Will Sharing-Economy Regulation Affect Devs?

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The sharing economy is growing at breakneck speed. Sometimes it seems that, if there’s a service desired by a reasonable amount of people, a startup with a mobile app and an army of crowd-sourced freelancers is already rushing to fulfill it.

Most startups use freelancers because it’s significantly cheaper than hiring full-time staff—and until recently, this new way of doing business was allowed to grow unchecked. But as Uber, Lyft, Airbnb and their ilk all grew in prominence (and revenue), governments and activist groups began to take note. Uber and Lyft are under pressure to treat their drivers more like employees; Airbnb is under fire with many municipalities that want the company to begin imposing hotel-like regulations on hosts.

Mobile app developers are integral to these businesses. If the services become more regulated, how will that affect those tech pros’ work prospects?

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Marc Fischer, CEO of Dogtown Media, a Los Angeles-based app development company, fields app pitches every day for just about everything you can imagine. He has tremendous enthusiasm for the sharing economy and an individual’s ability to use his or her own goods and services, on his or her own time, to make a living. He’s also distrustful of government regulation, and is concerned that interventions will be a drag on innovation and a hindrance to worker autonomy.

“Anything bureaucratic that the government puts on business usually has a negative effect because there’s higher taxation, more compliance, legal liability and also operational requirements that raise the cost of doing business,” he said. “The cost is passed on to consumers and, as a result, these companies’ growth models, which are based upon people being able to log on or off at will, are going to slow down or start to fail. I believe it’s going to have a negative effect on our industry.”

Some developers don’t see regulations as having any significant impact on their business, especially if their skill set is stellar. Aaron Cohen, manager at Fueled, a New York-based app development company, said: “I can tell you right now that Uber being forced to classify its drivers as employees will not have much impact on its rank and file engineering staff. High quality developer talent remains a scarce resource. In NYC, there are 10 openings for every qualified engineer.”

Even if reclassifying a virtual workforce into full-time employees bankrupts a startup, Cohen stressed that its engineers will have no problem finding new work. “Such a ruling may breathe some life into Uber’s legacy competition but not for long,” he said. “All it would mean is reducing their profit margin a few points. Or maybe they’ll just pass the cost along to you and me the next time we catch a ride.”

WorkJam, an employee relationship management platform for the sharing economy, coordinates the skills, schedules and invoices of hourly workers with the companies that employ them. Its fiscal health is dependent upon the people, many of whom are in the service sector, who use its app. COO Joshua Ostrega doesn’t believe legislation is a zero-sum game. He thinks government may provide a framework to prevent workers’ rights from being trampled.

“We’re witnessing a moment of incredible change like never before,” Ostrega commented. “We’re watching disruption go on right in front of us. I think there are going to be challenges in the economy. We’ve always heard these doomsday scenarios that some technology is going to displace something or someone, but the reality is that things improve or work themselves out.”

His opinion is that there’s definitely going to be transition—but nothing catastrophic. “I think it’s too big and it’s happening too fast,” he said. “Just the way the economy is working, people are being forced into these 1099 roles. So while workers’ rights have to be paramount, at the same time you don’t want to stifle the pace of innovation that’s actually helping them.” His conclusion is that there’ll be a shakeout with some regulation, but it won’t hinder business in a way that will affect app development in the long term.

“The new apps for the sharing economy increase freedom of choice for me as a 1099’er,” said Heidi Wieland, founder at BigBangPR. She has high hopes for the sharing economy’s continued growth, and sees the accompanying network of apps as an incredibly innovative model for companies to give greater freedom to employees. “They’ll continue to thrive,” she added, “and may well disrupt large enterprise and make them better. Developers and innovators will be hired, selected, acquired and continue to thrive… it’s our nature.”