Sen. Mark Warner thrust the on-demand economy into the presidential campaign Thursday, challenging the pack of 2016 candidates with a new, first-of-its-kind policy proposal and suggesting the creation of a new class of worker. Warner, a former Virginia governor, outlined a plan to address the legal and economic issues surrounding companies like Airbnb and Uber — home service and labor platforms that critics believe unfairly misclassify workers and circumvent labor regulations.
Responding to perhaps the most visible issue within the on-demand economy — whether contractors should be designated as employees — Warner suggested it is time for a new class of worker fit for the 21st century. "I don't want to leave this to just simply courts and litigation," he said.
Warner described the changing nature of the American workforce from a stable relationship between an employee and a single employer to one of contractual, temporary, or nonexistent work and proposed several new policy initiatives to address this transition. Among them: a joint social insurance fund paid by freelancers and their platform companies, student debt repayment based on income, and commissioning a comprehensive study by the Department of Labor to measure the on-demand market.
"For many of these online and contingent workers, they're operating without any safety net below them," Warner said. "They may be doing extraordinarily well — until they're not, and then there is nothing to catch them until they end up, candidly, back on the taxpayer's dime."
While acknowledging the advantages enjoyed by some on-demand workers, such as increased flexibility and autonomy to freelance, he argued that for many it is financial necessity and not choice that causes workers to string together multiple sources of income. Warner described the rise of the on-demand economy, and its lack of traditional employer support, as a fundamental change to the American workplace.
"Our current tax and labor system basically classifies workers in one of three ways: employed, self-employed, or not employed," Warner said. "So it's clear the distinctions developed over the 20th century simply are no longer effective in addressing how we view a 21st-century workforce."
Speaking at an event hosted by New America, a Washington, D.C.–based think tank, the Virginia Democrat emphasized that his was the first major on-demand policy initiative to be introduced from either party. "There are 25 people running for president at this point in the country," Warner, who is not expected to run himself, said to rolling laughter in the audience. "Isn't it remarkable that nobody has mentioned any of these subjects?"
Sen. Elizabeth Warren recently described the misclassification of contract workers as "a real problem," but did not directly answer whether she believes Uber and Lyft drivers should be recognized as employees.
The issue of whether workers for on-demand services such as Uber and Lyft should be classified as employees is currently being tested in the courts. As Warner alluded to, a pair of class-action lawsuits in California could determine the answer.
Drivers for both companies have alleged that Uber and Lyft exercise a high degree of control over their jobs, satisfying the legal threshold to be considered employees. Uber and Lyft have argued that their contractors benefit from the freedom and flexibility to create their own schedules and are properly designated as independent contractors. If the drivers are, in fact, ruled to be employees, they would be owed reimbursements for job-related expenses, insurance, Social Security, and other benefits. For Uber and Lyft, such a ruling would radically increase the cost of doing business. It may also undercut their enormous valuations.
Warner's speech comes a week before the Federal Trade Commission will examine these same automated labor pools and service markets in a daylong workshop. Focusing on competition, consumer protection, and economic issues, the FTC will consider if current regulations are adequate to cope with the on-demand economy. In addition to an industry-centric panel with Uber and Airbnb's policy chiefs, the workshop will also include a session on the structure of on-demand platforms as well as reputation scoring.