Cities are responding to this flood of new entrepreneurs and their enablers in a range of ways, few of which look at the long-term challenges of a sector that’s evolving significantly faster than traditional regulatory frameworks are equipped to deal with.
Gig-economy work attracts those who want to make some extra money on the side, those with variable-hour work needs and, increasingly, those who simply want to work for themselves. That’s a lot of people – up to 75 million workers, or roughly a third by Federal Reserve estimates. The household names are Uber, Lyft and AirBnB, but the category also covers dozens of other platforms as well as freelance workers.
The sheer number of potential business models and workers involved in the gig economy presents a challenge to city officials. In the short term, response from some cities has been nearly bi-polar.
Many recognize that the growth of gig-economy work – expanding three times faster than the American workforce as a whole – could be encouraged or expanded by reducing or more quickly processing up-front permitting, paperwork and fees. Others have reacted with narrow policies clearly designed to protect politically favored constituencies or existing businesses.
Many cities, seemingly working at cross purposes, are doing both.
And therein lies the challenge for municipal leaders: Existing regulatory frameworks never anticipated the explosive growth of the gig economy and are likely not prepared for it. At the same time, the do-something-now responses in many communities are often tailored to a specific new platform or business model in ways that can either lock in their incumbency or prove inadequate when the next generation of services comes along.
Tackling red tape in New York City and Salt Lake City
New York City undertook an initiative to make doing business less cumbersome for entrepreneurs. The Red Tape Commission was formed to gather feedback on the largest sources of frustration for local business owners. The top problems reported by business owners? Poor turnaround times for permit and license processes (nearly 45% had to wait between 6-12 months), fines and inspections, taxes, and fees.
The Red Tape Commission also suggested setting a maximum time allowance for agencies to process a permit or license request. But more can be done: Broadly reducing or eliminating these foot-in-the-door roadblocks for new gig-economy workers would help the nation’s gig-economy workers – as many as 75 million people, according to the Federal Reserve – quickly move from wanting to work to actually working, with ripple effects throughout the local and national economies.
Sometimes, it’s a matter of personnel as well as process. Former Salt Lake City Mayor Jackie Biskupski campaigned on the promise of decreasing business permit wait time, and followed through by streamlining permit processes and hiring more staff at the request of overwhelmed directors. As a result, Salt Lake City cut average business permit wait time by almost 50%. “When businesses want to invest in Salt Lake City, we don’t want to get in the way,” Biskupski said.
Taking a longer view at city hall
City leaders should do what they can to reduce paperwork, permitting and fees – simple, baseline measures to boost the local economy by allowing more people to experiment with entrepreneurship. But beyond that, staff and elected officials should look beyond the platform or app of the moment to ask themselves what a more-flexible regulatory and permitting framework looks like.
Such a framework could take many forms — sweeping, comprehensive overhaul at one extreme or, more likely, a multi-tier system that provides an easier onramp for gig-economy platforms and their workers. The “north stars” in deciding which options are right for any city come down to:
- How do we balance the need to license and tax businesses and the positive economic impact of allowing thousands of potential new entrepreneurs to flourish? As some cities and even entire states are finding out, gig-economy work is pervasive but also fragile. Big, well-intentioned policies designed to force these new platforms to treat workers more like employees can have many unintended – and income-reducing – side effects.
- How do we make “yes” the default answer on innovation? New businesses and business models, by definition, need room to experiment. As long as reasonable health and safety standards are met, these experiments should be welcome and encouraged.
- How do we keep the playing field level? With one-third or more of workers engaged in the gig economy, any regulatory or political unfairness has deep ripples across the population. Gig economy workers and the platforms they use for business should expect city regulations that maximize people’s right to earn a living without interference from incumbent competitors.
Ultimately, no single set of rules, fees and regulations is likely to fairly govern both the five-star hotel downtown and the bedroom-community homeowner who wants to rent out part of his or her house from time to time. But mayors and city council members interested in riding the gig economy’s economic wave should focus on simplifying things at the front end for these workers, while preparing frameworks for a flourishing-but-unpredictable future.
Plenty of platforms
New platforms and applications servicing the gig economy appear almost weekly. Below are some that, potentially, could have licensing or policy impacts at the local level.
HopSkipDrive – A ridesharing solution for those seeking assistance with child transport.
Zimride – Carpooling platform.
CampSpace – Allows users to find rental properties for camping.
JustPark – Matches people who need parking, with someone who can offer parking space for a single day or for extended periods.
Neighbor – This “AirBnB of space storage” allows people with extra space to rent it to others in need of storage.
Splacer – Special-event platform that includes both traditional venues and private areas.
Luxe –Enjoy the luxury of valet parking anywhere.
SharedEarth – This land sharing app enables users to offer a piece of land to someone else to grow a garden. In return the landowner receives a share of the harvested crops.
BoatSetter – Boat-rental platform.
RV Share – Recreational vehicle rental platform.
EatWith – Allows chefs to prepare menus in their homes for clients.
Care.com – A market maker for caregiver jobs including supervising children, helping seniors, watching pets, and looking after homes during vacation.
DogVacay –This app matches pet owners with potential pet sitters.
CrowdMed – One-to-many platform for seeking medical advice from a multiple sources.
Zeel – Home-massage platform.
GlamSquad – Matches beauty artists with individuals seeking a makeover or makeup services.
Your Mechanic – Marketplace matching those who need vehicle repair with mechanics.
Dolly – Offer your truck and services to help someone move!
Carvertise – Have your personal vehicle wrapped in advertising and get paid to do it!
Instacart – Grocery delivery service.
Presto Instashop – Mystery shopping service that pays consumers to evaluate how a business is performing.