AirBnB.Com, Uber.Com: Will State And Local Governments Shutdown The New Generation Of Small Business Owners?

Posted: Dec 07, 2014 12:01 AM

If you own a house or car, should you be free to do what you want with it? If your plans for your personal property include making money, then you may find out the hard way that, no, you can't do as you wish.

That's the harsh lesson being learned by many Americans as they participate in the new, burgeoning freelance services industries.

Consider Raleigh, North Carolina resident Gregg Stebben. He and his wife Jodi are registered as service providers with AirBnB.Com, the new online venture that matches travelers in search of lodging with private homes, extra bedrooms and couches for rent.

Stebben says he and his wife became providers (what AirBnB.Com calls "hosts") for fun, but what has ensued in the last few weeks has become drudgery. "I'm not a very political person, but right now I'm at the center of my hometown's politics" he says.

The renting of an extra room in their house became the subject of government scrutiny by politicians and city officials concerned that the Stebbens, and others like them, are undermining the local hotel industry. Last week the Raleigh city council voted to fine the Stebbens for their entrepreneurial activity and demanded that they cease with renting a room.

"We don't want our local hotels to disappear, so I understand that there are legitimate concerns here, but there's got to be some middle ground approach to this" Stebben says. "This isn't about the $80.00 a night that we might earn for renting an extra room, this is about the bigger picture, about whether or not our city is going to attract more businesses and entrepreneurs in the future."

The frustrations that AirBnB.Com and the Stebbens are having with Raliegh city government officials are not isolated. Earlier last month, the government for the entire state of Nevada effectively shut down Uber.Com, another freelance services enterprise that matches people needing a ride across town with local vehicle owners willing to drive.

The Nevada Attorney General's office argues that having previously set up shop in the Las Vegas area, Uber.Com was operating without the appropriate licensure and impinging on the rights of taxi cab operators. Uber.Com argues that there is no state law that regulates ride sharing services, and that ride sharing and taxi services are not the same thing.

Both sides of the equation have legitimate interests and concerns. But the deck is stacked against the freelance services industries, for a few different reasons: A) politicians naturally want to regulate and control and tax private enterprise; B) there are entrenched systems in place nationwide for regulating and taxing established services businesses like hotels and cab services; and C) politicians are typically short-sided such that they don't look for the next great wealth creating enterprise so much as they seek to keep taxing what they already control.

Will state and local government officials successfully kill-off the new entrepreneurial spirit of freelance service providers? The mighty Mayor Bill DeBlasio of New York City has vowed that he will successfully run AirBnB.Com out of his city, calling people's private bedrooms-for-rent "illegal hotels."

But if, as Stebben suggests, there is a "middle ground approach" between the new freelancers and the old-school business operators, it may have appeared recently in the state of Washington. “We had to take a serious look at both the taxi industry and the competition provided by” notes Tim Szambelan, a spokesperson for the city attorney’s office in Spokane. On Sept. 29 the Spokane City Council adopted new ordinances regulating both the taxi industry and the private ridesharing businesses.

With the new regulations in Spokane, private ridesharing companies will be required to pay the city 10 cents on every ride its drivers make, up to an annual cap of $10,000; book rides only through their respective websites and apps (“street hails” of Uber and Lyft drivers are prohibited); submit their vehicles to city inspections; provide customers with electronic receipts; and maintain current records on all their freelance drivers.

“I hesitate to call this a matter of deregulation, but the City Council did opt to try and level the playing field between taxi operators and the independent ridesharing providers,” Szambelan said. He says that the new city ordinances will streamline the process of launching a new taxi cab business, as well as simplifying the process of obtaining vehicle inspections and hiring new taxi drivers.

“We support common sense regulations like the ones approved in Spokane,” explained Uber spokesperson Michael Amodeo “The Spokane regulations embrace the unique nature of ridesharing.”

But will a sufficient number of Americans embrace the unique nature of ridesharing - and the other freelance services that are newly available? If a detached and ambivalent electorate doesn't wake up and demand better behavior from their various governmental agencies, the politicians might successfully destroy the greatest entrepreneurial resurgence that the U.S. has seen in years.