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Labor Organization in Ride-Sharing—Unionization or Cartelization?

Posted by on Tuesday, May 25, 2021 in Articles, Volume 23, Volume 23, Issue 4.

Mark Anderson & Max Huffman | 23 Vand. J. Ent. & Tech. L. 715 (2021)

The sharing economy brings together the constituent parts of a business enterprise into a structure that, on its surface, resembles a business firm, but in crucial ways is nothing like the traditional firm. This includes the ownership of the primary capital assets used in the business, as well as one of the most fundamental features of a firm—the relationship with its labor force. Sharing economy workers are formally contractors, running small businesses as sole entrepreneurs, with the effect that they are excluded from many of the protections made available to workers across the economy. The result is a seeming disparity across the market, with consumers realizing benefits of choice and price that did not exist before and platforms possibly poised to turn profits as the hubs of massive enterprises with few of the burdens of a dependent workforce.

This Article explains how existing antitrust law would not allow labor organization by sharing economy workers. Even under a possible Rule of Reason approach, the worker protection goals that underlie collective bargaining are not cognizable efficiency justifications for collective bargaining. However, this Article also shows that existing law ignores the well-developed economic theory that supports labor organization as a response to monopsony, and how that theory supports the idea of labor organization as having pro-consumer effects.

This Article identifies two primary market structures—the fallow-assets model and the locked-in model—and shows how in the first structure the effect of organization would be to increase output in the labor market, leading to increased output and lower price in the consumer market, while in the second structure the effect of organization is likely to lead to harm in the consumer market. Outcome ambiguity and the novel enterprise structure militate for a Rule of Reason treatment of labor organization in ride-sharing. In operation, this produces the uncomfortable result that the workers least in need of labor protections are most likely to succeed in avoiding liability, while those most in need of protections are most likely to be subjected to damages and injunctions. As a result, non-antitrust labor protections remain essential.

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Mark Anderson

Max Huffman