Uber, Lyft, The Gig Economy, The Sharing Economy, and Work at Less Than Minimum Wage – II

Where are we now with all five of these things?

First, time out to address Uber’s recent self-driving pedestrian fatality.  It is no shock that this sort of thing can happen with the current state of driverless technology.  Three things are almost certain to take place:  the developers will research and determine exactly what happened, they will explain it in all the detail we want, and they will solve the problem.  We should expect no long-term slowdown.      

Now, on to some general points.

First, the gig economy, which refers to people getting one-off work assignments, is not the same as the sharing economy, in which provision of resources, such as bedrooms, cars, and power tools, is primary.   

Second, online payment and customer engagement does not make the products offered by Uber, Lyft, and AirBnB distinct.  They are de facto taxi and lodging providers and should be subject to the same regulation as others.

Third, because of low rates of pay, which can drop even more when pertinent expenses are included, gigs are, as Steve Tobak of Fox Business put it, “no substitute for a career.”    

Fourth, poorly accounted-for expenses, especially involving private vehicles, often make either gig or sharing opportunities less profitable or even unprofitable than they may seem.   

Fifth, even though most gigs and sharing are economically inferior, their effect in partially repealing the minimum wage is a good thing, and it is wrong to object to them on grounds that they should pay more, which, given that we are still over 16 million jobs short as well as having 5.2 million people working part-time and wanting but not finding full-time positions, is only another way of saying “let them eat cake.”

Sixth, Uber’s business model is clearly dependent not only on its drivers not comprehending the true impact of their car expenses but on skirting or avoiding normal taxi regulations.  Its only long-term hope for survival, except for a top-to-bottom management and business-practices makeover, is through driverless technology, which, as above last week, also took a hit.

So what do we need to know?

Customers will do well to continue, as their needs and wishes dictate, using gig and sharing services.  There is nothing immoral about hiring people or their possessions for low rates.

Investors should stay clear of Uber, which could crash as a company and a stock at any time.  If and when they have initial public offerings, Lyft and AirBnB may offer some opportunity, depending on their environments at the time. 

Workers should look at the full weighted costs of participating in gig or sharing opportunities before accepting them, and continue if they think, given all hidden expenses, they are worthwhile.  

AirBnB’s management would do well to work out official agreements with their largest locations, and otherwise adhere to laws as they are, otherwise their company will have no future.  Lyft and Uber managers should continue to emphasize self-driving technology, and work to consistently stay within legal and ethical boundaries.  And, maybe more than anything else, anyone working for these three companies should maintain current résumés.