While the car service app Uber Technologies faces continued government roadblocks to doing business around the world, Democratic candidates for President like Hillary Clinton and Bernie Sanders have spoken out forcefully against Uber, insisting that the company should be further regulated, ignoring the possible consequences of higher fares for users of the Uber app and the ease of doing business for Uber drivers should such regulations become enacted. The primary contention drawn by Democrats is that Uber drivers are legally classified by as independent contractors, a status under which they are exempt from most state and federal labor laws, as opposed to being classified as employees.
In an interview with Bloomberg News, Bernie Sanders said he has "serious problems" with Uber because it's "unregulated." Martin O’Malley further proposes to create an entirely new safety net specifically for Uber drivers and other members of the sharing economy.
In Hillary Clinton’s recently unveiled economic plan, she heavily criticized Uber and the sharing economy as a major contributor to the rise in income inequality arguing it creates independent contractors, such as Uber drivers, who do not receive government mandated employee benefits.
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However, these arguments ignore evidence that in Uber's top 20 markets, Uber drivers "averaged more than $19 an hour in earnings, compared to $12.90 in average hourly wages for cab drivers based on Occupational Employment Statistics data”, according to a study co-authored by Princeton economist Alan Krueger, one of Hillary Clinton’s named economic advisers.
2016 Democratic Presidential Candidates Hillary Clinton and Bernie Sanders (Photo Credit: Spencer... [+]
Source: Alan Krueger and Jonathan Hall
The bold claim made by Democrats that Uber and the sharing economy are major contributors to rising income inequality is also flawed as the argument heavily overestimates the size and scope of “the sharing economy”. A new Wall Street Journal analysis demonstrates that the "gig economy" is still not that meaningful in the grand scope of the economy, as measured by the number of self-employed independent contractors in the economy and the percentage of civilian workers not on payrolls, which have both fallen in the past 5 years.
Source: The Wall Street Journal, U.S. Department of Labor
Jeb Bush positions himself as the pro-technology 2016 candidate as part of his 4% GDP growth goal
Republican candidate Jeb Bush meanwhile is positioning himself as the pro-technology 2016 candidate by making several trips to San Francisco, despite the city being a Democratic party stronghold, highlighting the importance of innovation to the economy. His visits to several technology companies most recently includes Thumbtack, a consumer service technology company for hiring local professionals. The former Florida governor also rode in an Uber car to the Thumbtack San Francisco headquarters in praise of the car service app.
Technology and innovation make up a broader part of Governor Bush’s 4% GDP growth goal, eschewing the complacency with the current environment of close to 2% growth. The 4% ballpark can arguably be attained under the right set of pro-growth economic policy conditions. Ronald Reagan’s agenda of tax cuts and regulatory reforms coincided with 3.5% GDP growth during his presidency. Bill Clinton’s agenda of free trade (NAFTA), tax reductions on capital, and budget restraint from the 1996 Welfare Reform Act coincided with 3.8% real GDP growth during his presidency.
Critics of the 4% GDP growth goal tend to be largely defeatist and complacent in embracing "secular stagnation", arguing that a growth rate close to 4% is unattainable and wishful thinking. Meanwhile, these same critics often call for enhanced regulations on technology companies like Uber, and continue to defend the Affordable Care Act and Dodd-FrankAct as written, without acknowledging their negative impact on economic activity in both the healthcare and financial industries respectively or any need for reform. Jeb Bush, on the other hand, offers a positive and optimistic goal that with the right economic policy conditions, higher economic growth can be realized, which in turn benefits society’s economically disadvantaged.
As the Kuznets curve demonstrates a strong negative correlation between income inequality (as measured by Gini coefficients) and GDP growth in developed countries, Jeb Bush's 4% growth goal doubles as an anti-poverty message that is empirically sound.
Kuznets Curve (Income Inequality as measured by Gini coefficient vs. GDP Growth)
