Startups like Uber, TaskRabbit and Handy are transforming the way consumers access goods and services by matching people who need something—a driver, a housecleaner or a handyman, for example—with providers willing to supply it.
It’s called the sharing economy, and some 7% of U.S. adults say they are working on sharing platforms, according to a PricewaterhouseCoopers survey, with many more likely to follow, attracted by the idea of a job with flexible hours and the chance to be their own boss.
But is there a downside to these kind of work arrangements? Critics worry that sharing platforms may seduce underemployed and economically weak people into jobs with no benefits and few protections. Others say sharing-economy jobs provide different types of workers with something they value more than benefits: flexibility and autonomy.
The sharing economy is empowering millions of people to unlock the value of their time, skills and talents to make money in ways and on a scale never possible before. It is providing good jobs, but not in the way “good jobs” are traditionally defined.
A green shoot in a postindustrial age where technology is pulling us away from centralized, hierarchal institutions, the sharing economy is changing the way we create and access goods and services. The result is transformed labor coordination whereby ”needs” can be directly matched with provider “haves,” bypassing the traditional middlemen.
This transformation is impacting all levels of labor and workers of all ages. From drivers and housecleaners to attorneys making $100,000 a year, the “micropreneurs” working on sharing platforms fall into four groups, each of which derives specific benefits from this new economy.
First are the “flexers,” the stay-at-home parents, retirees, students, people with disabilities and others for whom the conventional demands of nine-to-five jobs aren’t an option. The flexibility and autonomy offered by the sharing economy allow this group to be in the workforce.
Next are those who can’t find a traditional job in a tough market. The sharing economy isn’t the complete answer to unemployment, but it can be a savior for many by providing an indispensable way to generate some independent income.
The third group, the “pros,” have made a full-time job from one or more sharing platforms. By providing brand, marketing, support and distribution services, sharing platforms have enabled these independent professionals to expand their businesses in ways that weren’t possible before.
Perhaps the most interesting category of providers is people with traditional full-time jobs seeking to earn extra income. I recently met an Airbnb host who had used the money she was making renting out two spare bedrooms to kick-start her textiles business on Etsy. Turned down by a bank for a starter loan, this was the only way for her to fund her passion. She isn’t alone. Economic impact studies by Airbnb found that more than 10,000 of its hosts have used rental income to support themselves while launching a business. The sharing economy is enabling individuals to take entrepreneurial risks they wouldn’t have taken otherwise, the effects of which aren’t yet known.
As these ideas become increasingly mainstream and lucrative, critical voices appear. It is true that benefits like health insurance and sick pay are being decoupled from the employment contract. But the sharing economy didn’t create this disparity; it is caught in a historical cycle of technological innovation outpacing employment law. What’s more, we’re already seeing new kinds of social safety nets emerge: TaskRabbit has introduced a wage floor, making it impossible for workers to earn less than $12.80 an hour. That’s higher than any state minimum wage in the U.S. Guilds like Peers.org and Freelancers Union are creating ways for independent contractors to pool bargaining power to access discounted health insurance and telecom plans. Some platforms are looking at how they can give providers equity, to share value with the people creating the value.
For many, a traditional employment relationship is an outdated and unattractive concept. When 1,156 Lyft drivers were asked if they would seek a full-time job if they couldn’t drive for Lyft, only 25% said yes. The control over their schedule and rates and where they work, plus the ability to decide what they’re good at and enjoy, outweigh the benefits of a traditional job. The genie is out of the bottle around the choices the sharing economy provides, and it can’t be reversed.
The companies building today’s digital sharing economy—ride-sharing services Uber and Lyft, small-jobs marketplace TaskRabbit, homecleaning platform Homejoy and other mostly venture-capital backed startups—claim to be generators of good jobs.
In reality, today’s sharing economy—at least in its current Silicon Valley 1.0 version—isn’t providing high-quality, secure jobs at all. Instead, it is compounding the increasingly precarious nature of 21st-century labor and creating a new class of networked workers: the “precariat.”
Not everything about the sharing economy is bad. Yes, it’s great for networked consumers who can now summon anything from a car to a cleaner on demand. Yes, this “gig” economy is undoubtedly convenient for somebody looking to earn a little extra money on the side. Yes, anyone can sell their labor on these networks whenever they like. And, yes, nobody is forcing anyone to “work” in this new sharing economy.
The problem is with the terms of service of this new sharing economy. The “jobs” offered by these Silicon Valley startups aren’t your fathers’ (or your mothers’) jobs. By presenting themselves as software marketplaces, sharing companies view their businesses as platforms, rather than as employers. And by categorizing their workers as independent contractors, or “1099 employees,” these platforms aren’t obliged to offer benefits traditionally provided under federal law.
The result is that sharing companies are creating jobs that have none of the legal benefits of traditional employment. The precariat is burdened with the traditional labor expectations of employees, yet their jobs generally don’t come with health care, unemployment or any other kind of insurance. There is no workers’ compensation, and ride-sharing companies such as Lyft and Uber ask drivers to shoulder the cost of leasing and maintaining their vehicles.
The sharing economy is actually doing the opposite of generating good jobs; it is generating huge inequality between the owners of the platforms and the precariat that sells its labor on them. This new economy—with its reliance on the huge returns demanded by venture-capital investment—can’t create good jobs. The vertiginous valuations of startups like Uber ($40 billion) and Airbnb ($20 billion) rest upon these companies treating workers as autonomous contractors without intrinsic economic rights.
If TaskRabbit, Homejoy or Lyft had the same financial obligations toward their employees as traditional enterprises, their radically profitable business model would be undermined and Wall Street and Silicon Valley investors would have little incentive to pour billions of dollars into these startups.
In some ways, this “new” economy is actually very old. It’s a Wal-Mart-style economy in which precariously employed, low-paid workers have little power. But even those in low-end, nonunionized jobs at traditional analog employers like Wal-Mart get some benefits under federal law. And in contrast with the “disrupters” of Silicon Valley who shamelessly claim to be “revolutionizing” work, at least the Wal-Marts of the world don’t market themselves as liberators of labor.
Too many sharing-economy workers have been seduced by the idea that the flexibility and freedom that comes from working when and where they want outweighs the benefits and security of traditional employment. It won’t be long before they discover it doesn’t. Some Uber drivers already are protesting pay and working conditions.
The sharing economy doesn’t work for labor. To create good jobs it must provide workers with the minimal benefits that guarantee a decent standard of living. But such concessions undermine the profit margins of these startups and are thus anathema to its investors. The sharing economy is actually a very selfish economy.
Source: The Wall Street Journal