What Elizabeth Warren Gets Wrong About Uber

Democrats can fight the sharing economy-but they'll lose voters if they do.


Credit: illustir / photo on flickr

Add Massachusetts Senator Elizabeth Warren to the growing number of Democrats who have declared war on the sharing economy—specifically, ridesharing.

At a? speech at the New America Foundation's annual conference on May 19, Warren argued, "For many, the gig economy is simply the next step in a losing effort to build some economic security in a world where all the benefits are floating to the top 10 percent."

At some points Warren did seem to praise ridesharing for offering "more rides, cheaper rides, and shorter wait times." She also laid out the regulatory barriers that cartelize most taxi markets and create vast inefficiencies.

However, immediately after pointing out the many consumer benefits of this innovative business model, Warren ended her temporary cease fire by pointing to Uber's and Lyft's recent exit from Austin, Texas over the city's fingerprint background check requirements. She said, "[Uber and Lyft fight] against local rules designed to create a level playing field between themselves and their taxi competitors."

What Warren and other critics of the sharing economy cannot seem to comprehend is that there are two ways to "level the playing field." One is by extending antiquated, anti-competitive regulations to new technologies. The other—and far better—option is to remove these barriers so that legacy business models can adapt to new competition.

Given the many downsides of fingerprint background checks, including higher costs, longer processing times, and false positive results, Austin should have removed the fingerprint requirement from its taxi drivers instead of applying it to ridesharing drivers.

The common failure of fingerprint databases to keep up-to-date records on those who were arrested and then never charged with a crime has many negative effects. This is the main reason why the NAACP and Austin Area Urban League came out ?strongly against? these requirements—which they correctly argue disproportionately harm minorities.

Beyond Warren's push to apply pointless regulations to new business models, there were countless other problems with her speech. The most glaring is her push to extend collective bargaining to every worker.

When discussing collective bargaining, Warren argued that, "every worker should have the right to organize—period." Warren does not seem to care that ridesharing drivers are rightly classified as independent contractors instead of employees. Independent contractors can join a union (such as the ?Freelancers Union), but for good reason they cannot collectively bargain.

Extending collective bargaining to independent contractors makes no sense and would violate federal laws against price-fixing. Not to mention that collective bargaining, which requires an employee designation, would take away ?most of the benefits that make sharing-economy work so appealing, namely flexibility. For example, 50 percent of Uber drivers work less than 10 hours a week and 80 percent of Lyft drivers work under 15 hours a week.

Warren also claimed that ridesharing relies on, "extremely low wages for drivers." This may be true compared to senators' speaking fees, but for a single mother working while her children are in school or for a college student trying to earn some extra income in between classes, the ability to earn about $15 an hour after expenses is important. After all, given the Fight for $15 movement, is this not the wage that activists desire for workers?

Warren is the latest in the long line of Washington Democrats who cannot hide their distaste for the independent, flexible work that many workers prefer—especially working mothers and millennials. While much of this opposition is led by labor unions that desperately want to unionize sharing-economy workers, another reason is the utter lack of understanding of why someone would want to drive for a ridesharing company. Given that these powerful individuals—such as Hillary Clinton—usually do not even drive themselves around, it is no wonder they look down on the decisions that millions have made to earn extra money by driving with Uber or Lyft.

Speaking of Clinton, while she clearly values independent work (99 percent of the Clintons' labor income since leaving the White House came from independent contractor "gigs"), she apparently does not want others to participate in the new economy. This new economy is driven by work that is flexible, mobile, and individualized, and the sharing economy is just a small subset of the new opportunities provided by technological progress. So when Bernie Sanders says "I am not a great fan of Uber—you can quote me on that," he is actually showing his love for a 20th century model that gave employers high levels of control over their workers.

What Democrats such as Warren, Clinton, and Sanders fail to realize is that opposition to the sharing economy is a losing political strategy. While it is a positive sign that Warren did not call for an outright ban on ridesharing, what she fails to realize is that applying a 1930s model of employment and regulation to new technologies will effectively destroy many sharing-economy companies. If government gets between voters and their Ubers, Democrats can kiss flexible voters goodbye.