How Regulations Are Turning The Sharing Economy Into The Regular Economy

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The other day, an Uber ad popped up on my Facebook newsfeed. The ad was looking for drivers and it made one thing very clear: driving with Uber isn’t a job—it’s a casual way to make a bit of extra money.

That’s been part of Uber’s pitch since the beginning. It sees its drivers as independent contractors, self-employed individuals who use Uber to help connect them with riders.

It’s a premise that’s starting to break down.

In the United Kingdom, a labor tribunal ruled in late October that Uber drivers are employees, not contractors. While company is appealing that decision, the recent ad campaign suggests Uber wants to make that new drivers signing up for the platform (even those outside the U.K.) aren’t looking for a real job.

But, as Uber becomes a regulated player in the market that’s becoming harder.

In Quebec, the provincial government “legalized” Uber in mid-October. As part of that deal, Uber drivers in Quebec are required to obtain a commercial driver’s licence before Dec. 1.

While the professional license doesn’t cost a lot, and the process doesn’t appear to be particularly complicated, it’s still a time-consuming process that involves advance planning and probably some studying.

For someone who just wants to drive a couple hours here and there, it’s the type of barrier that just might be high enough to make them think twice.

Every hoop that has to be jumped through, every test, that has to be taken and every dollar that has to be spent before hitting the road makes casual drivers (the very drivers that Uber wants) less likely to sign up.

What will be left are drivers who do see it as a job. After all, they’ve invested their time and money preparing for it.

And that could force Uber to change the way it does business.

People who depend on Uber for their income are going to want more money – especially if they’re out on the road waiting for fares during non-peak hours and when there’s no surge in sight.

The end result is that Uber will not only have a workforce but that workforce will look a lot more like the taxi industry’s than an extension of the sharing economy.

And it’s not just Uber.

A similar trend is starting to impact Airbnb and other home-sharing platforms.

While home-sharing sites didn’t initially attract the same sort of regulatory attention that Uber did, that’s starting to change. Cities like Chicago, New York, Vancouver, Toronto, San Francisco and Montreal now have regulations governing short-term rentals, or are seriously considering them.

The rules, in many cases the result of lobbying by the hotel industry, generally seek to limit people’s ability to rent out their property on a short-term basis.

In Vancouver, putting a place up for rent on a site like Airbnb could soon require a permit. And people will only be able to get those permits for their primary residences. In New York, it’s illegal to rent out a whole apartment for less than 30-days.

But the effect of these rules is likely to be the opposite of their intent.

Instead of encouraging short-term occasional rentals, they push those very providers out of the market and open the door to professional services that straddle the boundary between staying in someone’s home and staying in a hotel.

Already, in many markets outside North America, searches on sites like Airbnb tend to return traditional bed-and-breakfasts, guest-houses, hostels and even hotels – rather than people’s actual homes.

Ultimately, if these trends continue, the benefits for people who want to participate in the sharing economy could be outweighed by the cost and complication of permits and licenses, leaving behind providers look a lot more like the old incumbents.

How to Earn Money in the Sharing Economy

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