By Tom Still

MADISON – Whether the phenomenon is called the “shared
economy” or the “on-demand economy,” companies that capitalize on making more
efficient use of people and their possessions are changing some traditional
business models.

The most familiar examples are mobile applications that
facilitate ride-sharing – Uber, Lyft and Sidecar are prominent examples – or
ways to rent other people’s homes, such as Airbnb.

But the shared economy has spread into other sectors,
ranging from routine chores such as grocery shopping and laundry (Instacart,
TaskRabbit and Homejoy are examples) to legal and other professional services.
In Wisconsin, where natural resources and outdoor recreation are a big part of
life, shared-economy companies are emerging to rent hunting lands and

It’s a trend called the “Uberization” of the economy, an
app-driven labor market that advocates see as more efficient, liberating for
workers and satisfying for customers – and that opponents fear as unregulated,
unstable for workers and fostering a piecework approach to employment that
could disrupt society.

The debate is taking place in Wisconsin in cities such as
Madison, where ride-sharing companies such as Uber have become an issue on the
floor of the City Council and in the race for mayor. It’s also a subject of
debate in the Wisconsin Legislature, where a bill to establish a statewide
permit and safety regulations for ride-sharing networks has been proposed.

In the city of Milwaukee, the issue has been resolved … in
part. The Milwaukee City Council voted unanimously last summer to approve an
ordinance that lifted a cap on taxicab permits and opened the door to
tech-based services such as Uber and Lyft. The ordinance took effect last fall,
essentially bringing operators for Uber and Lyft under the same system as
traditional taxicab companies.

The ordinance requires Uber and Lyft drivers to follow the
same licensing and background investigation requirements as other drivers, but
those companies say Milwaukee’s regulations are still too rigid and expensive
for drivers who are predominantly part-time.

The ordinance at least allows such companies to operate
legally – which is not the case in Madison, where municipal fines have been
issued against drivers. It also lifted the cap on permits. A Milwaukee County
court had ruled the cap unconstitutional, anyway, so the city had little choice
but to formally open up the market.

In other major cities, the regulatory climate around
ride-sharing is much more relaxed because people like the service and have
voted with their feet and wallets. During a recent visit to Washington, D.C.,
my own experience with ride-sharing services was superb – and pricing was
competitive with traditional cab rates.

A few clicks on the mobile app and a ride appeared within
minutes, usually in a new, freshly washed vehicle driven by someone who knew
the city streets well. In many major cities, competition from ride-sharing
companies is raising the level of service among incumbent cab companies.

Municipal opposition to ride-sharing and other shared
economy trends is partly motivated by public safety. City officials worry that
ride-sharing drivers won’t be fully insured, that their vehicles won’t be safe
or that their backgrounds aren’t fully vetted. 

There’s also an undercurrent of “fence-me-in” economics at
play. Many cities appear reluctant to unleash market forces and innovation. In
the process, they may be costing their own constituents a chance for part-time
work that pays pretty well. A recent report by Princeton economist Alan Krueger
noted that Uber had 160,000 drivers working regularly in the United States at
the end of 2014. Those drivers worked fewer hours and earned more per hour than
traditional tax drivers – even after accounting for their expenses.

Cities that want to stand out as innovation hubs to the rest
of the country and the world should walk the walk as much as possible. That
means accepting the fact that the shared economy is here and growing. 
Protecting public safety is one thing; hiding behind it is quite another.