California and Massachusetts regulators have decided to allow Uber drivers to be considered independent contractors rather than employees, a distinction crucial to the success of the ride-sharing app. But it’s hardly the last word on the matter. The left has been vilifying Uber as the villain of the new “gig economy,” in which more and more workers-especially younger ones- support themselves as self-employed contractors, stitching together a variety of app-enabled tasks. Liberals consider such arrangements largely exploitative-with companies such as Uber getting fabulously rich while the contractors doing the work hustle, scrape, and scuffle for crumbs. Uber corporate employees, after all, enjoy fringe benefits, unemployment insurance, and job security; the drivers do not.
“Uber Is Not the Future of Work,” proclaimed Lawrence Mishel of the left-wing Economic Policy Institute in the pages of the Atlantic. Bernie Sanders posted Mishel’s article on his campaign website and has declared he has “serious problems” with “unregulated” businesses like Uber. Last year Hillary Clinton got in the mix, saying the gig economy raises “hard questions about workplace protection and what a good job will look like in the future.”
These arguments distract from some of the key benefits of a gig economy. An economy with a greater proportion of independent contractors is one that is less susceptible to the vagaries of the business cycle. Recessions should be shorter and cause less unemployment if the economy has more independent contractors.