Speaker 1: 0:00

Hi, my name is Juliet[inaudible] and this is my podcast. The great end to dote this podcast is brought to you by the center for growth and opportunity at Utah state university. To learn more, visit www.thecgo.org.

Speaker 2: 0:38

[inaudible].

Speaker 1: 0:40

Hi, welcome back. Hey, I'm glad to be speaking with Leah polygon Philly, a senior research fellow at the Mercatus center at George Mason university. Her primary research interests include entrepreneurship regulation and the new economy. Welcome Leah.

Speaker 3: 0:56

Thank you Juliet for having me on your show.

Speaker 1: 1:00

So before we jump in, uh, I want to ask you a question that I ask all my guests, which is what is the most important thing that people my age or my generation should know that we don't,

Speaker 3: 1:12

I think, uh, people in your generation or your age, um, should know that they should embrace being startups and not large established companies. Now I'll explain what I mean by that, which is actually what I thought when I was your age. I had this like set plan that I was going to be a lawyer and I did everything that I could to go on, try to be a lawyer. And I was pretty, um, how should I say inflexible to try different directions or to pivot into different areas, but over the time, and because I did this, um, I started to realize that I think it's much better for someone younger and your age to be more like a startup and that a lot of startups pivot in different directions, they're versatile. They might try different markets. They might fail a couple of times and then finally find their market. So Airbnb, for example, I don't know if many people know this, but they actually failed three times before they finally took off because they were trying to be in a different market. And you'll hear that a lot with different startups. Yeah. Like they'll, they'll go one directional to have one product. And then they realize actually like this wasn't a great idea. And there was another opportunity comes up and then like, they shook to seizing that opportunity instead. Um, and like on the other hand, established companies, they're much less likely to change or to pivot into different directions. And they've kind of have like an established thing that they do and establish product and they're much slower. I'm also much slower on jumping on different opportunities. And so I think about young people, so to speak or, uh, people entering college is more of startups is that you kind of want to say yes more times than no, you want to develop different skill sets, be a bit more versatile because you never know like where that one Avenue will lead you to, like now that you're working on podcasts, like who knows in two years time, like maybe there'll be like an awesome opportunity. And because you've already developed this like unique skillset, um, you'll be able to pivot into that, into that Avenue, um, more so than, than others, for example. Um, so I think, and, and that means by the way, being embracing kind of not having a specific plan in mind, so to speak, like I said, I started out with a strict, like, I want to be a lawyer. And by the way, Don Boudreaux who've you had on the show a couple of times, uh, he and another, um, George Mason university, professor, Pete, Becky, they were great mentors for me and opening up a different Avenue for me and showing like, Hey, you don't have to be a lawyer. Like, you know, you can follow your curiosity into this other thing called economics. And that's how I got to where I was. Um, I also had to make another change recently, which is I, I left a full time tenure track position because I thought I wanted to pivot into a different area. And I wanted to, um, I thought it made sense for me to do this, um, to do this now.

Speaker 1: 4:15

That's cool. That's really good advice. I will definitely keep that in mind because that is, I'm going to college. This is very applicable.

Speaker 3: 4:25

Just be open to different opportunities. Like you just, you just never know, like what Avenue would lead, what, what Avenue you take will lead you to down the line or down the road.

Speaker 1: 4:35

So just curious, I don't know if you know this off the top of your head, but what, what did Airbnb try to be before?

Speaker 3: 4:44

So they would try to just set up, um, the first thing that they tried was just to be extra conference, uh, extra rooms for when there were conferences and particular cities. Um, and I don't mind that was at least one of them and they realized, I don't remember exactly why it didn't that market didn't really work out for some reason. Unfortunately, I don't remember the exact details of what the other failures were, but, um, the, the co-founders talk about, like, we tried this, we failed, we had other areas that we tried, we failed. And then they finally took off with like the modern version of Airbnb. But I don't remember the particulars other than they try to be like a conference, like a, uh, alternative conference hoteling first and, um, realized that wasn't really their market.

Speaker 1: 5:38

Yeah, that's so cool though, because I mean, I look around and people I know are taking part in this, which is exactly what we're going to be talking about today. Um, so before we kind of jump into the sharing economy and all of that, I kind of want to ask you what your story is as it relates to that. Um, so a lot of people describe it as quote, any marketplace that uses the internet to connect distributed networks of individuals to share or exchange otherwise under utilized assets and quote, that's kind of complicated for saying, if you have something you're not using, you use the internet to use that as like a business in a way to make money off of it. Um, can you tell us what defines the sector, but also what interested you about it?

Speaker 3: 6:34

Yes. So by the way, there are different ways to call them this economy. I'm sure you've heard. So one is the sharing economy, which we think more so of the definition that you gave, like there's an unutilized under utilized assets, like a car and then, or a, uh, uh, a second home that you're not using that you can rent out. You can also think about it as you've heard people talk about it as the gig economy. Right. And that's, and that is more of like, um, Uber drivers in particular, or maybe, um, I don't know if you've heard of handy, which is an app like Uber for household cleaners and made. So that's, you might think about that less as a sharing economy, but that's more gig economy, so to speak. Um, and I like to call it independent workers about, um, these are the group of people we're talking about as independent workers, because it's a bit more inclusive about the type of people who do this work. So it's not just Uber drivers or door dash food delivers, but, um, there's a lot of different types of people who are, who would call themselves independent workers. And they are type they're individuals who get their source of income from something besides a full-time traditional employment job, right? Like they're not necessarily employees of a particular company, but they might be freelance musicians, or they might be a freelance graphic designers or consultants in different areas. And some professions that we think of like electricians, for example, a lot of them are, um, contractors as well, which is the same type of people, which is, they're not employed by a particular company, but they're getting their income, um, through these one-off, uh, services, excuse me, one-off, um, goods or services that they're producing a lot of, um, sellers go to etsy.com. I'm sure. I think you've heard of it too. Right. And they're all like independent sellers making money off of Etsy. They're not employees of Etsy and that, um, they have this, uh, contract with Etsy where they have to perform certain services, but they're independent sellers and they use the Etsy platform, um, for, for how they make they make money. And so that's kind of the workforce that I'm interested in studying. A lot of them are more entrepreneurial creatives. There was a great book talking about the rise of the creative class and it embodied exactly these type of people who want to be, who don't want to be tied into a nine to five employment job who have a lot of different interests and areas that they want to explore. And as a result, they might want to be more independent workers, right. And, and maybe someone like you Juliet, like you want to try and see how a podcast takes off and you devote all of your time to this podcast and see, okay, can I make enough money off of this to make a living? And can I contract other services? Like, can I be a speaker as well? Um, so I just, I think it's like a fascinating workforce to study it's it's way beyond the quote unquote gig economy. And if we look at the data, the gig economy defined us, um, only those individuals who contracts on these digital platforms like Uber or handy, they're only a slither of the whole independent workforce, which encompasses all types of different freelancers. Like I just gave you examples of, by the way, nannies are also, a lot of them are also independent, um, independent workers.

Speaker 1: 10:21

That's, it's so huge. I don't know that just kind of like widened my perspective of this, I guess, because it seems, I don't know, I just always think of Uber, but then I then just connected the fact. So I like sell my clothes on Depop because I like buying clothes

Speaker 3: 10:45

That an independent worker.

Speaker 1: 10:46

Yeah. And I did not think of myself as that. I didn't think of it like that, that I'm, I'm using the platform to connect with other people and to do business with other people. I didn't realize that until right now. Thank you for that.

Speaker 3: 11:02

You're an entrepreneur or independent worker as well for, um, or I dunno how you could also think about yourself. I guess freelancing is a bit more, is a little bit different. Um, but yeah, you would be considered according to this research as someone who gets income through independent work. So yeah. You would be an independent worker.

Speaker 1: 11:23

That's cool. I'm a part of this economy. So I talked to Adam theory a few months ago about permissionless innovation. And I feel like this fits in really well because platform companies are a form of permission-less employment where companies match independent contractors or independent workers with consumers. And like, there are other methods of doing this, but also these companies are born free in terms of regulation. They're not born into regulatory environment where it's really harsh and there's already a ton of rules. Can you talk about how permissionless innovation in that aspect of these companies, um, how it's important, how it kind of changed, not necessarily change on how it like characterizes them apart from other jobs, other companies.

Speaker 3: 12:16

Yes, definitely. It's a good question by the way, Juliet, so one thing to color, one thing to color, this is, um, I was actually a co-principal investigator and, um, John Templeton foundation funded grant where we got to interview like across the us, uh, different technology, startups, CEOs specifically about this question of regulations and about this question of, um, working with independent workers and independent contractors. Um, and we did over a hundred interviews with CEOs across technology, startup CEOs across the U S so it was awesome. And it was like a really great way to get insight on what are the particular things, what are the particular regulations or whatever, what are the particular challenges facing technology startups from the perspective of technology, startups themselves? Um, and one of the things that we, I guess, one of the things that we learned is a lot of technology startups do work with, um, independent contractors and they need to be able to do so because, and it circles back to the first question that you asked me about, what, what is it that you, what is it that, uh, most people your age should know, um, which is technology, sorry, if, like I said, are, especially in their formative early years, they, they're still trying to find their market and, um, they might need to pivot and change directions or, um, need to, they might need to be, uh, need to fire a bunch of people all at once, for example. And so it's really important for them to work with flexible labor supply. Um, and that came across and all of the, in these interviews. And by the way, we also hosted a survey, um, out of NYU law. And we had close to 500 technology startup CEOs, um, as part of the survey. And they also answered that one of the most important things is they need flexible labor in their early years because they need to be able to pivot and make changes depending on what's going on in the environment. Right? So we had, um, one startup from the interviews just like I had to shut down my entire group in California and we had to move to Florida and I couldn't, and I had to work with one person in Florida. Then we had to shut it down and then pivot into a different market and go back to California. And you have a lot of these changes and they need to be able to adapt to these changes. And they say it's really important, like vital for them to be able to work with independent contractors, independent workers, and their early years, because, and that's, in that sense, it's easier to, um, to, you know, either ask them to either bring in more people right away. It's easier to, you know, faster to hire and also easier to get rid of them. If all of a sudden, you know, you're crushed and you need to close your business down for a little while or to pivot, like I said, into a different market or to make all of these different adjustments. Um, and we asked the startups in our survey as well. Like how essential is the use of independent workers or independent contractors? Is there a legal definition, um, for your business models? And we had close to 60% say absolutely essential slash indispensable, and that's close to 500 participants who answered that question. Wow. Yeah. And so one other thing I think I strayed off a little bit from your original question, but I do was just reminded of, of this with, you know, with promotional and permissionless innovation, uh, that we did these great, um, fieldwork interviews and this survey as well. But one of the things they also mentioned is, um, that how important it was to, for them to be able to grow when, um, they didn't have a very strict, uh, regulations in their industries. And when we did our analysis, after we found that those, um, startups that were able to grow the most, a lot of them are in software. Um, they were they're in less regulated industry. So software, by the way, in the U S is very unregulated, unless you're talking about software specifically for finance or software specifically for med tech. And then those in med tech and in finance and, uh, clean tech for example, was another technology startup industry where, um, a lot of entrepreneurs expressed, uh, that it was difficult for them to grow because of the regulations. And on top of that, a lot of technology startups, they need, um, what's called venture capital funding, uh, to be able to, you know, take off and to grow. And when we interviewed venture capitalists, they were all, they also said, you know, we're not gonna, we stay away from investing in startups, in regulated industries. So it's kind of a crushing to startups who are trying to kind of take off in more regulated industries, because one it's more difficult from the regulations, a direct impact. And then there's an indirect impact, which is they need money to be able to survive. It's one of the most important things for startups is fund financing and funding from venture capitalists. And most venture capitalists are like, yep, we stay away from those industries like med tech or FinTech or clean tech and others. So it makes it a lot more difficult for those companies. Um, you know, to be able to permissionless permissionless, do permissionless innovation.

Speaker 1: 17:56

I know it's hard to try to make a verb out of that

Speaker 3: 18:00

Thinking, how do I do that?

Speaker 1: 18:02

I must like crush innovation in general, too. Not even like permissionless innovation is one thing. And that's like super beneficial to companies to startups, but then also when you take into account companies and startups that are trying to come into the market in places that are completely and totally regulated, that must just completely destroy any chance of new things changes in a certain industry, which is just kind of sad.

Speaker 3: 18:35

Yeah. I actually have a, you, you reminded me of a specific example. Um, there was a startup entrepreneur. Um, he, uh, had a lot of great resources I should say came out of a good accelerator program was, um, was trying to innovate in the, uh, like legal tech or a law tech space, which is very, very highly regulated and just ended up failing in that space because every idea that he had, that they were trying like, uh, that they were trying to innovate or to try to change or disrupt in different ways. They just got crushed by the industry regulations. And he ended up telling us that they had to pivot completely out of legal tech. And now they work with paralegals instead, which is a much less there, there are a lot fewer regulations working with paralegals than it is with lawyers. So that's just one example of like, it was, uh, it looked like it could have taken off because they had the right team, great ideas, a lot of great resources, great, like venture capital backing. And it was crushing to hear the CEO be like, yeah, but you know, every time we tried something, we would just get crushed entirely by the, by the legal industry. And then, you know, they ended up exiting that industry. And as a result, we don't get much renovation and, um, and the legal tech industry, um, maybe, maybe it does need more innovation

Speaker 1: 19:59

Even though a lot of these startups. I mean, that example, obviously not one of these that I'm thinking about right now, but like startups that are born into a low regulatory environment that, that is regulators, special interest groups, try to crush that out immediately. Um, and you can see that over and over again in Virginia, for example, Uber and Lyft were banned in like 2014, I think, by the DMV. And it's still, they're still banned in a lot of places. Are there caps and things like that because it, it challenges the old system. Um, can you tell us about what the biggest opponents are of this model of economy of companies, um, and like some, maybe some examples of what they've tried to do to stop these companies?

Speaker 3: 20:57

Uh, yes. So that's a great question. So let me put it in two different waves of the regulations that are impacting. It sounds like more sharing economy or gig economies, a gig economy companies in particular. So the first wave is exactly what you said, which is that they try to do it more on a local level with, um, industry regulations around taxis, for example. So I lived in New York city and that was a huge market for Uber and similar to what happened in different States and different cities in 2015, mayor DeBlasio essentially tried to ban Uber completely from, from New York city. Um, and part of the, part of the issue as you pointed out is that there was a large, special interest group in New York city, which is the taxi medallion owners. And you just saw like the, you saw the huge impact that Uber had on, um, taxi medallions in New York, because you saw the price of taxi. Medallions just don't even fall as the wrong word because it's not strong enough, but it just collapsed when Uber entered and took off. Um, so as a result, you had this group of people that are like, look, we've invested in texts, medallions. They were really expensive. I mean, the price of texting medallions is over a million per medallion. And then the price just crap, like crushed after, um, collapsed, I should say, after Uber entered and really, um, started to take off there. So during that time, like 2014, 2015, 2016, even 2017, uh, all across the us, you had, um, these types of developments where city level, sometimes state level, um, they would try to go in and use the existing, uh, regulations, especially around, uh, for hire vehicles or taxis to try to crush, um, Uber, Lyft, vias, um, it all over the U S so ultimately it didn't, you know, now we have, now we've come to terms with this, and it's not really a big fight that they're having anymore. So you might say like the ride sharing companies kind of won that particular battle, but now we're seeing a whole different battle. This is the second wave, which is, it's not about the medallion, you know, taxi medallions or the city regulations around for hire vehicles and taxis. Now the battle is on these independent workers, these gig economy workers, right. And their, um, labor classification. So in the U S we have, you know, as a worker, you can fit into two groups of people. You're either classified as an employee, uh, or you're classified as what's called an independent contractor illegally and Juliet. These are the type of people we were talking about. Like you, for example, you would be an independent worker if you're getting income from something, besides it like working with an employee, working for an employer. So a lot of the Uber drivers and many other different people on these platforms, like the Etsy sellers, there are all legally classified as independent contractors and there's rules right now in the us that try to prohibit and a greater use of independent contractors by creating a stricter definition. So for example, California, in 2019, uh, they passed what's called California as assembly bill five, or for shorter California, AB five is how you'll see it in a newspaper outlets. Um, and what they did there is created a much stricter definition of what it means to be an independent contractor. And the intention from the rule was that, um, we should, a lot of these independent contractors would be then reclassified as employees, uh, which would be great. The idea is that they would be great because these employees would have more benefits, um, access to health insurance, access to things like paid, leave, sick leave, and so on. Whereas independent workers, they don't have access to those type of employee benefits. So that was the intention of the role. But what the result was was that a lot of these independent workers in California, neither became employees nor were able to continue working as independent workers. Now, I know you did a podcast with Don Boudreaux. I listened to it where he talks about intention does not equal results. So this might be a great example of exactly what Don Boudreaux was talking about in that podcast, which is the intention was to great, get more independent contractors to become employees. But the result was that a lot of companies ended up stop working with stopped working with their independent contractors altogether. So they need their like continue to have their source of income as independent contractors or independent workers, nor were they reclassified as employees. Um, I was pretty devastating. The New York times did a profile of 200 freelance writers from Vox media and they were all fired and they cited California's AB five as the role fired as independent as independent workers cause they were freelancers. And then, um, the Los Angeles times, they did a, an interesting profile of all the creative workers. So remember, as we talked about, you have, um, a lot of the creatives work as freelancers, like freelance musicians, freelance singers, uh, freelance artists. And they did a whole profile of all the different types of members of the creative community who are all harmed by AB five. Now this was such a, this was such a harm that, um, California ended up, um, exempting, a lot of these groups of people later. So, you know, they ended up exempt exempting, the music industry, for example,

Speaker 1: 27:10

Wait, wait. So they didn't get rid of the rule, but people are exempted.

Speaker 3: 27:15

Yeah. They exempted some roles. Exactly.

Speaker 1: 27:18

So it still sucks for the people that aren't exempted.

Speaker 3: 27:21

Exactly. And I would say the people who aren't exempted are the ones who don't have a lot of like lobbying power or a lot of, um, influence, I should say. So for example, the music industry is huge in California. So they were able to lobby and kind of push a lot to get their industry exempt, but there are a lot of different industries and roles that weren't exempt. So instead of getting rid of the rule completely, um, you have, uh, groups of different individuals and different industries and different roles. Sometimes it doesn't really make sense, which roles got exempt and which didn't like, there are some roles where like a landscape architect got exempt, but like a regular architect did. And so you've got like these weird things going on in the roles, um, because different types of people will, you know, lobby or ask exemptions, but the rule is still there.

Speaker 1: 28:15

And I don't know, this just frustrates me because it seems like it's not only for the company, it's not only a benefit for the company. It's also a benefit for the worker to have this sort of relationship with the person that is paying you with your employer, not even employer, but like you're connecting media, like Uber is to driver type of thing. Um, can you kind of talk about the appeal of this sort of job to workers and I don't know, it's just so frustrating. I'm frustrated now.

Speaker 3: 28:51

Yeah. So as you, um, as your question alluded to the, a lot of workers who go into this space want to go into this space because of the flexibility of a work schedule. So traditional employment, typically you have to work at particular hours or at particular quantities, which is, let's say you have to work. Or a typical Workday schedule is nine to five. You have to go in nine to five, um, and you might have to work 48 hour or excuse me, 48 weeks in a, in a given week. Um, and so as a result of employee, traditionally employment, traditional employment arrangements, typically they have more flexible schedules, but independent workers say that the number one, like the primary benefit of working as independent workers is that they get the flexibility that they want and that's what they need in their lives, maybe for personal reasons, maybe for other reasons. Right. But, um, and every survey that you'll read about independent workers, you'll see that the flexibility is why they go into that job, right? They're like, Oh, we can have flexible hours. You know, you can work for, you can work 10 hours a week if needed, um, or you need, you can work irregular hours, um, as needed sometimes you'll have, uh, there's, there's some studies about women working as independent workers in particular because some of them are primary caregivers. And so it's hard to work a nine to five schedule because you might have to work a schedule around, um, your children, right. Or in different ways, um, that make, that might make it difficult for these women to be able to show up nine to five. Um, and so there was a great survey that came out. It was on, uh, 2000 women in the United States who were using independent work as their primary source of income and 96% of them. So almost all of them said the, the main reason they chose this type of work is because of the flexibility it gave them. And we see this, like I said, across all different types of surveys that they say the main benefit is the flexibility, um, the Bureau of labor statistics, by the way, they did, um, a survey to, and they do it of independent contractors or independent workers who, you know, don't have traditional employment and almost 80% of them. I think the actual statistic is 79% of them, so that they prefer those, their arrangements over having a traditional job. And again, they said the primary benefit is flexibility.

Speaker 1: 31:31

So you've written a lot about women in this economy and kind of how they are in this. Can you kind of tell us more about the benefits to them and also just how it changes? I don't change changes the possibilities of everything.

Speaker 3: 31:50

Yeah. So we don't actually think of women as independent workers, because when we think about, um, the gig economy, we're thinking about Uber or door dash, and a lot of tho workers, there are male. Um, but actually there was a study that showed if you take out the transportation sector entirely. So ignore the Uber drivers and the Jordache women actually comprise a greater share of the independent workforce of those individuals who are getting income from digital platforms. And I want to point out to some of the work that they do. A lot of them are professional freelancers on platforms, such as Upwork or freelancer.com. Um, some of them do graphic designing. Some of them even provide like paralegal services came up on the top of our list. When we, when we looked at, uh, when we looked across these platforms, there are other women who are on platforms, such as care.com, which that platform, I think it's 95% are women. And that one is a women as independent dog walkers, uh, as nannies or personal care aides. Um, at sea, we talked about Etsy. So that is 85% year after year, greater than 85% are women on that platform as well. And so when you think about like, when you imagine the so-called gig economy or the independent workforce, it's much more broader than like I said, Uber or door dash. And when you take out that transportation sector, we actually see women again, participating more and they get kind of me. And I think it has something to do with, and this is part of what our new research paper came out. Excuse me, it's part of what we found in our new research paper that just came out, which is that it's about the flexibility element to it. And one of the things we found in the paper too, is even before, you know, the gig economy conquered America in recent years, uh, research studies have shown that women have always gone into these, uh, alternative labor arrangements for the specific reason of needing greater flexibility, um, in order to participate in the labor force. Um, and by the way, in our, in our new research study, we actually, we asked that question, what can account for why women, um, participate more in some platforms versus others, you know, something beyond industry. And we found that, uh, women tend to go into platforms, uh, into independent work platforms where there is greater flexibility. Um, and so it gets back to the point I was just making, which is that women really value this flexibility element. And so as a result, we see, um, you know, we see women engage in this type of independent, um, independent work opportunities.

Speaker 1: 34:40

So, um, kind of back to the California example when they imposed these rules, um, first I guess, how, how did that impact women, particularly in especially women who are choosing this form of work, this line of work because of the flexibility and the freedom that they get from it.

Speaker 3: 35:07

Um, so there's two ways. Okay. So first is that if it, you make it more difficult to be an independent, to be classified, uh, as an independent contractor. And so it makes it more difficult for organizations to work with you, for example. Um, so again, let's think about those examples of FCR care.com. So to the extent that specific platforms like Etsy or care.com, uh, provide flexibility, work to those who need it and extend opportunities to women who would otherwise be unable to take on traditional employment, then those type of challenges like in color, like the ones you mentioned in California, um, they could, uh, disproportionately hinder women's participation on these platforms and in the labor force in general. So what that means is, again, if they're unable to take on these work, if they're unable to work on these platforms, we might not see them participate in the labor force at all, because they're unable to take on traditional employment. Now I want to bring back, bring you back to that study. I mentioned earlier about the 2000 independent workers in the U S excuse me, 2000 women as independent workers in the U S that study actually found that a quarter of those women had recently voluntarily left their full-time employment. And so they don't want to go back because they needed, um, a, they needed a different way to work. And that's why they ended up finding independent work opportunities, um, through digital, through different digital platforms, for example. So if you take away those independent work opportunities, um, for those women, they might not go back, um, and be able to work in traditional employment. Anyway, if that makes sense.

Speaker 1: 36:54

Yeah, that does make sense. Um, okay. So these sorts of regulations and these sorts of rules are imposed in order to provide workplace protections and all that stuff like healthcare paid, leave, all that stuff. And that was kind of the goal and well, the intention, and then it didn't happen, you know, but regardless of the fact that it didn't happen, I'm glad that some people are exempted. I wish everyone was exempted because the consequences of that are bad for the workers, bad for the companies, um, and therefore bad for the consumers. But, um, the problem kind of, I guess the intention kind of gets at something that is, could be a problem in the future. The fact that there aren't that many benefits, which gives you freedom, but at the same time, it could be an obstacle in the future for these sorts of companies and in this sector kind of. So what are some possible solutions to address this? Or what ways could companies kind of, I don't know, address it,

Speaker 3: 38:06

So great question, Juliet skin, it gets to the heart of the problem. So I'm glad, I'm glad you asked this. So, as we mentioned earlier, the main intention or reason as to, um, for these type of rules is that, look, there's a growing independent workforce, these independent workers, they are not, uh, they're not part of, uh, employment based regulations or employment-based season employment regulations. So they don't have access to, um, uh, paid, leave, sick leave, uh, insurance, health insurance from employers and so on. So as this workforce continues to grow and grow, you might get more and more people who are outside of, outside of employment base regulation. So the intention, so excuse me. So the, the challenge is then, okay, well, you're going to have these group of people who don't have unemployment insurance and all of these various things. Um, I think a different way, a different direction to take a different direction to solve. Some of these challenges is to think about what's called portable benefits solutions or portable, uh, shared benefits that sometimes how they're referred to are flexible benefits. Um, that would mean kind of rethinking the whole way, the whole idea of how benefits are now tied to employment, and to think about different solutions of how to, uh, give workers access to benefits that are not tied to employment. And the reason I say this might be a good idea is because when we survey independent workers, um, that's also what they would like. So most independent workers don't want to be employees for the reasons that we just talked about, but our recent study also found that 80% of independent workers would actually like some access to some sort of benefits. And they emphasize that are not tied to one particular employer that are not tied to a particular job, and it can follow you like wherever you go. So it's not like you have to change your health insurance every time you change a job, or you might be, um, or you might not have access to something just because you you've changed your job. Um, so I think kind of the future of work and the future of benefits should move towards that direction where we decouple benefits from employment. Um, and just think about like how, uh, we can create, uh, idea incentives, I guess, or, um, or ways to get more portable benefits solutions. So I have some ideas about this, uh, things like, um, subsidies that currently exist in the U S that, um, that Ty Bennett, uh, health insurance benefits to employers. So that's one way that we incentivize more employment-based benefits, but I want to point to something else. That's like an easy, low hanging fruit solution that can be done tomorrow. Um, and this wouldn't necessarily be like the perfect portable benefit, but it is, you know, a step in the right direction, which is right now, um, companies like Uber, they are drivers are independent contractors, but they're legally, they can't give them benefits to these contractors. If they give benefits to the contractors, like if they offer them some sort of health insurance or other things that look like employee benefits, um, the IRS and other government agencies will see that move. And they'll say they might use that as a factor to turn the entire business model around and say, okay, you've provided them benefits. Therefore they should be classified as employees, not as independent contractors. So in this way, they punish a gig economy companies like Uber or handy, for example, or Lyft for giving benefits to independent workers. And this is something that's, it's, it's like a bipartisan, uh, effort, right? It's acknowledged by both the left and the right, that this is a real issue that companies, if they give benefits, then they'll be, um, then they're kind of punished for giving benefits. So like one easy, low hanging fruit solution, I think is to get rid of this specific factor it's called the employee benefits factor. Um, the IRS and these other government agencies need to get rid of this factor if they get rid of it. These, some of these gig economy platforms have directly said, if this has gone, like we'll start giving, start working, start giving benefits in different ways to, um, to companies. Uh, the CEO of Uber has said this, I handy just another gig economy platform has been working on doing this in New York state for a while, where they want to set up like a portable benefits fund in New York state. Um, but again, the problem is they have to get around this legal barrier, which punishes them, if they give benefits to their independent contractors,

Speaker 1: 43:12

That's just, it's so frustrating that it's so difficult for these people in these startups, in these companies to just have the relationship with each other that they want, that's the most beneficial for everyone. And it seems so silly, but it's, it's real. I don't know. I just, it frustrates me. Um, but I was thinking about how quickly these companies can come about, especially just thinking about how Uber was created in 2009. So now it's huge, but it was, it just started in 2009. It's been not that long. And same thing for Airbnb 2008, does the speed at which these industries change and grow and like pop up, does that make it harder to regulate? And does that, could that be a part of the problem or I don't know.

Speaker 3: 44:10

Yeah, no, I think you're pointing to, so, uh, this is discussed a lot in the research and among policy makers and scholars that the, uh, technological innovations are growing much faster, um, are, and are developing in at a greater pace than, uh, regulations can keep up. And so, as a result, I think Julia, what you're pointing to is that they're able to innovate. And by the time that regulations get around, they're already too big and they might not be able to regulate in the way that, you know, they could have if the company was smaller. So Uber is a great example of this and what happened in, in New York city too, which is, um, by the time the regulators, again, regulate regulations are often very slow to move. And as you pointed out, tech companies grow really fast. Uh, Uber just started in 2009. And by, by the time I was living in New York in 2014, they've already like changed the entire landscape in New York city to the point that by 2015, mayor de Blasio was like, wait, what's going on. We need to be on them. Right. So, I mean, that was, it was huge. They only started the company in 2009 and they, you know, they're, they conquered New York city by 2014 when I was there. Um, so what ended up happening is by the time that Uber was huge, this was 2015, July, 2015. They had a huge market already. They had a lot of resources and what they were able to do is use them big market, which is a consumer base, uh, to, in a sense, fight off regulation. So Uber in 2015, when the, um, when DeBlasio tried to, um, push this new role to effectively ban them, they were able to send out like a mass email to all of their users in New York, because they were able to, you know, grab a whole consumer base almost all. I don't know how much, exactly the percentage, but a large part of New York, a large portion of New York and used Uber at this time. Um, and everyone was like, Oh, no, I can't believe this is happening. So they ended up, um, sending like thousands of emails to city council and ended up tweeting making calls and being like, what's going on. So in this way, it's, it's weird, but like Uber grew so fast that they were able to, um, mobilize their consumer base to fight off the regulations for them. If that makes sense.

Speaker 1: 46:52

Yeah. That does make sense. Um, what are some of the arguments that people make to try to crack down on these companies or to change the model that these companies and their workers are operating under?

Speaker 3: 47:08

So the main argument is that, um, like I, uh, like we were talking about earlier, which is that they think the driver should be employees or that the, um, housecleaner should be employees or, um, I'm blanking on other gig economy platforms right now. Cause those are the two I've been focusing on. And so the model, the argument that they're pushing forward is that, um, you know, these companies are misclassifying workers, um, as independent contractors when they should be classified as employees. Um, and it's not, by the way, it's not only Uber like Amazon, for example, has a huge market and delivering. And a lot of the delivery workers are also independent contractors. So there's been cases of, uh, the arguments are also, I should say that Amazon drivers and delivers are also independent contractors, but they're misclassified and they should be employees. So that's really the main, um, like the main argument about how these business models should change is that, um, a group of scholars and policymakers, I should say, and others believe that the business model should change to make those, all of those workers, um, employees. But I think what they, what they miss is that those business models, um, they rely on the flexibility of a labor supply because they're on demand and it's hard to be an on-demand company if you don't have a flexible labor supply. And that was one of, uh, that was one, I think another paper looked at exactly this type of, um, flexible labor supply and found that it was essential. It was essential for these business models, um, to be on demand. And there's a reason that they don't schedule them nine to five, for example, or put them in different shifts. Um, and I think that's missing. And also the fact that, um, they independent like some of these drivers and a lot of these different workers are independent workers. They really don't look like employees. And, um, like, cause you can open up your app and work whenever you want, you can recover many hours that you need or that you want, and you can also work for multiple different companies and oftentimes competitors. Um, I dunno if you've ever sat in an Uber where they might have, you know, the Uber app and the lift up Lyft app on at the same time, or they have both stickers on their, on their, um, when shields, but in New York city, for example, this is huge. And there were like four different ride sharing companies in New York. And I remember getting in a car and I asked the person, I always ask the driver was like, Oh, do you work for multiple different platforms? I'm one driver, almost all of them, almost all of them always said yes, by the way. And there's also other evidence besides my anecdotal evidence of this. But I do remember at one time this driver was said, I work for all four. And he was like, Uber, Lyft, Juno, and via. So those Juno doesn't exist anymore and via, I'm not sure if it's on the area, but it's definitely in New York and in Chicago. Um, yeah. And so they don't look like a typical employee because not many employees would be allowed to go work for their competitors, if that makes sense. Um, so then that way they really don't look like, you know, they really don't legally look like an employee and they might not perfectly look like an independent contractor. And I think that's where the tension is, um, uh, in, in these discussions too.

Speaker 1: 50:57

Thank you for all of this. So to conclude, what is one thing you believed at one time in your life that you later changed your position on and why?

Speaker 3: 51:07

So I think when I was probably your age and also through college, as well as after I graduated college, um, I was always anxious. Like I had anxiety over making sure that I was consistently good at everything I did and that if, uh, you know, if I wasn't consistently good at everything I was given that it would determine whether I would be successful or not. And so I really thought that for a long time, like you had to crush every single opportunity that you had. Otherwise it would mean the end of the world because there's a huge network effects too. Like someone will be like, Oh, I had, you know, Leah came and presented and she did a terrible job and therefore I wouldn't be invited to present again. And so I had very strong beliefs that, um, like just failure was never an option and that always had to be consistently good. And I think over time I learned that, um, and I think it was after I failed at particular things. I learned that, okay. One, it's not that bad as I thought I would. And I would like all the anxiety, maybe wasn't warranted. And two that like, in those moments I failed is when I grew the most because that like being bad at something, or I remember I did a really bad presentation once and I was like, that's it, that's never happening again. And in that moment, I like dedicated a lot of time on, um, preparation, like public speaking training and a variety of different things. So just think that's something I've changed my mind on, which is that okay, I don't have to be consistently good. And, and in those moments where I did bad, um, they turned out to be great opportunities for growth and learning.

Speaker 1: 52:57

That's that's cool. Okay. I will definitely keep that in mind. You know, I don't know. I feel like I learned so much from these questions, which is very helpful for me,

Speaker 3: 53:08

But you should also know, by the way, I know that people often give advice. It's very easy to give advice. Um, because a lot of people neither internalize the costs or benefits of giving the advice. And also that a lot of advice is tied to particular experiences that people had. So you should also take a grain of salt with the advice that you get, including my own.

Speaker 1: 53:32

Yeah. I never thought about it like that, but that's a really good way to put it because it makes a lot of sense to me. So,

Speaker 3: 53:39

Or different advice too, from people, because I think it's a lot of times it's tied to, um, like to the experiences people had, like mine, for example, are tied to my experiences that I had, but someone could have had a different set of experiences and, you know, you might hear something different because, um, that's what they got out of their experiences.

Speaker 1: 53:59

Yeah. Plus every person is different the way that you react in a certain situation to the way you perceive something completely different from other people. So we'll not entirely completely different, but it can be. Um, well, so that's all we have time for today. Leah, thank you again for all of this for all your time, your insight and for your advice and your advice about advice also like to thank everyone who listens subscribes and shares the great antidote podcast. If you'd like to be on the podcast, or if you have a guest in mind, please feel free to reach out to me@thegreatantidoteatthecgo.org. Bye

Speaker 2: 54:50

[inaudible].