Wednesday, September 9, 2015

The Uber Economy

While you were ordering your music right from your Ipod, your books right from your Kindle and almost every other item you need for your home from Amazon, a new economy was spring up around you: the Sharing Economy.  The Sharing Economy is led by smartphone apps Uber, Lyft and AirBnB.

AirBnB is the most established here in the Fox Valley, as people have been renting out rooms in their homes and apartments--or their entire houses and units--to visitors from out of town.  The appeal of AirBnB is that prices are lower or the accomodations are more personalized to what they need while they are in town.  Uber and Lyft are on-demand ride services.  You enter where you are and where you need to go and the app finds a registered driver in the area who would be willing to pick you up.  Pricing is often based on time of day and demand--meaning it could be cheaper than calling a cab--and certainly more convenient than riding the bus.

The sharing economy is coming under attack however--not from the forces of the "old economy" like hotel chains or taxi companies who see it as a threat to their profits--but rather from governments, who see it as a threat to their sources of income.  In the case of AirBnB, those that rent out their rooms or houses to tourists and visitors aren't paying any hotel room taxes.  Hotels and motels are easy to spot and auditing their books and receipts are no big deal.  But when Larry in the 400-block of Main Street allows Harry from Chicago to crash on his couch for three nights and $75, it's far more difficult for City Hall to know about that.

When it comes to Uber, cities miss out on licensing fees for taxi drivers and inspection fees for vehicles used as taxis.  Here again, Larry may just pick up two or three people a week in one of his two cars.  He doesn't track his mileage and for one trip he may charge $10--while the same route a couple of days later might be $25--paid in cash both times.

The umbrella companies themselves are running afoul of bigger governmental entities as well.  Uber is being sued in several states for categorizing all of the people who drive for them as "independent contractors".  That means they do not have to provide any benefits--especially health insurance--to all of those drivers.  That has state and federal officials upset, because Uber basically circumvents the Affordable Care Act by being a huge operation--yet having almost no "employees".  This is going to lead to some interesting legal arguments in the near future as to what it means to be an "employee".  Especially when you consider that Uber and Lyft drivers pay the company for the information coming in from the app--while not having any assigned work hours and setting their own pay rates.

It seems that the Sharing Economy is popular with everyone but those who think they aren't getting their "fair share".

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