THE BLOG

6 Tech Trends to Watch -- or Ignore -- in 2016

01/05/2016 12:43 am ET | Updated Jan 05, 2016
  • Steven Hill Senior Fellow at New America, author of "Raw Deal: How the 'Uber Economy' and Runaway Capitalism Are Screwing American Workers"

Separating the Hip from the Hype...

2-0-1-6 -- what do those numbers even mean? When you think about it, it's funny how we delineate our passage on this earth by a rolling count of digits, like the mileage odometer on an automobile that marks out the wear and tear. Each click another year closer to...tick tick tick. I still have a vivid memory of the first time I became aware of a year -- it was 1-9-6-9, and my young mind was thunderstruck by the realization that those numbers meant something apparently important (other than the year the Miracle Mets won the World Series).

In the Chinese calendar this is the Year of the Monkey...in the Mayan calendar we are standing at the crossroads of 13.0.3.1.6. Best wishes to all for the upcoming year, however you demarcate your time. Here are six tech trends to watch during this upcoming Year of Monkeyin' Around.

1. Uber drivers are contractors? Not for much longer. A battle royal is looming for June 2016 in a federal courtroom in San Francisco. The combatants? Uber versus its drivers. Thousands of Uber drivers in California have filed a class action lawsuit claiming they are employees of the company but have been misclassified by Uber as independent contractors. If the drivers win, they likely will be entitled to reimbursement for their driving expenses, (such as for gas and vehicle maintenance), plus Uber will have to pay the employer's half for Social Security, Medicare, as well injured worker and unemployment compensation (and wouldn't that be a good thing?) The lawsuit also challenges Uber's dodgy practice of telling passengers that tips are included, even though drivers never receive the tips.

How is the judge likely to rule? Here's a clue. The labor standard boils down to how much control a business exerts over its workers. Recently Uber cut off hundreds (and possibly over a thousand) of drivers from its platform in Los Angeles and San Francisco because those drivers "acceptance rate" was too low. Many veteran drivers have figured out that, given the dramatic increase in traffic congestion (much of it caused by Uber's service flooding our streets with thousands of cars), drivers don't make any money on short rides because they are stuck in traffic. They have begun refusing short rides, so Uber fired all of these drivers without warning.

Think about it: if these drivers really are the "CEOs of their own driving business," as Uber likes to claim, shouldn't they be able to refuse a ride they know will cause them to lose money? This incident and others show that Uber exerts beaucoup control over its drivers, which seems to support the legal claim by drivers that they are employees, not contractors.

Uber has countered that if their drivers are treated as employees then they will lose the flexibility that for many is an attraction of the job. But as various labor experts have pointed out, that's the reddest of red herrings. Restricting drivers' flexibility would be 100 percent Uber's business decision, not something ordered by the judge. No wonder many Uber drivers have called for forming a union, and recently legislation was passed in Seattle to allow NGOs to organize these drivers.

2. Year of surge pricing vs congestion pricing. With the ridesharing juggernaut having expanded so rapidly, already-traffic choked cities have become even more so. From San Francisco to Seattle to New York City, congestion is becoming a pressing "quality-of-life" issue. It's great to tap your app and have your own private chauffeur -- otherwise known as an Uber driver -- show up in 10 minutes, but in a "clash of conveniences" it now takes 20 minutes longer to get anywhere. This will be the year that major cities begin grappling with the considerable environmental downsides of ridesharing. It will start with Mayor Bill DeBlasio of New York releasing his administration's long-awaited "congestion report," in which they will determine to what extent Uber et al are contributing to congestion, and how ridesharing adds and detracts from the overall quality of the transportation grid. That report will become a model for other cities that are trying to figure out how to regulate this new and burgeoning service.

3. Forget driverless cars. Despite how much Uber CEO Travis Kalanick likes to crow about our "driverless future," and despite Lyft's recently announced development partnership with General Motors, outside of the new Star Trek movie this one is...not...happening... anytime... soon. Besides the remaining technological challenges, the liability issues are huge. Every driver makes hundreds of daily driving decisions that, strictly speaking, break the driving laws (for example, crossing the yellow line to pull around a double-parked vehicle). It all works out fine because of something called human judgment. But what company is going to program its driverless cars to break the law? And what regulators will approve that product, knowing that it has been programmed to break the law? To cut through this conundrum, some are proposing to create "virtual drivers" who will purchase "virtual insurance," but this is just gobbledygook vaporware for the fact that nobody knows how to move through this morass.

However, we may see driverless long distance trucks sometime soon, since driving on the freeways is a simpler task. A driverless truck could drive from San Francisco to Denver on the interstates, and when the truck reaches the final destination then it pulls over in a truck stop where a human takes over and drives the final few miles into the city. But riddle me this Batman: what single occupation employs more US men than any other? You guessed it, truck driver. Approximately1.6 million men are truck drivers, and their jobs are in the crosshairs. Which is unfortunate, because the skills and training for being a truck driver are not easily transferable to other occupations (except driving for Uber?). Is it really all that "efficient" to unleash a technology that will wipe out all these jobs? Isn't it also efficient for people to have gainful employment? Creative destruction is fine, but we should deploy appropriate levels of regulation to ensure that it remains as creative as it is destructive.

Post-note: Did anyone notice, that Lyft just announced that it's a taxi company after all? Tucked into the announcement that Lyft will develop self-driving cars with GM was this little nugget:

"G.M. will also work with Lyft to set up a series of short-term car rental hubs across the United States, places where people who do not own cars can pick up a vehicle and drive for Lyft to earn money."

Lyft will rent cars to its drivers? How is that any different than a driver paying a gate to a taxi company to drive its taxi? It will be amusing to see how Lyft tries to spin this one. "No, really, we are still a technology company, not a taxi company...so we shouldn't have to follow taxi regulations blah blah blah."

But if it walks and talks like a duck...

4. "Year of the Portable Safety Net" for workers. Recently a plan to create "portable safety net benefits" for U.S. workers was endorsed in principle by 40 business, labor and NGO leaders, and written about in the New York Times and Wall Street Journal. As proposed in my book Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers, a plan for a portable safety net would allow health benefits and other worker supports to stay with a worker as she or he moves from job to job. For decades following the New Deal, most workers had a single employer who provided their safety net. But now more and more workers are working for multiple businesses, either as contractors, freelancers, temps or regularly employed part-timers. Unlike in Europe, Japan, Canada and elsewhere, the U.S. system was never set up to provide a safety net for these sorts of workers. In 2015, engaged discussions based on my portable benefits plan were initiated among some business and political leaders in Silicon Valley, which led to the signing of the statement of principle. Look for further steps towards this in 2016, and possibly legislation being introduced in various cities.

5. Year of the Unicorn IPOs. Uber, Airbnb, Pinterest and Snapchat will move into IPO orbit, driven by the Federal Reserve's first rate hike in more than nine years. The Fed's recent quarter-point hike is likely to be the first of several, which will force these companies' hands. The past decade's low-interest environment has made it really cheap for these companies to fund their own growth by borrowing private capital through venture funds which could get higher yields for their money from these unicorn companies. But as interest rates creep up, government bonds will become more attractive and the unicorns will find fewer investors. So that will likely force them into the stock market in order to raise private capital as a way to fund their ongoing grab for market share.

But going public means it won't be so easy anymore for these companies to play hide-and-seek with their cherry-picked data. It's not clear that any of these companies are profitable or able to thrive without being subsidized by deep-pocketed venture capitalists. An IPO and its aftermath will provide more of a glimpse behind the Wizard of Oz curtain. Following other notorious IPO flops that began with flashy debuts at Square, Alibaba, Box, GoPro and Fitbit, the Wall Street Journal wrote, "The data suggest that even some of the most promising startups in Silicon Valley might be worth far less in the eyes of the rest of the investment world." The smoke-and-mirrors of the "sharing" economy startups may be in for a rude dust-up.

6. Forget wearables. Who needs a Dick Tracy smart phone the size of a large postage stamp hanging from your wrist? Apple can't make up its mind about how big their appliances should be, leading to the current aimless drift toward devices that are either bigger -- or smaller -- than my "ancient" iPhone 4S (more than adequate, thank you). The big smart phones are too clunky -- it's like carrying around a hockey puck in your pocket. And the Apple Watches are for those with tiny, wee fingers -- elves, perhaps?

On top of that, the watches are unaffordable to most people, but Apple has a plan to change at least your perception of that. Along with providers AT&T and Verizon, Apple has concocted a new pricing structure for buying an iPhone, and there's no doubt that consumers are sticker-shocked to find the cost is now twice what it was. One plan charges consumers a monthly fee of around $25 per month, plus various surcharges and activation fees on top of that. And presto, the price of an iPhone suddenly is a lot closer to that of the silly techno-jewelry. Still, I'm guessing wearables will go the way of Google glasses.

That's my quick take, what's yours? Wishing everyone a Happy 2-0-1-6!

Steven Hill is a senior fellow with the New America Foundation and the author of the recently published Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers. You can follow him on Twitter, @StevenHill1776.

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