New Labor Laws for Gig Economy? Sure, If More Wealth Disparity Is the Goal

Greg Ip, a writer for the Wall Street Journal, is wrong when he writes about Uber’s legal problems: “The controversy highlights a little-appreciated gap in the U.S. economy: its labor laws and institutions haven’t kept up with how the needs of businesses and workers have changed. In the U.S., you are either an employee, or you aren’t. What the U.S. needs, a new study says, is a new category for gig-economy jobs that blends elements of both.” See here. For now, these rebuttal points: The latest take-down of unions in the American economy paves the way to emerging state legislation that allows Uber and similar firms to structure work as something other than employment. Second, the Uber trend exacerbates growing wealth inequality. Uber brags that its drivers make $20 per hour—but they fail to factor in the cost of owning, maintaining, and insuring a vehicle. And they don’t factor in the 100% cost of the Social Security tax that is borne by their contract drivers (instead of a 50%-50% split on the Social Security contribution). Third, Uber’s market capitalization is now over $50 billion—a figure that signals that shareholders and lenders expect to extract enormous profits from this arrangement. If the employment relationship is so overtaxed that employers want to shed jobs for this reason (a valid complaint!), why not tax jobs less and other things more—for example, consumption of goods and services above and beyond the basics of life (e.g., groceries)?