In August 2014, the online transportation network Uber launched a new service named ‘UberPool,’ which allows Uber users to share the cost of a car ride with strangers traveling along a similar route. In the two years after its launch, UberPool recorded more than 100 million rides and came to account for approximately 20% of Uber trips. But while Uber has successfully facilitated pooling among its millions of customers, it has done little to facilitate a different kind of pooling among the 400,000-plus drivers who compose its workforce: the pooling of risk. In a forthcoming article for the University of Chicago Legal Forum, I focus on five types of risk: health risk, longevity risk, mortality risk, disability risk, and productivity risk. I explain how these risks are pooled in traditional workplaces and why gig economy platforms such as Uber fail to facilitate such pooling.

Risk pooling in the United States occurs largely through the workplace. There are a number of reasons for this. First, reliance on workplace-based risk pooling mitigates (though it does not eliminate) the adverse selection problems that arise on individual insurance markets. Second, at least in some cases, employers may be able to manage moral hazard problems more efficiently than insurers. Third, channeling insurance transactions through the workplace takes advantage of scale economies and specialization: human resources experts navigate complex marketplaces on behalf of large groups of employees, some of whom may lack the sophistication to do so themselves. Last but not least, US tax law subsidizes workplace-based pooling through a number of preferential provisions that the article describes.

Importantly, most of the tax incentives for workplace-based risk pooling depend upon the classification of workers as employees rather than independent contractors. Moreover, Uber and other gig economy platforms are reluctant to accept employee classification for their workers, which would likely trigger the application of minimum wage laws, overtime requirements, and vicarious tort liability. Gig economy workers are thus excluded from substantial tax subsidies for workplace-based risk pooling that workers in more traditional employment arrangements enjoy.

The article concludes by considering the future of workplace-based risk pooling given the growth of the gig economy and a rise in the number of workers classified as independent contractors rather than employees. One potential reform would be to decouple the tax preferences for workplace-based risk pooling from the other legal consequences of employee classification. For example, Congress might allow a tax exclusion for Uber’s contributions to its drivers’ health, disability insurance, and pension plans while also allowing Uber to continue to classify its drivers as independent contractors for other purposes. Another possibility is that gig economy workers will ‘re-pool’ on their own through voluntary cooperatives. Yet, as the article notes, this sort of re-pooling reproduces some of the same adverse selection problems that plague individual insurance markets—and without many of the tax advantages that flow to participants in workplace-based risk pools. A third approach would involve a greater governmental role in risk pooling. While a Republican-controlled Congress is unlikely to take safety net-expanding actions, public pooling is more politically plausible in some US states. In the meantime, we can expect that workplace-based pooling will remain the primary mechanism for risk sharing in the United States outside the limited confines of Social Security, Medicare, and Medicaid. While platforms such as Uber are sometimes described as constituting a ‘sharing economy,’ a more apt description might be the ‘go-it-alone economy,’ in which risks are individualized and workers go unpooled.

Daniel Hemel is Assistant Professor of Law at the University of Chicago Law School.