gig economy is classifying gig workers as independent contractors. Timothy writes:
Gig workers are self-employed “independent contractors.” Legally, they work for themselves.
This status is beneficial to workers because it allows them to have flexible hours and to be their own boss. They have the ability to find work using multiple mobile applications, or apps; a driver can switch between using Uber and Lyft depending on which offers the better fare.
The arrangement also benefits the gig companies such as Uber and Lyft because they can focus on producing good software without managing an enormous workforce. Drivers find clients through their apps, but pick where and when to drive.
Special interest groups and lawmakers now want to reclassify these independent contractors as employees. They argue that drivers should be categorized as employees, which means the gig companies would have to pay their expenses, overtime rates, and the minimum wage, as well as open the door to unionization.
This would be devastating to gig companies. Their entire business model is based on a flexible workforce. It also would be devastating to riders because their fares would skyrocket.
Drivers pick clients through Uber and Lyft precisely because they control when and where they work. If gig businesses are responsible for expenses and overtime, they need to control their employees’ schedules to ensure they don’t lose money. That means telling drivers when and where to work, instead of letting the drivers choose. Goodbye, flexibility.
In 2015, the number of active Uber drivers grew from 160,000 to 400,000. By mid-2016, that figure had grown to over 650,000.
That would be tragic. Because, according to a new study by James Sherk, a labor economist at The Heritage Foundation, we’re seeing that drivers and riders alike are satisfied with how things are going—and the numbers prove it.
Read the full story at Turning Independent Contractors into Employees Would Kill the Gig Economy | Foundation for Economic Education