A huge economy in sight after a decade of freewheeling growth

Earlier this year, New York City introduced a minimum wage of $ 17.22 an hour after spending, among other regulations, the first in the country. In several European countries, efforts have been made to reclassify drivers among employees, including in the United Kingdom, where a court of appeal has ruled in favor of professional status, referring the last word to the highest court.

Taken as a whole, these changes show that, ten years after companies like Uber have gained tremendous popularity by offering low-cost on-demand services, governments have retreated, demanding the same labor protections and other regulatory requirements as businesses. Companies have avoided by designing their Business Plans.

When Uber and other companies such as TaskRabbit started offering concerts, consumers were initially thrilled with the convenience and novelty. Their employment model (self-employed entrepreneurs are not necessarily paid by the hour and do not receive benefits such as health insurance or unemployment insurance) has helped companies to remain agile and reduce the number of employees. holders such as taxis that can be weighed down by the city's compensation regulations. Workers can come in and out at will, including slipping between jobs. But as services have grown and become ubiquitous, complaints have multiplied.

By the time Big Tech began to lose its luster in Washington, the novelty factor of the mobile phone companies was beginning to dissipate. Even though the services are still enjoying high popularity among consumers, complaints of voters in cities and states have begun to accumulate under the effect of some of their effects, such as streets cluttered and low wages.

"Much of this brilliance has disappeared," said Meera Joshi, who headed the agency that regulates taxis and taxis in New York and oversaw the minimum wage required for Uber and Lyft.

"You see the same problems recurring around the world: they concern congestion, driver fees, the impact on the environment," she added. "In New York, a lot has happened faster."

Given the growth of the sector – Lyft alone said that more than two million people would have driven at some point in 2018, accounting for more than 1% of the US labor force – others cities and states should follow.

"California is not happening in isolation," said Bradley Tusk, a political consultant and venture capital specialist, whose Tusk Ventures was one of the first investors at Uber. "Politics in the state government tends to stay on the left", a problem for companies as the Democrats have advocated additional regulation of labor in the technology sector, he said declared.

These changes threaten to generate significant additional costs for the entertainment economy, which is not limited to Uber and Lyft, but also to a multitude of distribution companies like DoorDash and Instacart, including bicycles and delivery cars. now dot the streets of cities around the world. Almost none of these companies are profitable, and Uber and Lyft in particular have not identified a clear path to profitability.

Their shares have struggled since their debut on the market this spring. Uber has dropped nearly 25% since its IPO and Lyft by around 35%. Morgan Stanley analysts estimate the costs of Uber and Lyft drivers in California could increase by 35%.

Businesses said measures like California are not what most drivers want. Economics will force them to change their business models and reduce workers' flexibility if drivers are classified as employees, they say.

Nevertheless, the two companies state that they will continue to work with governments in the future. A spokesman for Lyft said the company "has been working for a long time with regulators to find solutions that benefit drivers and runners and support innovation."

New York's regulations differ from those discussed in California. Drivers are still independent contractors in New York, but their pay is minimal and the number of cars is limited. As a result, the number of rides in the city has recently begun to decline and companies have increased their prices, bringing them closer to taxi fares.

The California bill, known as Bill 5, seeks to require workers who fulfill a number of conditions, including not setting their own wages, to be considered employees rather than contractors. independent.

"People working in these areas need to be protected," said

Anthony Rendon,

the democratic president of the state assembly. "If it has an impact on their business model, it's probably because they have to pay more for their employees."

With the strong support of the union, the bill was passed by the legislature and

Governor Gavin Newsom,

a democrat, said that he would sign it.

Uber, Lyft and other companies, including DoorDash, are still demanding an agreement that would exempt them – an agreement offering them concessions such as a benefits fund and a measure giving drivers the opportunity to bargain collectively with several employers.

If that fails, they plan to turn to the voters. The three companies pledged earlier this month to spend at least $ 90 million to fund a poll initiative to reverse the bill.

The effects of the bill once it has become law are unclear. Lyft says that far fewer drivers would be able to drive in California because it would require regular shifts to handle the supply of drivers. Drivers would not be able to switch between applications – a common practice – and would instead pay a minimum hourly wage related to one.

Both Lyft and Uber stated that fares would increase for runners and wait times would increase.

After the bill was passed on Wednesday, Uber immediately signaled her mistrust by stating that she was not planning to change her practices because she felt the measure did not apply to her drivers – a position she would defend probably in the courts. Tony West, Uber's general attorney, said Tuesday that the company "will continue to defend our ability to allow self-employment on demand".

–

Alejandro Lazo

contributed to this article.

Write to Eliot Brown at [email protected]