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Trump's pick for transportation secretary could be a big boost to Uber and Lyft

smiling travis kalanick uber
smiling travis kalanick uber

(Uber CEO Travis Kalanick.David Paul Morris/Bloomberg via Getty Images)

While much of Silicon Valley is reeling from the election results, companies that rely on the so-called gig economy, such as Uber and Lyft, might be breathing a sigh of relief at President-elect Donald Trump's pick for transportation secretary.

Trump has reportedly chosen Elaine Chao, labor secretary under George W. Bush, to lead the Transportation Department — and she's already shown that she's on the side of companies like Uber and Lyft when it comes to labor regulations.

In a speech at the American Action Forum in November 2015, Chao said many of the labor regulations in place today haven't caught up with the peer-to-peer economy that's been enabled by the internet, and she specifically used Uber as an example:


"Literally millions of people today participate in the digitally enabled, peer-to-peer economy. Despite its attraction for workers, however, some suggest the sharing economy is not a 21st-century construct at all, but a new version of the 19th-century 'piece work' economy. This ignores some basic realities, including who is working in the new economy, what type of work they are performing, and why.

"Take the ride-sharing company Uber, which published an analysis of a representative sample of its workforce of more than 160,000 drivers in 2015. Nearly half of the Uber drivers surveyed had a college degree or higher. Sixty-two percent had another full-time or part-time job. Nearly half had health insurance coverage through another job, spouse, or family member. More than two-thirds reported having financial dependents at home.

"So it's no surprise drivers cited the flexibility to set their own schedule as one of the principle reasons for partnering with Uber. Another frequently cited reason was the need to supplement fluctuating income from other sources.

"The survey also uncovered interesting compensation data. The after-tax, net hourly earnings of Uber drivers were generally equal to or higher than the average hourly earnings of traditional taxi drivers or chauffeurs. This is despite the fact that nearly one-third of taxi drivers and chauffeurs work 50 hours a week or more, compared with only 7% of Uber drivers."

As Dan Primack first pointed out, it's a noteworthy speech because not only is Chao clearly well versed in the labor issues facing these companies, but she's also willing to trust their data about workers without investigating further. Meanwhile, news organizations such as BuzzFeed have questioned whether Uber drivers can make a living wage at all.

Chao's stance on the gig economy — she also uses Airbnb hosts and Etsy sellers as examples in the speech — is that the government "must not stifle the innovation," and that there's room to craft new solutions (emphasis added):

"So it is legitimate to ask if the regulatory solutions of the past — crafted by big government for big business — are appropriate for a peer-to-peer economy that is fluid, flexible, and filled with workers who prefer independent arrangements.

"I believe there is room in our economy for a variety of approaches. We need to preserve the protections of the past for those who need them, while crafting new solutions that better fit the preferences of workers in the sharing economy. The digitally enabled, peer-to-peer economy has provided an important safety net for many families during difficult times.

"At a minimum, government policies must not stifle the innovation that has made this sector such an explosive driver of job growth and opportunity."

While Chao wouldn't be in charge of labor if she's confirmed, her familiarity with the issues facing these companies and pro-gig-economy stance suggest she might be friendlier to the rise of Uber and Lyft as alternative transportation services. Both Uber and Lyft told Business Insider that they're looking forward to working with Chao as transportation secretary — a role that could shape not only their labor policies, but also the future of self-driving cars.

"Ms. Chao's knowledge of transportation issues is extensive, and we look forward to working closely with her," said Niki Christoff, Uber's head of federal affairs.

Lyft also congratulated Chao on the position: "We have the utmost respect for Elaine Chao, an accomplished public servant and highly capable leader. We congratulate her on the nomination and look forward to working with her on an array of transportation issues."

Trump is expected to nominate Chao on Tuesday.

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