Garnet Capital Advisors Blog

We now live in a sharing economy. From DogVacay and TaskRabbit to Airbnb and Lyft, Internet companies have exploded in growth to provide fast, affordable services to an on-the-go consumer.

The biggest of these companies has been Uber, the ride-sharing service that lets users bring up an app on their phone, find a driver nearby and schedule a ride. While convenient, the sharing economy - driven to prominence by services like Uber - has raised a number of interesting questions about how we work and the future of labor.

Uber clashes with local governments
One of the biggest issue for ride-sharing involves the driver behind the wheel. Uber categorizes its drivers as contractors, not employees, which changes their tax classifications, employee benefits, insurance requirements and a whole host of other, important details.

By hiring contractors, Uber lets most people with the app and a car work for the company. This has contributed to the service's massive growth - growth so large that New York City is currently figuring out a way to cap Uber's local operation, much to the chagrin of the company itself, according to The New York Times. Uber has also run into resistance over its legal nuances in other major cities around the world. 

Right now, Uber and the sharing economy represent a fast, easy job opportunity for a worker that is so often hamstrung by the current labor market. And this fact has politicians with eyes on the presidency weighing in on the effect Uber has had on the way we work.

Is Uber a positive or negative?
Uber is an fantastic case study for the potential of the labor market, positive or negative. It is a symbol of a free market, unregulated business opportunity and it has created so many jobs - albeit contractor jobs - that have many supporters excited.

On the other hand, Uber drivers don't get benefits or any of the other perks of full-time employment. Opponents, like in New York City, are working toward bringing Uber more in-line with the regulated, standard business model of today. 

"It's becoming a lightning-rod, wedge issue that candidates have to address," Steven Hill, author of an upcoming book on Uber and the sharing economy, told The New York Times in a separate article. "It has real and symbolic importance about the direction of our economy."

Right now, Uber is fairly split along party lines. Republicans are more supportive while Democrats are more concerned about the lack of worker rights and wage equality. Either way, candidates on both sides are trying to play into millennials love of Uber to garner votes, even as political battles go on behind the scenes to regulate ride-sharing services.

All in all, Uber represents an early success story for the future of the labor market. Becoming a driver is so easy most people can do it, and in an economy where jobs are at a premium, that is no small feat. More companies could opt for this model, including contractors over full-time employees, and that could have a widespread effect on the economy as a whole.

Good or bad, Uber is disrupting the way we work. For more information on the effect on banking and the economy, feel free to reach out to the loan advisory firm Garnet Capital Advisors for more information.