Robert Reich Says “Sharing Economy” Will Be End Of U.S.: Does He Have A Point?

Robert Reich, the political economist/commentator, professor, author, and former Secretary of Labor in President Bill Clinton’s administration, has a doom-and-gloom message for America.

The “sharing economy” will be the end for the nation if something doesn’t happen to reverse course.

Just what is the sharing economy?

This is the common term used to describe “independent contractors, temporary workers, the self-employed, part-timers, freelancers, and free agents,” notes Salon, adding, “[m]ost file 1099s rather than W2s, for tax purposes.”

The site also points out that there are many more “share economy” workers today than there used to be and that the number is expected to grow to include 40 percent of the American workforce in the next five years.

According to Robert Reich, in a recent blog post on his website, “Already two-thirds of American workers are living paycheck to paycheck.”

Reich draws this number from a June 2013 report in which 76 percent of Americans admitted to doing just such an economically dangerous thing.

The danger, Reich notes, is that workers bear all economic risks, including “downturn in demand, or sudden change in consumer needs, or a personal injury or sickness,” which can “make it impossible to pay the bills.”

Furthermore, protections that Americans take for granted, such as the minimum wage, overtime, and family and medical leave, are in danger of evaporating.

Employer-financed insurance programs like “Social Security, workers’ compensation, unemployment benefits, and employer-provided health insurance under the Affordable Care Act” are also in danger of collapsing under the weight of the sharing economy.

“No wonder, according to polls, almost a quarter of American workers worry they won’t be earning enough in the future. That’s up from 15 percent a decade ago.”

For this detail, Robert Reich is quoting an August 2015 Gallup finding in which 24 percent of Americans said they were concerned about not having enough hours or being furloughed by their employer.

So what’s the answer? Robert Reich believes that America should take a step away from the complicated criteria of whether employees are being “misclassified” as independent contractors and instead “aim… for simplicity.”

“Whoever pays more than half of someone’s income, or provides more than half their working hours should be responsible for all the labor protections and insurance an employee is entitled to,” Reich says, adding that the country needs to back away from unemployment insurance and instead embrace “income insurance.”

“Say, for example, your monthly income dips more than 50 percent below the average monthly income you’ve received from all the jobs you’ve taken over the preceding five years. With income insurance, you’d automatically receive half the difference for up to a year.”

But, is it practical? Especially with so many companies refusing to hire full-time staff based on their fears of government regulation? Is it, in other words, a genie that can be put back into the bottle, and what would it do for some people in the sharing economy who can earn much more than they ever could for a staff job in their area?

Case in point, a friend who is an independent contractor makes around three times what he could get for doing the same work in a full-time capacity for a single company. According to him, it’s because he has more time to work and more flexibility in the work that he decides to take on.

Given the robust nature of the sharing economy, he’s also able to up his rates when he needs to and refuse certain work that would not be worth the time effort. This has led to a bigger return on his time, an explosion in his earning power, and security in how he manages multiple contracts.

But what do you think, readers? Is the sharing economy ultimately a good thing for Americans’ income and stability, or is Robert Reich correct to call it into question?

[Image via Robert Reich Facebook]