The dark side of the gig economy is a place where people are forced out of decent-paying full-time employment into multiple jobs just to make a living.
(TNS) -- A recent federal appellate court ruling that favored ride-sharing firms like Uber and Lyft over the Chicago taxi industry also carried a powerful message to business: older companies beware!
The decision by the 7th U.S. Circuit Court of Appeals, which backed the city's right to regulate ride-sharing firms differently than cabs, doesn't literally give that warning. It does, however, stress that many veteran industries are increasingly under fire from innovative upstarts while also signaling that the legal system recognizes the consequences will be business upheaval and workplace casualties.
"When new technologies, or new business methods, appear, a common result is the decline or even disappearance of the old," the ruling stated.
I'll leave it to the legal experts to determine where this court decision will ultimately lead. But from a business perspective, it seems to indicate the courts are ready, willing and able to distinguish between emerging business models pioneered by the likes of Uber and Lyft, and legacy industries such as the taxi business.
Moreover, it asserts that one-size-fits-all regulations don't always apply, even if the competing businesses are ultimately providing the same service. As a result, the city can impose different rules on cabs versus ride-sharing firms because each has its own business model and its relationship with the public is different.
One of the main distinctions: Ride-sharing firms pick up riders that contact them via app, while taxi customers typically flag a cabbie off the street. Ride-sharing firms have an ongoing relationship with their customers, who can rate their drivers and vice versa, while taxis operators typically don't have a clue about who is getting in their vehicles.
Therefore the city can regulate them differently because the services are different, said the court, which also noted customers also see a difference between the two and the industries are not interchangeable.
This won't be the last time the legal system will have to referee a battle between old and new. Nearly every mainline industry — medicine, retail, media, travel, manufacturing, finance and even law — is bumping up against fresh-faced competition on an unprecedented scale.
Got a business? Yep, there's an app for that.
Yet among the most contentious issues to emerge is the rising impact of the "gig" economy, a fast-growing group of independent contractors who temporarily fill the employee ranks of Uber, Lyft and numerous other organizations.
There's no hard data yet on the size of this labor force. Some say it represents less than 10 percent of the domestic workforce but is growing rapidly, while other studies says it makes up nearly 25 percent. The U.S. Department of Labor is conducting a study to determine its size.
We do know the gig economy consists of workers from every discipline: drivers, tech specialists, software programmers, contract nurses, adjunct workers and so on.
While full-time workers usually get steady hours, regular pay and employer-supplied benefits, gig economy workers get none of that bounty. However, they do get flexible hours and more control over their schedules while earning money.
Moreover, those whose skills are in demand get to bounce from various projects, which can make for a fuller career, says Ann Logue, an adjunct lecturer in finance who follows emerging economic trends at University of Illinois at Chicago.
"There's a lot to be said for the flexibility and freedom to do different projects," she says.
But there's also a gig economy dark side, a place where people are forced out of decent-paying full-time employment into multiple jobs just to make a living.
Increasingly, that's occurring due to changing technology, but companies also want to get out from under the sticky requirements that come with full-time employees, including handling payroll taxes, workers' compensation claims and human resource matters.
New concerns, starting from scratch, have a better chance at accomplishing this, but older organizations already have many of these systems grandfathered into place, making it more difficult to dump.
None of this is going unrecognized or unchallenged.
Already some unions are at the forefront of fighting this tide by advocating for greater enforcement of regulation, trying to organize more employee bargaining units and suing employers who they believe are stripping workers of their rights.
And that brings us back to the recent federal court decision and a quest for guidance.
While not weighing in on gig economy matters, the appellate court did assert that business should not be insulated from competition, no matter how disruptive.
If that occurred, the judges' opinion said: "Instead of taxis, we might have horse and buggies; instead of the telephone, the telegraph; instead of computers, slide rules. Obsolescence would equal entitlement."
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