Legislating Against The Middle Class

Everyone loves vacations–the adventure of spending a few days in a different place and relaxing. However, vacations are not cheap. Travel can be expensive, and hotels are expensive. Several alternatives to hotels have appeared in recent years to make vacations more affordable and to give Americans a way to supplement their income–companies like Airbnb provide cheaper lodging at popular destinations and allow people to earn extra income by renting out their houses on a short-term basis. Needless to say, hotels are not happy about the existence of a cheaper alternative. In Massachusetts, the hotel lobby has been successful in creating regulations that will greatly limit the availability of Airbnb lodging.

On December 30, Hot Air posted an article about a law recently passed in Massachusetts that will probably end Airbnb in that state.

The article reports:

Baker (Governor Charlie Baker) is touting this as a compromise which he claims is able to, “avoid placing undue burdens on occasional renters.” This is nonsense, of course, because in order to qualify for the exemptions to most (though not all) of these new burdens on hosts, you can only rent out your room for a maximum of fourteen nights per year. For most hosts, that’s not going to be worth the bother of signing up for the app in the first place.

The article lists the new requirements for people who want to rent their property on a short-term basis:

And what are these burdens? First of all, anyone with a spare room will now have to carry the same type of insurance as a hotel chain, basically wiping out any profit they might make. On top of that, they’ll be paying a 5.7 percent state tax, plus another 6% tax if municipal or county governments decide to impose one.

Further, hosts will be legally required to list themselves on a publicly available registry. Proponents claim this allows neighbors to know who is renting out rooms to “strangers” but it’s obviously intended as an intimidation tactic, opening up hosts to public shaming, abuse or worse.

The bottom line here is that the hotel industry and their lobbyists have won a massive victory. They don’t like private citizens cutting into their business so they’ve greased the palms of enough politicians to essentially shut Airbnb down in the state. As the New York Times reported more than a year ago, leaked documents from the American Hotel and Lodging Association (AHLA) revealed, “a multipronged, national campaign approach at the local, state and federal level.” The goal of that campaign was to enlist elected Democrats to pass laws which would choke the life out of Airbnb and protect their profits. They specifically mentioned Boston as one of their key target markets, and now they have succeeded in bribing the state government to shut Airbnb down.

The article concludes:

It’s true that some people have begun “abusing” the system by purchasing large amounts of property and renting it out like a hotel using the app service. Perhaps a law like this might have been more palatable if it were applied only to people with more than ten rental units or something along those lines. But for all the private individuals with an extra room or a guest house who were using the system as originally intended and making a little extra money, this basically shuts them out of the game.

Airbnb already has one lawsuit in progress against Boston for similar municipal laws they passed earlier. Now they’re saying a new suit against the state may be coming. But if they find no satisfaction through the courts we’re probably seeing the beginning of the death of the gig economy along with the chance for private citizens to profit from their own homes or apartments.

I hope Airbnb wins their lawsuit. They are essentially the Uber of the hotel industry and are going to have to fight many of the battles against lobbyists that Uber had to fight.

Big Government Protecting Itself

The Boston Globe reported yesterday that Massachusetts Governor Deval Patrick has quietly transferred 500 of his managers into the state public employee union. Governor Patrick will be leaving office after the upcoming election and the governorship is expected to be turned over to the Republicans. This move prevents the Republicans from downsizing the Massachusetts bureaucracy. Placing the managers in the state public employee union will also qualify them for a series of 3 percent raises and insulate them from firing when the next governor takes over.

The article reports:

While smaller clusters of management positions have been converted into union positions in the past, this is the largest sweep into the union in at least two decades, according to administration and union officials.

Rolling the managers into the 22,000-member union will effectively protect them from any house-cleaning that might occur when the next governor takes office in January — a particular likelihood if Republican Charlie Baker were to take over after eight years of Democratic leadership.

Union employees generally have to be removed “for cause,” while managers serve at will.

Obviously, this move will make downsizing the Massachusetts state government more difficult for the new governor. It will also increase the cost of state government, although Patrick administration officials have stated that the cost to the state would be “less than $500,000.” When did we reach the point where $500,000 was not significant?