For much of the 2010s, the Gig Economy was a hot topic. Companies like Uber, Etsy, and Airbnb were darlings of Silicon Valley and Wall Street.

Now, with inflation putting an end to the free money years post-Great Recession, these companies are losing customers to high prices and calling the entire Gig Economy and the so-called "millennial subsidy" in question.

"I remember Ubers used to just be a no-brainer, and it would be like $20 here, $15 there, super easy. And now I mean it's $40 or it's $50, and you got to question that. …I mean, that can be more than your meal." Grant Plotkin, a 26-year-old Gen Zer, told Business Insider.

The Millennial Subsidy is a term coined to describe the years of cheap, convenient services from apps like Blue Apron, Uber, DoorDash, and more.

Still, some question this dip. Uber's gross bookings for the second quarter of this year are up 19%, with revenue up 16% year over year. The numbers at Lyft, Instacart, and DoorDash all look the same.

So, what's going on?

"It appears that consumers accustomed to the ease of hailing a ride or having something delivered to their doorstep with the touch of a button are loath to give that up," writes the Financial Times. "But gig economy companies — which are labor intensive businesses — can also benefit when the economy slows. More people look for side gigs to supplement their incomes. This increases the pool of drivers and delivery people. Delivery times and prices come down; the service becomes more reliable and affordable. This helps attract more users."

And labor is a central piece of the puzzle. Ridesharing companies have long fought to keep their workforce under contractor status rather than full-time employees (a distinction that saves the companies massively).

In 2020, Californians passed Proposition 22, which shielded Uber, Lyft, and other gig economy apps from reclassifying their labor pool as employees. Late last month, the California Supreme Court upheld the proposition, giving it momentum to spread to other states.

“The companies and proponents of Prop 22, including some gig-based workers, are going to try to scale this to other states,” Caroline Donelan, partner with labor and employment firm Blank Rome, told CNBC. “And at the same time, there’s going to be more pushback from unions and opponents of Prop 22 to go straight to various state legislatures to seek more protections for workers.”

“I think it provides a template for the types of laws they could try to get passed in other states, whether it’s through ballot initiatives, where that’s an option, or legislation,” added Gary McLaughlin, partner at Mitchell Silberberg & Knupp.

The Union Push

Long-established unions like the SEIU fought alongside upstart unions like the California Gig Workers Union to defeat Proposition 22. But with its passage, these labor groups see unionizing as their best defense. "They can unionize, but they cannot, if they’re properly characterized as independent contractors, bargain for wages and conditions of employment,” William Gould, professor of law emeritus at Stanford Law School and a former chairman of the National Labor Relations Board, told the San Francisco Chronicle. Instead, with a union, "they could speak out politically. They could fund litigation designed to improve their conditions. They can try to get legislators elected who are sympathetic to them.”

Verdict

The way we work and our economy as a whole has undergone massive change (thanks in no small part of Silicon Valley) over the last decade-plus, so it's no surprise our labor rights are also in flux. If the paradigm secured by California's Prop. 22 will now be scaled across the country, the role of the union and who it can represent should change alongside it.