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New technology meets old labor laws in the gig economy

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On December 9, the Brookings Institution’s Hamilton Project hosted a series of panel discussions in an event titled “Modernizing labor laws in the online gig economy”.  The two panels focused on the impact of the gig economy on its workers as well as a proposal for modifying labor laws to accommodate a new category of workers. The discussion was framed around the question of how to protect workers who use gig economy platforms while simultaneously reaping benefits of innovation. Panelists each offered their own suggestions for how to balance these goals, but most could agree that changes to labor laws should not be rushed.  This caution reflects the constantly evolving nature of the gig economy and its workforce.

Part of the challenge with issuing a policy response is defining the scope of the gig economy, which goes by other names like the sharing economy, the 1099 economy, and the on-demand economy. Panelists Alan Krueger of Princeton University and Seth Harris of Cornell University outlined the gig economy as a triangular relationship between customers, intermediaries, and independent workers. This relationship does not fit neatly into existing labor regulations for employees or independent contractors. Gig economy workers have features of both categories, yet are not adequately protected by either set of regulations. To correct this legal ambiguity, Krueger and Harris propose the creation of a new legal category for independent workers.

Labor protections are not a new issue, but technological change has enabled workers to monetize their time and assets in new ways. Smartphones with GPS allow a driver to work for Uber, while anyone with an Internet connection can rent out a room on Airbnb. These companies may have earned added scrutiny given their rapid growth, having earned multibillion-dollar valuations after only a few years in operation. Meanwhile, the hotel and taxi industries have existed for quite some time, and they face their own challenges in complying with labor regulations. A counterargument to a new worker classification would be for better enforcement of existing labor regulations.

Another alternative source of ideas could come from the workers themselves.  Just as technology creates new business models, it can also create new ways of organizing workers and distributing needed benefits while maintaining a flexible work schedule. It is important to keep in mind the needs of workers themselves, each of whom might have different needs. When the audience was asked if they had used Uber, most hands were raised, but no hands went up when asked if anyone drove for Uber. Given the number of stakeholders, the solutions to issues at the intersection of technology and labor policy are likely to come from many different sources.

Elsie Bjarnason contributed to this post.

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