The “New” Sharing Economy – Not So Fast…

Do you use Uber, Lyft, or AirBnB yet? If so congratulations, you are part of the latest trend called the sharing economy sometimes referred to as the gig economy. These companies and others like it have modified the traditional relationship between employers and employees. Most folks already have familiarity with using outside contractors, temps, and even telecommuting, but the new sharing economy has added a twist! Is this the answer to employee engagement, is this the answer to bridging the gender divide? Let’s take a deeper look.

What does the traditional employer/employee relationship look like? First of all, although there may be a job offer in writing, there is a no written employment contract. Because there is no written contract, employees are considered to work “at will” which means an employee can either be fired or quit at any time and for any reason as long as it’s not illegal. Additionally, a full-time commitment is assumed unless another option is negotiated.

The traditional workplace has always asked that employees be physically present in the workplace. As times have progressed, telecommuting has removed the requirement for physical presence but of course there are other checks that allow the employee to be connected to the workplace through technology. The federal government piloted telecommuting in 1990 as a cost-cutting initiative that could potentially produce savings on facilities and transportations costs as well as sick leave and as you can guess they found that telecommuting is a successful policy.

The traditional workplace is also very much characterized by an organizational hierarchy. The hierarchy is from top to bottom with bosses, directors, commissioners, presidents, or owners at the top and line workers on the bottom. In the traditional workplace, length of tenure may define seniority. Your benefits and your worker protections will be the responsibility of your employer along with the nature of the work that is performed.

Before discussing the sharing/gig economy let’s acknowledge the other non-employee relationships that really aren’t new trends. These relationships are those for contractors, temps, and freelancers. None of these relationships are truly like the traditional ones because none of these categories of workers are considered employees. Non-employees, as they are called, are covered by some of the same protections as employees but for the most part their salary is contractually agreed upon and they receive no benefits, such as that for health insurance unless it’s specifically bargained for. In this type of worker relationship the worker is actually not the company’s agent.

In the new sharing economy just about anyone with a requested resource can offer it up in the marketplace for a negotiated price. Because of this characteristic, scholars are asking how the government can get its arms around this “new” economy. In the gig economy, non-employees are relied on to perform the main work of the business despite the fact that the employer has no traditional payroll or human resources and can avoid legal responsibility to its workers by providing minimal protections. There is no worker’s comp, no insurance, no leave protections, and no retirement benefits. Although the businesses require workers strictly follow the company rules there is no traditional legal relationship. Contractors differ in that they do not perform the main work but only provide a part of what the organization needs.

What’s in it for the gig workers? The Bureau of Labor Statistics says that one of the obvious benefits of the gig economy is job flexibility. Workers can work as much or as little as they like and whenever they like. The disadvantages include uncertainty, inconsistency, and lack of benefits.  Despite the lack of various benefits one possible advantage for the gig worker in the new sharing economy is you don’t have to be an expert negotiator of the price of your service but again, the tradeoff is an acceptance of company rules for participation.

Governments are attempting to regulate the new economy but research in the Harvard Business Review points out that regulation is the enemy of innovative growth especially if it has provable upside economic potential. So then, how can governments get in on this? Do governments have a service or goods to be offered or can they get cost-savings from a ride sharing service or a cleaning service? Can governments let go of their safety and other standard protections in order to be a part of the new wave of innovation or is it simply too risky? This question remains unanswered for now.

Yolanda Smith is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here.