The “Gig” is Up (in the UK for Now)

Categories : Financial, News
February 24, 2021

In this blog and on The Van Wie Financial Hourradio program last August, I asked the question, “Is your side-hustle being threatened?” My reference was to a national movement attempting to reclassify an ever-growing number of “gig workers” (those who receive 1099s, also known as “independent contractors”) into traditional W-2 employees. What difference does it make? If you have a “side-hustle,” meaning a voluntary, usually part-time, second, or third job, you understand the reasons and consequences of choosing this method of income enhancement.

Despite the constant under-reporting of inflation by the government and media, everyone knows that prices are rapidly escalating. Food, gasoline, insurance premiums, and many other necessities, are reflecting dramatic price increases to consumers. For most people, incomes (especially net of taxes and benefits) are not keeping pace.

For millions in America, and in countries around the world, one answer to closing the gap has been a “side-hustle.” Having a supplementary money-making gig has allowed many ambitious Americans to maintain, or even enhance, their lifestyles. Perhaps surprisingly, many people profess to enjoy their alternative employment for more than financial reasons; freedom and flexibility are most often mentioned.

As the old saying goes,“No good deed goes unpunished.”Gig workers are again being targeted by the usual groups of do-gooders, who are trying to force them into becoming W-2 employees. This is being fought in Courts around the country and the world. Unsurprisingly, many employers and employees are not readily accepting the change. Companies such as Uber and Lyft, along with other businesses that need part-time and/or seasonal workers, are being challenged to eliminate gig workers.

American courts and politicians have for some time been pressured into maintaining the status quo, but this week produced an ominous decision from “across the pond.” From the Supreme Court of the United Kingdom (UK) came a ruling that may well produce a ripple effect in this country. In the UK, Uber BV vs. Aslam (Aslam) was unanimously ruled to eliminate the gig status of Uber drivers. That decision will most likely metastasize, and like COVID-19, spread over several continents.

Under Aslam, Uber drivers in the UK are now entitled to minimum wage and benefits such as Holiday Pay. While that may sound reasonable, even compassionate, it also allows the company to dictate working hours and conditions for drivers. In fact, the entire employer/employee relationship is altered, allowing the employer to establish mandatory wages, hours, and working conditions.”

Resulting from this relationship change, drivers may not be free to set their own hours. Rather, the Employer may demand their services in terms of time and place. Routes and hours can be changed, and when a customer requests a car, there may or may not be available rides in the immediate area. One inevitable result will be disappointed and inconvenienced customers.

The entire business model of ridesharing is now at risk. There will be some winners, but there will be a great number of losers. Many of the losers will be customers, and the overall volume of business activity could be diminished. Prices are certain to rise. And for what?

Aslam doesn’t stop at ridesharing. Delivery services for various products are booming in the COVID-19 economy, and these will also be affected, should Aslam's decision trickle down to this country. We know that our Supreme Court (SCOTUS) has a fondness for International laws.

The UK Court decision does not have to migrate to the USA. Congress could enact legislation to maintain the current voluntary system. After all, many elected officials use ridesharing, especially in Washington, D.C. Sadly, few are likely to care about cost and availability, as they are “prioritized” customers, and they get reimbursed for transportation expenses in the Capital City. By taxpayers. Go figure. Be careful what you wish for.

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