The Future of the Sharing Economy and Gig Workforce

There is a significant debate underway in many nations as to whether or not people working as Uber drivers, Instacart shoppers and similar agents are actually employees, rather than contract workers. Legislative reform has already been attempted on a large scale in this regard. In some cases, class action lawsuits have been filed by the contract workers. If governments rule that such workers are employees (rather than independent contract workers), it would have a massive effect on the business models of sharing economy firms. Such regulations may evolve in different ways in various regions of the world. The EU and UK may be more likely to force firms to consider such workers as actual employees, at least to some extent.

The U.S. is less likely to rush into such changes after a 2020 proposition approved by voters in the state of California took much of the power out of the state legislature’s efforts to require most contract workers to become recognized as employees. However, the proposition did provide for better protections for contract workers, including medical assistance for accidents that occur while on duty, and minimum compensation requirements. Proposition 22 was challenged in 2021 when a superior court judge in California ruled it was “unenforceable.” However, in March 2023, a California appeals court ruled that the proposition should remain state law. Legal wrangling continues, as The Service Employees International Union lawsuit that challenges the proposition continues as of early 2024.

Meanwhile, the question of liability for accidents and other losses will continue to evolve. Who is responsible if a ride-sharing service car has an accident? Who is responsible if a contract personal service person commits a crime once in the home? The best answer may be for high levels of insurance to be offered by the sharing platforms, on top of individual policies maintained by owners of cars, homes and other equipment owned by people who are selling gig or sharing services. One of the most widely discussed liability problems arose when a tree branch (that was holding up a yard swing) fell on the head of a home-sharing guest, killing the guest. Who is responsible—the homeowner? The home-booking service? Both?

Additionally, governments at the state, province and city level will become more involved in regulating sharing and gig services. Many cities worldwide have already begun regulating ride-sharing companies such as Uber and Didi. What types of background checks should drivers undergo? How will such services be allowed to compete with highly regulated taxi services? Home and room-rental sharing platforms are raising massive questions in city governments. Should Airbnb renters pay the same hotel occupancy taxes that guests at Marriott or Hilton pay? Should homes that are rented to travelers have the same safety features required of hotels? What about people who are hired to provide minor home repairs through gig platforms? Should they have a plumber’s license before they can fix a leaky faucet? The regulatory debate has only begun. Eventually, model regulation may evolve that will be widely adapted by many states or cities at once.

Meanwhile, several vital factors will continue to drive the sharing and gig economy forward:

1) The rapid growth of this sector has been enabled to a large extent by the global adoption of the smartphone. The number of consumers worldwide who own smartphones will continue to expand rapidly. At the same time, wireless networks will become much faster reliable when 5G networks are perfected.

2) The investment community will remain interested in the sharing economy, and growth capital will remain readily available.

3) Sharing economy platforms will be easier and less expensive to launch thanks to the growing capabilities of cloud computing and related, open-source or low-cost software applications.

4) The population in many of the world’s largest and most developed economies is aging rapidly, from China to the US and Canada, to Europe, Japan and Southeast Asia. Surveys show that a very significant portion of people turning 65 years of age want to continue to work and earn money. The flexible, part-time nature of gig economy work is ideally suited for many older workers.

5) There is no end the possible ways in which sharing economy entrepreneurs can invent new ways to solve distribution challenges, improve consumer satisfaction and convenience, and increase cost-efficiencies via new services.

6) Over the long-term, significant portion of transportation needs will be served by on-demand “mobility services” rather than by traditional, personal vehicle ownership. This is potentially a massive, global market that will be boosted by the development of autonomous cars.

7) The potential of self-driving cars to reduce costs by replacing drivers in the car-sharing sector is considerable.

8) Specialized sharing startups will offer innovative alternatives to leading platforms. Some will be focused on a more exclusive or luxurious experience. For example, ridesharing firm Alto offers company-owned and maintained Buick SUVs, featuring music and climate control preferences, free bottles of water and umbrellas. Alto’s drivers are company employees who drive Alto-owned vehicles. They are expected to meet consistent and exacting standards, and the vehicles are large, spotlessly clean and equipped with multiple types of cords where customers may recharge their phones and tablets while underway. Fees per trip are higher than rides on basic cars offered by Uber and Lyft. Riders are encouraged to purchase monthly or yearly memberships.

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