GOP Lawmakers and the 'Gig Economy'

GOP Lawmakers and the 'Gig Economy'

The partisan battle over the "gig economy" — epitomized by ride-sharing services like Uber and Lyft and space-sharing services like Airbnb — has crept into the early stages of the presidential election. Republican candidates like Jeb Bush and Marco Rubio have voiced their support for these new platforms, while Democratic candidates — Hillary Clinton in particular — have expressed concern about the contractor-dependent model upon which gig-economy firms rely.

The Los Angeles Times has proudly declared 2016 to be "the first Uber election." But despite the attention paid to the issue, regulating the gig economy has not, thus far, been a federal concern. While the candidates offer platitudes, the gritty details of policy have been the domain of states and municipalities.

In the nation's big cities — of which Democrats maintain control of 13 of the 15 most populous — gig-economy firms have been on the defensive. New York mayor Bill De Blasio sought unsuccessfully to rein in Uber by freezing the firm's growth in the city for one year. Philadelphia, another bastion of Democratic governance, undertook its own effort to crack down on Uber by seizing UberX vehicles. (UberX is Uber's low-cost option, relying on part-time drivers using their own vehicles.) In spite of its efforts, more than 1 million rides have been furnished by the service in the City of Brotherly Love.

At the state level — where Republicans maintain control of 33 governorships and 68 of the 98 partisan legislative chambers — gig-economy firms have fared better, if for no other reason than that Republicans' top priority has been to address questions surrounding the legality of the gig economy.

Looking solely to ridesharing laws, the trend is clear. Of the 24 states in which Republicans maintain a "trifecta" (the governor's office and both legislative chamber), two-thirds have passed laws legalizing ridesharing. Of the seven Democratic-trifecta states, only California has passed similar legislation. Among the 31 states with Republican governors, 19 have passed such laws, and among the 18 states with Democratic governors, only seven have.

It's evident that the gig economy is a priority where the Republican party is in control. But Republicans have not always covered themselves in glory when it comes to these new enterprises. In Kansas, the legislature fought to require that ridesharing drivers maintain otherwise optional "comp and collision" insurance, which ensures compensation for the driver in the event of an accident. The benefit of the coverage accrues directly to the driver, and the ridesharing companies cried foul about having to provide security for lending institutions with liens on the vehicles. What's more, the enhanced coverage level was not recommended by the National Association of Insurance Commissioners in its compromise white paper on the issue because of the costs associated with it. Only after Uber ceased operating in Kansas was a compromise reached that instead calls on Uber to notify drivers of the benefits of such coverage.

Now Utah — home to Republican legislative super-majorities and an early adopter of legislation to accommodate ride-sharing — is on the verge of making exactly the same misstep. Such blunders might be better attributed to cock-up than conspiracy. Republican states like Utah fundamentally want to see the gig economy succeed, but they are prone to poor execution.

Moving forward, it behooves red states to fine-tune their approach. The political stakes are high. Rural and suburban Republicans, the party's core constituencies, happen to be among the least likely to avail themselves of these new services. Instead, the electoral upside that could accrue to the GOP by embracing the gig economy lies in the services' decidedly urban user base. Using a free-market message to disrupt Democrats where they are most comfortable would be truly innovative.

Ian Adams is senior fellow and Western region director of the R Street Institute.

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