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VIDEO: Gig Economy Is Here to Stay

Our friends at the Federalist Society are back with a new video on the gig economy, “Here to Stay: The Modern World of Hospitality,” examining how short-term housing rentals, like those found on Airbnb, should be treated by regulators. 

Cato Institute expert Matthew Feeney gets a featured role here, arguing that short-term rentals provide valuable benefits, both to property owners and travelers, and should be lightly regulated. Matt points out that not only do platforms like Airbnb solve many of the concerns users have about safety and reliability (that government regulation might otherwise address), but many of their harshest critics are actually their incumbent rivals—established hotel companies.

The video focuses on people as operators and consumers, but says less about how gig economy regulation can or should affect us as employees. Fortunately my colleague Iain Murray has written an excellent study, “Punching the Clock on a Smartphone App?: The Changing Nature of Work in America and Regulatory Barriers to Success,” covering that angle. As many observers have remarked, one of the most compelling aspects of the gig economy has actually been erasing the distinction between boss and employee, as people become de facto independent contractors or small business owners by piggybacking on the platform infrastructure of new companies. Unfortunately, federal and state labor regulations have not been so seamlessly evolving:

The Labor Department’s David Weil argues that people like you and me should not be able to negotiate our own labor contracts. We need smart people such as, well, him. From the top down, he seeks to “change private behavior,” and institute a single set of planned principles, set by government. This achievement would be as impressive as it is unrealistic.

People, on their own initiative, have instead been working from the bottom up. “Sharing economy” firms such as Uber, Lyft, Taskrabbit, and others have been attracting willing workers in droves, even though few of the workers are formal employees. A major  reason is that their arrangements have low transaction costs. Willing workers should be allowed to work, even if they don’t match David Weil’s preferred high-transaction cost methods. 

For those looking to get into the legal and economic theory behind these distinctions, see Iain and our former colleague Ryan Khurana’s Web Memo from last year, “Platform Economy Bibliography: A Study Guide for a Rapidly Developing Field.”