August 3, 2016 at 5:00 am ET
Sen. Elizabeth Warren has carefully crafted an image of a fearless warrior fighting on behalf of the working class, protecting them from the greedy big businesses that put profits above consumers. Her crusades against Wall Street and big money donors are well documented and frequent. However, she has recently set her sights on Airbnb, casting serious doubt on her sincerity and commitment to defending the little guy, and raising concerns that she is siding with labor unions over consumers.
Airbnb is one of the most popular 21st century tech tools in the on-demand economy. With a presence in over 191 countries, Airbnb has proven to be an invaluable source of economic activity for communities and income for the working class. Across the world, Airbnb has boosted economic growth and incomes of millions of families.
But providing tangible and positive economic benefits to the working class, as well as an innovative service to consumers, is not enough to keep Sen. Warren from summoning regulators and her vast network of followers to target Airbnb.
In a letter to the Federal Trade Commission, Sen. Warren, along with Sens. Dianne Feinstein (D-Calif.) and Brian Schatz (D-Hawaii), aired concerns over Airbnb potentially discriminating against minorities and discouraging affordable housing.
Airbnb openly promotes having more than 2 million listings worldwide, across more than 191 countries. The share of rentals in any given American city is likely minimal in the local property market. A bigger impediment to affordable housing is the increasing demand for rental properties, a post-financial crisis phenomenon underway before Airbnb became a huge success.
In Boston, for example, Airbnb boosted the local economy by an estimated $51 million in 2014. And according to the company, “Airbnb hosts come from diverse income brackets, with a significant portion below median household income.” The ability for these hosts to rent out their property is not only helping the local economy, but also helping these hosts and their families make ends meet, support local businesses, and potentially save for retirement.
If individual allegations of racial discrimination are true, or if there are any violations of the law by hosts, Airbnb should step in and hold the individual hosts accountable. And there are signs pointing to them doing that.
In early June, Airbnb took steps to ensure racial discrimination and bias doesn’t take place within their community of hosts. Airbnb even enlisted former U.S. Attorney General Eric Holder to help craft what they are dubbing as a “world-class anti-discrimination policy.”
But Sen. Warren’s wholesale assault on the ability for people to use the service is a continuance of her efforts to attack any innovative service that allow entrepreneurs and the free market to determine what services are available to consumers.
It is more likely Sen. Warren is not personally opposed to Airbnb and similar services; rather, she is standing up for the labor unions that have bankrolled her campaigns and policy initiatives.
The New York Hotel and Motel Trades Council, AFL-CIO (better known as The Hotel Trades Council) successfully lobbied the Democratic-controlled New York Assembly to impose industry-crippling fines on short-term rentals. The bill was tailor-made to harm Airbnb and drive them out of New York.
Members of the New York Assembly offered a number of absurd reasons as to why this law was necessary. “Every night there could be different person sleeping in the next apartment and it shatters that sense of community in the building. It also can be dangerous,” said Assemblywoman Linda Rosenthal (D-Manhattan) who also described herself as “elated” when the measure passed.
But the reality is it had nothing to do with safety and everything to do with protecting the political activists and labor unions.
The unions supportive of the hotel industry view Airbnb as a threat to their political influence. If more consumers choose Airbnb rentals over traditional hotel rooms, less money will go to the big hotels, and consequently less money goes to the unions to be used for political activities.
The senators’ letter to the FTC signals the beginning of federal regulators going after another popular on-demand economy technology. It’s already happening at the local level in San Francisco, New York and other major American cities.
But as the fight against ridesharing companies has proven, working-class consumers want more choice and innovation in the economy. It’s up to Elizabeth Warren, the unions and regulators to adapt to the new reality.
Diego Sanchez Gallardo is the director of Hispanic Initiatives for the US Consumer Coalition, a consumer advocacy organization that promotes expanded consumer choice, responsible regulation of consumer-facing industries, fair market conditions and consumer freedom.