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What We Need To Know About On-Demand Work Platforms Before Regulating Them

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As we fast approach the 2016 election cycle, the future of on-demand work platforms is at a crossroads, with Uber, TaskRabbit and other market leaders facing increased scrutiny and skepticism from regulators and political leaders.

At the same time, these platforms inadvertently contribute to a growing anxiety among the public, who are concerned that the on-demand economy may change the future of work for the worse — if their jobs are not entirely automated out of existence.

Along with several colleagues from the Institute for the Future, I had the opportunity to address some of these very concerns at the Department of Labor, presenting an alternative viewpoint to Secretary Perez and his colleagues.

With a number of technologies emerging together to enable the unprecedented ability to coordinate and allocate resources in real time, a corresponding rise of new work and organizational structures may be an inevitability.

Despite this, a number of policy leaders and many in the media are still having the wrong conversation about these platforms, not asking the right questions about the underlying technology shifts taking place.

Instead, they are attempting to categorize the entire industry as either good or bad. In our view, this is almost like 19th century politicians trying to hold a Yes/No vote on industrialization.

Our perspective is based on direct research into these work platforms over the last two years, which suggest a far more complex ecosystem. Here I share just a few of our recent findings:

  • Alignment between the platform owner’s incentives and worker incentives makes a difference. As a counter-example of this, we recently researched a work platform that strived to ethically compensate workers above average local rates. But paradoxically, because of its bundled pricing structure, workers on the platform actually made less than they would on a more profit-centered, “mercenary” platform simply taking a percentage of wages earned.
  • Distinctive new lifestyles are beginning to take shape within the coordination economy. Many on-demand platform drivers, for example, plan their days so they can be conveniently available in demand “hot zones.” In other words, these drivers are monetizing their existing, daily routines in new ways.
  • Some traditional wage reforms are not reliably beneficial. Recently, a platform implemented a minimum wage policy for its own workers, and, partly as a result, saw some of its best-rated workers quitting the platform entirely, because they were now earning less revenue.                                                                                                                                                 Readon….
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