1099 as Antitrust?

Published September 29th, 2015 -  - 09.29.155

There’s an interesting post up on interfluidity arguing that independent contractor status should be awarded selectively, in a manner designed to incentivize competition in the gig economy.  The basic idea is that there is a substantial risk that gig economy firms like Uber will become monopolists because of a particular kind of cycle, or “network effect.”  The cycle works like this: “[c]ustomers flock to the platform that has the densest, richest set of offerings;” when workers decide which platform to use, they’ll “prefer to work for the platform that has the most customers;” so “once one platform pulls ahead, a cycle may kick in . . . leading to a single dominant platform.”  To disrupt this cycle of monopolization, interfluidity proposes that we find a way to incentivize gig economy firms to require their workers to “multihome” – to work for multiple platforms.  The incentive he proposes is to award independent contractor status to workers who multihome in a “substantive, not mere token way.”

As a matter of competition policy, this approach may make good sense.  Given the resistance that Uber has shown to employee status, the firm might be willing to do a lot to ensure its drivers remain independent contractors.  But, as the interfluidity post itself recognizes, the approach – even if it works – will benefit consumers a lot more (or at least a lot more immediately) than it would benefit workers.  As the post puts it, “[t]his suggestion basically sells out benefits and protections for workers in order to secure competition on behalf of customers.”  That seems largely correct.  If an Uber driver loses the chance to claim employee status simply because she also drives for Lyft, that would be a very major impediment to drivers ever being able to claim protection of the vast swath of labor and employment laws.

To address this problem with the proposal, interfluidity suggests (via this link) that we offer a universal basic income (also known as an unconditional basic income).  That is, in exchange for giving up the benefits of being an employee (including the right to collectively bargain), workers would gain access to a guaranteed minimum income.  This is an important move in the right direction.  If, that is, workers like Uber drivers are going to be classified as independent contractors (and that’s a big if), we need to shift policy in the direction of supplying basic goods outside of the employment relationship.  But, whatever the merits of a basic income (and there are many), I see two problems with relying on it to compensate for the “sell[ing] out” of workers that the proposal involves.  One, it’s not on the political horizon.  The risk, then, is that we end up adopting the pro-competition policy and don’t get the worker-protective policy to go along with it.  Two, and more important, being an employee under current law is important for reasons that go beyond the right to earn a minimum income.  Being an employee entitles workers to safety and health guarantees, workers compensation, unemployment insurance, anti-discrimination protections, and the right to form unions and collectively bargain (which can translate into a host of additional protections and benefits, including a voice at work and protection against unjust discharge).  Interfluidity is right that a basic income can – if set sufficiently high enough – increase worker bargaining power by, e.g., raising the reservation wage. And this bargaining power can, in turn, be translated into lots of other things.  But the bargaining power that would flow from a basic income is unlikely to be a sufficient substitute for all the legal protections that come from being an employee under current law – especially given the dramatic political constraints on what the level of a basic income conceivable could be.

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