The sharing economy: Destroying jobs won’t help low-income workers

Montreal, February 13, 2020 – Will Canada import California’s job-killing experiment and risk putting freelance work out of the reach of Canadians who need it? An MEI publication launched today shows that forcing companies to consider freelance workers as employees could reduce these workers’ incomes and deprive many of them of this first rung on the jobs ladder.

“The dramatic creation of new part-time jobs thanks to the internet and cellphone apps has expanded the range of services people are willing to hire for, and made it much easier both to work and to hire people for casual work,” points out Peter St. Onge, Senior Economist at the MEI and author of the publication.

The sharing economy has created over 60,000 Canadian jobs per year on average between 2005 and 2016. Consumers can now easily hire someone to deliver the groceries, shovel the driveway, walk the dog, mow the lawn, or simply call a cab that comes on time.

Unfortunately, regulators are increasingly hostile to this new job creation. “The goal of a California law that took effect on January 1st, 2020, was to improve conditions for gig workers. In practice, it has led to mass layoffs of freelance workers in the media and the film industry,” explains Peter St. Onge. “Despite good intentions, forcing employers to provide benefits to contract workers risks making matters a lot worse.”

Moreover, losing one’s job not only hurts the worker today, but can negatively impact future job prospects. One study found that the simple fact of having a part-time job, even involuntarily, reduces the odds of being unemployed a year later by over 80%—from 25% for unemployed workers to just 4% for part-time workers. “In other words, a great way to get the job you want is to work any job right now,” says Mr. St. Onge.

The Canadian economy is one of great upward mobility. A 2012 study of census data found that 83% of Canadians in the bottom 20% of income earners in 1990 had moved up to a higher income category ten years later. By 2009, 40% of them had even reached the two highest quintiles. Temporary jobs and those at the bottom of the ladder are often a prerequisite for this kind of mobility.

“Instead of making it harder to hire freelancers and part-time workers, governments should be making it easier. The freedom to contract and to work as one pleases is not only a fundamental right, it is among the most effective ways to help marginal workers who need that first rung on the ladder,” concludes Peter St. Onge.

The Viewpoint entitled “The Sharing Economy: Destroying Jobs Won’t Help Low-Income Workers” was prepared by Peter St. Onge, Senior Economist at the MEI, and Daniel Dufort, Senior Director of External Relations, Communications and Development at the MEI. This publication is available on our website.

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The MEI is an independent public policy think tank with offices in Montreal, Calgary, and Paris. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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Interview requests: Alexandre Bernier, Researcher – current affairs and communications, MEI. Tel.: 514-273-0969 ext. 2226 / Cell: 514-884-2947/ Email: abernier@iedm.org