‘Sharing economy’ unnerves regulators
Startups argue they create jobs with new models; industries say startups sidestep rules.
Phillip Zakhour is a pioneer of the “sharing economy.” He makes his living by renting out the in-law unit of his San Francisco house on Airbnb, performing errands and odd jobs as a TaskRabbit, and ferrying people across the city as a driver for Sidecar.
“I do this now because it pays,” said the 49-year-old former software engineer, who said he can earn about $4,000 a month before taxes. “I’m a single dad with two kids and a mortgage. I’m not saving any money, but I’m surviving.”
But the Web- and application-based startups that have kept Zakhour afloat now face a thicket of regulatory, tax and labor issues in many of the cities where they operate.
While the new companies say they are creating jobs by disrupting legacy industries that have fallen behind the curve, established industries say the newcomers are taking unfair competitive advantage and in some cases endangering the public by sidestepping safety, tax and labor rules.
Government agencies are under pressure both to enforce existing rules and to update them for new business models.
“The sharing economy often straddles the line between pure sharing and commerce,” said Oakland, Calif., attorney Janelle Orsi, co-founder of the Sustainable Economies Law Center. “Our laws should also make reasonable space for ‘nano-enterprise’ — all the small things people do to supplement their incomes. Why not allow people to make money giving rides to others?”
State regulators with the California Public Utilities Commission in November came down on the side of traditional cab companies, slapping startups Lyft, SideCar and Uber with a $20,000 fine after accusing them of operating as passenger carriers without evidence of commercial insurance. There is also tension between the new companies and regulatory authorities in New York, where officials are cracking down on Airbnb hosts, arguing short-term rentals violate laws against renting for less than 30 days.
The new companies say regulators don’t understand the pace of innovation or the contribution they make toward easing congestion and environmental degradation.