Hillary Clinton takes aim at the sharing economy

In a speech today laying out her economic policies, the Democratic presidential front runner said that while the 'gig economy' was good for innovation, it was also 'raising hard questions.'

Seth Wenig/AP
Democratic presidential hopeful Hillary Rodham Clinton speaks at a campaign event in New York, Monday.

Hillary Clinton is taking on the sharing economy.

Laying out her economic policies in a speech today at The New School in Manhattan, the Democratic frontrunner for president called out what she called the “gig economy” – the contractor-based business model popularized by companies like ride-sharing giant Uber – for repressing middle class wages and stifling national economic growth.

“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,” she said, according to MarketWatch. “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.”

Mrs. Clinton plans to make raising middle class income a central feature of her campaign. She added in her speech that she plans to “crack down on bosses who exploit employees by misclassifying them as contractors or even steal their wages.” She cited the need for paid family leave, earned sick days, fair pay, and fair scheduling – all workplace protections that contractors don’t receive.

While she didn’t mention Uber by name – or it’s national ride-share competitor, Lyft – the two companies are at heart of recent controversies over contractor-based business models, along with the home-sharing business Airbnb. 

The sharing economy has exploded in recent years, now claiming some 10,000 different companies, The Monitor's Gloria Goodale reported earlier this year.

Jonathan Askin, a professor at Brooklyn Law School, told The Monitor in an email then that “it’s ironic that we call the new concept the ‘sharing economy,’ when in fact we are creating the purest form of ferocious, self-empowering capitalism.”

“This doesn’t sound like the ‘sharing economy,’ it sounds like the ‘selfish’ economy,” he added.

Opponents of the sharing economy argue that by only offering contractor positions that generally lack the benefits, advancement opportunities, and job security of full-time positions, they are preventing the country from building sustainable wage growth. As a consequence, those contractors can’t rely on future income to make major investments like buying a home or putting a child through college. They are also more vulnerable to crippling economic events like a sudden, serious illness or injury. 

A 2014 report from Edelman Berland, an independent research firm, for the Freelancers Union found that more than 1 in 3 American workers (an estimated 53 million people) are freelancers.

The number of lower-wage jobs are also increasing as the amount of mid- and higher-wage jobs decreases, according to the National Employment Law Project. Lower wage jobs have increased by 2.3 million since the Recession, according NELP data, while there are 1.2 million fewer mid- and higher-wage jobs.

Uber is in the midst of challenging a class-action lawsuit in the Northern California district court seeking to label all of its contractors full-time employees. The ride-share company is countering that most of its drivers prefer the independence of working as independent contractors.

“We have driver after driver explaining their unique circumstances, why freedom and autonomy are so important to them in their own words, in sworn testimony,” said Uber’s lawyer, Ted Boutrous, Jr., in an interview with TechCrunch.

“All of that goes right to the heart of our argument why this can’t be a class,” he added. “For there to be a class everyone must be similarly situated, they must have suffered the same injuries, allegedly. That is the opposite of what we have here.”

Indeed Paul Osterman, a professor at the MIT Sloan School of Management, wrote in an email to CNBC that if the jobs “meet people’s needs for flexible employment and provide learning real skills and pay decent wages, then they are certainly a positive for the economy.”

However, Dr. Osterman added, if the jobs “result from misclassification to avoid paying benefits or employment taxes, then they are an emerging problem and a source of worsening job quality.”

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