A man waits to cross Montgomery Street in the Financial District in San Francisco, Calif. on July 1, 2016. (Photo by Joel Angel Juárez/Special to S.F. Examiner)

SF’s gig economy comes into focus

More and more residents in San Francisco are earning supplemental income from digital platforms like Airbnb and Uber, but as this new economy grows, so do the regulation challenges.

That’s why a new task force is being announced Tuesday to help the mayor and Board of Supervisors craft policies around the growing gig economy in a city already torn over how to regulate and tax technology companies.

Airbnb, for example, spent millions of dollars to defeat a ballot measure last year increasing short-term rental regulations, and filed a lawsuit last month against San Francisco after a new law was approved by city legislators requiring short-term rental companies to verify users are legally registered with The City before using their platforms or face penalties.

Meanwhile, a proposed 1.5 percent payroll tax on tech companies could go before San Francisco voters in November.

The gig economy is a term used to describe the economic activity of people who use digital platforms to earn income. In San Francisco, that means those who drive for Uber or Lyft, sell products via Etsy or Ebay, or rent rooms in their home using Airbnb, as well as others.

Supervisor Mark Farrell is spearheading the creation of the Gig Task Force in collaboration with the Mayor’s Office of Economic and Workforce Development.

Farrell said the task force — as well as a city report he requested that attempts to quantify for the first time the local gig economy — signifies San Francisco is taking the lead in addressing the growing industry.

“This is part of our economy that did not exist five years ago,” Farrell said during an interview Friday with the San Francisco Examiner. “It is growing so rapidly. And there will be new opportunities within this segment of the economy that are created over time.

“I think it is really important as a city that we have a vision of what our future workforce looks like and understand the implications,” he added.

The task force will convene with the gig workforce and digital platforms to make policy recommendations to city leaders.

The report from City Controller’s chief economist Ted Egan, also set to be released Tuesday, is perhaps more interesting for the questions it poses, rather than the questions it answers, because many are admittedly left unanswered due to limitations of data.

“As we see the beginnings of change in employment patterns we must evaluate the needs of this changing workforce and how our city can best support workers,” Todd Rufo, director of the Office of Economic Workforce Development, said in a statement.

The controller’s report “Gig Economy in San Francisco: Prevalence, Growth, and Implications,” found that 5.1 percent of San Francisco’s workforce are deriving income from the gig economy and for supplemental income, not for part-time or full-time work.

“Online platforms have had relatively little role in shifting people from full or part-time work into self-employment, and are not enabling a wholesale shift from wage work to a ‘1099 economy,’” the report states.

The percentage of San Francisco residents earning income from online platforms exceeds those in other major cities. Los Angeles has about 4 percent and other major cities are around 3 percent, according to The City’s report, which included data from the JP Morgan Chase Institute.

“Self-employment seems to be emerging in restructuring industries within The City’s economy such as Transportation and Manufacturing,” the controller’s report states. “Although we do not have direct data on the use of online platforms in The City, the growth of Transportation Network Companies and platforms that support sales by artisan manufacturers likely contribute to the growth of self-employment in those industries.”

Between 2004 and 2013, self-employment in the transportation industry grew by nearly 8 percent, the most of any industry, while wage employment declined by about 3 percent. Manufacturing industry wage employment also declined by about 3 percent while self-employment increased by 2 percent.

The gig economy is raising questions across the nation, including among members of the U.S. Congress. While such jobs are often touted for their flexibility, those working them often lack the protections and benefits of more traditional jobs because they are considered independent contractors.

In a May 19 speech at the New America Annual Conference, Sen. Elizabeth Warren, D-Mass., focused on workers rights

“It’s exciting—and very hip—to talk about Uber and Lyft and Taskrabbit, but the promise and risks of these companies isn’t new,” Warren said. “For centuries, technological advances have helped create new wealth and have increased GDP. But it is policy — rules and regulations — that will determine whether workers have a meaningful opportunity to share in that new wealth.”

The controller’s report states that due to data limitations, there is still much left unknown about the potential impact of online platforms, “particularly on struggling or disadvantaged workers.”

Questions left unanswered include, “Does working through a platform increase the earnings of workers?” and, “Are workers choosing flexible work through platforms in lieu of full-time employment?”

Egan said such data isn’t readily accessible, and would require research through surveys of workers.

Farrell noted the importance of exploring health care for such workers, but said more data needs to be made available “before coming to any conclusions.”

More data is expected to come through the Treasurer and Tax Collector, since short-term rental hosts must register with that office and pay the hotel tax, and drivers for companies like Uber and Lyft must register as a business as well with the tax collector, said Farrell, who plans to provide an industry update every six months.

It’s unclear whether companies will provide information to The City’s task force.

“Private companies involved in this industry have been thus far unwilling to share any level of information,” Farrell said. “We’re just looking for core demographic information that can really help assist us as a city government to understand the industry better.”AirBnBBoard of SupervisorseBayEtsyFacebookGig EconomyHonorLyftMark FarrellPoliticsRon ConwaySan FranciscoTaskrabbittechtech taxThumbtackUberUdemyUpwork

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