There was a paradox deep inside Gov. Doug Ducey‘s announcement Tuesday of a new research partnership between the UA and the ride-sharing company Uber.
It’s a paradox that reflects the pluses and minuses of the “sharing economy” that Uber is a part of and that Ducey is promoting in Arizona.
Uber will do research in Tucson on the mapping and optical technology it needs to operate driverless vehicles, the governor announced at the University of Arizona Optical Sciences building. It’s a remarkable project for this town and university to be a part of.
But if you’ve followed the debate between ride-sharing companies like Uber and taxi companies, you can see where I’m going: First, Uber drivers began pushing taxi drivers out of their jobs, and now, Uber is creating driverless vehicles that will eventually push Uber drivers out of their jobs.
Creative destruction, indeed! And this is an economic victory for us? Well yes, it is. And no, it isn’t.
Ducey is fully committed to the sharing economy — especially Uber. In January he administratively canceled regulations that were blocking ride-sharing companies from operating before the Super Bowl in Glendale. In April he signed a new law that ensured their businesses are allowed under state law. And in June he recruited Uber to downtown Phoenix, where it is establishing a 300-employee “center of excellence.”
“We’ve accomplished a lot this year in terms of improving Arizona’s business climate,” Ducey said Tuesday. “When you think about some of our biggest successes, there’s one word that always comes up. It’s Uber.”
“Sharing economy” is a name that’s been applied to a growing group of businesses that allow people to get paid to use their skills or belongings to perform a service, often on an ad hoc, irregular basis. In Uber’s case, that means drivers who are registered with the company make themselves available to give rides, for a fee, to passengers who have signed up for the service. Uber is, in essence, an app that brings together a willing driver and a willing passenger for a fee that Uber’s algorithms decide, with the company and driver each getting a cut.
The benefits are obvious: Consumers get transportation that is often cheaper and more convenient than the alternatives, and drivers get paid to use a vehicle that otherwise might be sitting unused.
A UA professor who has been researching “sharing economy” businesses told me Tuesday that they give clear benefits to consumers and can help the environment by making more efficient use of resources such as vehicles.
Anita Bhappu pointed to companies such as RelayRides, which allows people rent out their cars. Imagine going to the airport and, instead of leaving your car there while you’re gone, renting it to a fellow traveler who will use it while you’re gone.
The sharing economy is also referred to as “collaborative consumption,” Bhappu said.
“The other pillar of the sharing economy/collaborative consumption movement is that it’s about shoring up and strengthening local communities,” she said.
But Uber has not really emphasized this community spirit, Bhappu said — it’s been the “bad boy” of the sharing economy. While it is an innovative company, it is not the underdog that it likes to portray — it’s a politically connected corporate giant that uses a vast lobbying network to get its way in states and cities around the country.
In doing so, it facilitates a deterioration of traditional full-time jobs, as Ross Eisenbrey, vice president of the pro-labor Economic Policy Institute in Washington D.C., explained to me.
“The sharing economy is kind of a misnomer,” Eisenbrey said. “It’s basically an economy where an employer like Uber shifts as much of the costs of the work and employment off of itself and onto an employee whom it treats as an independent contractor.”
These companies don’t offer typical employee benefits and protections such as sick days, Social Security payments and disability leave, Eisenbrey noted.
Think of the contrast between Uber drivers and the striking Sun Tran drivers, who have sick leave, a pension plan, 10 holidays per year and 100 percent medical coverage for themselves and their dependents. That’s the difference between the old and emerging economy. Great for consumers, but not great for people who want secure, full-time jobs.
That’s the downside of embracing companies like Uber.
The upside for Arizona is that this sort of economic change is hard to hold back, and it’s better to be swimming with the tide than against it, as Kevin Desouza, an Arizona State University associate dean of research, pointed out to me. Governments often ignore, then react against, new technologies — but are better served by embracing them, he argued.
Support and management jobs, such as those at the new Phoenix center, and research work such as the type that will be occurring at UA, are where the benefits of these businesses more dependably accrue.
“It’s in Arizona’s best interest to embrace new technology,” Ducey said Tuesday. “This is about economic growth. It means new jobs, new research opportunities right here at the U of A.”
True enough, though those research opportunities may eventually mean fewer Uber jobs here and everywhere.