Report

Implications for Business

There are a few major implications for the on-demand marketplace, both those companies that are launching — or have launched — services, and those consumers and businesses that are becoming reliant on the convenience of on demand.

  • The increased heat on on-demand displacers will lead to more defections of the smaller players from that sector, like Homejoy, or those small players will convert to some sort of employment option. The larger players may be making enough money to deal with the legal issues, but small players simply can’t.
  • Many are skeptical of a third category of worker being created. However, as a long-time soloist freelancer, I believe this sort of reclassification is long overdue, and as Senator Warner pointed out, it’s great being a freelancer until you need a safety net, and then when you do, you’re out of luck. Also, a legislative solution is a better way to define policy like this than a judicial one, and politicians and on-demand displacers might combine to push this forward. And if so, a freelancer/’independent contractor’ working for Uber or the like — at least those that are not receiving full-time employment benefits from other companies — should be considered a third class of worker. Note that this might include part-time workers without benefits working in retail, food service, and other service industries.
  • Other sectors of the on-demand economy will not be pulled into the contentious debate regarding on-demand displacers, except by association. But that might make raising capital harder, nonetheless.

The implications for business leaders are complex. While a new service may come to your town and offer lower cost office cleaning or bicycle delivery service, it’s worthwhile to determine the impacts on the workers and the community by on-demand displacers.

On the pro side, they can be a force to break entrenched interests and cartel behaviors, like taxi owners and municipal regulatory agencies that suppress competition for self-serving reasons.

On the con side, displacers may seek to simply shunt most costs and risks involved with performing some job onto the individual worker, using the legal incantation of their supposed ‘contractor’ status. While that may lead to a reduction of costs to the end customer, it disguises the hidden costs, like industrial pollution does.

When corporations can forget the externalities of their operations — like dumping toxic waste into public waterways — they may opt to do so, and leave the bill for the larger economy to pay. As a result, Walmart and MacDonalds can keep their workers’ income below the poverty line, and leave it to the government to provide food stamps and other benefits, and Uber is playing a similar tune, just in a different key.

Imagine that your business has decided that working towards sustainable operations is good policy, and worth the additional costs that may be involved, if any. A similar analysis of across-the-supply-chain people operations will likely lead to the same conclusion: it’s in the best interests of the business for people operations to be sustainable, and that should extend down the supply chain. So, it may well be that businesses in the near future will stop working with on-demand displacers, just as they don’t work with companies that pollute.

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