If you ever needed proof that the “on-demand” or “sharing” economy has really become a thing, and that people also really have no idea what to do about it, consider the big economic policy speech Hillary Clinton gave on Monday.
“Many Americans are making extra money renting out a spare room, designing websites, selling products they design themselves at home, or even driving their own car,” Clinton said. “This ‘on-demand’ or so-called ‘gig economy’ is creating exciting opportunities and unleashing innovation but it’s also raising hard questions about workplace protections and what a good job will look like in the future.” Her stance on that? Skeptical at best. “I’ll crack down on bosses who exploit employees by misclassifying them as contractors or even steal their wages,” Clinton said.
While Uber and Lyft are the best-known players among new 1099 businesses due to the huge numbers of drivers they sign up, the U.S. has been moving steadily toward more independent contractors since the early 2000s. Between 2006 and 2010, the ranks of America’s so-called contingent workforce—which includes temporary part-time workers as well as independent contractors—grew from 35.3 percent of the employed to 40.4 percent, according to data from the U.S. Government Accountability Office. Over at the New York Times, Noam Scheiber argues that the shift began even earlier, “innocently enough back in the late 1970s.”
Today, the Uberization of the economy is arguably less innocent. Uber and several companies like it are facing lawsuits over their classification of workers as independent contractors. Putting workers on the contractor side of that line has meant that they no longer have steady benefits or the labor protections afforded to traditional employees. It also eliminates many of the labor costs employers normally have to bear, making 1099 businesses much leaner to operate and scale.
On the other hand, those who chose to work in the on-demand sector benefit from flexible schedules and—at least in theory—greater control over their jobs. That’s partly why it’s been tough for economists to tell so far whether all these 1099 gigs will be good or bad for the economy in the long run. Independent contractors aren’t new, but as investors throw millions and billions of dollars at platforms that run on them, and those platforms grow ever bigger, they’ve been pushed suddenly into the spotlight. So it makes sense that politicians, Clinton included, want to have a take on them. But in reality, it’s probably still too soon to know whether the on-demand economy needs a crackdown, or just a bit more scrutiny.