(the) sharing (the) economy

Quick! You have just been told that you are having an additional week of vacation: what is the first site that comes to your mind to search for accommodation for that vacation? If your answer -like mine- is Airbnb, you are a part of the so-called sharing economy -even if you didn’t know it.

Nobody knows who coined the term sharing economy, which probably explains why its definition is so loose -encompassing from the on-demand economy to the gig economy, and a lot more. That also probably explains why although the term has been widely used since about 2010, according to a survey taken in the winter of 2015, only 27% of Americans had heard of it.

So, really, what is this all about? Is this about sharing something that I already have (like a lawn mower I hardly ever use) so that you don’t have to buy your own? (and vice versa, you sharing something you already have and that I may need occasionally). Well, yes, that could be an option -but one that hasn’t had any traction. So, no, not really.

That sharing of things probably never caught on because owning things is the marker of the middle class: once you make it (or belong) there you have the money to buy and own the things you like -even if you hardly ever use them. So you do buy and own them. Unless you are a minimalist, you like to buy and own your books, and magazines, and music, and clothes, and…

But it’s a totally different story when what you share are not things, but rather skills or services: say you need someone to 3D-print something for you, or someone to develop an app, or to edit a video, or to clean your kitchen after you throw a party… those would good examples of the sharing economy (and yes, there are platforms such as CanYa that can take care of that for you).

But talking about examples, probably the two most popular that come to mind are:

  • Airbnb is an online marketplace and hospitality service that enables people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. Or, simply put, your home away from home.
  • Uber is a platform that connects driver-partners and riders: driver-partners use their own vehicle (or a fleet partner’s vehicle) to pick up riders and drive them to their destination. Or simply put, your car only when you need it.

These companies don’t just represent a new way of thinking or new services, but a new way to use data effectively to provide services to people when and where they want them. In other words, they are first and foremost technology companies: without a sophisticated app to match a driver with a rider, Uber wouldn’t be competitive with taxi drivers who cruise around all day looking for fares -and the same is true of Airbnb and the many other sharing economy platforms.

These new ways undoubtedly have many benefits, not only for consumers and the environment, but also for the people looking for a different employment model:

  • Reducing negative environmental impacts through decreasing the amount of goods needed to be produced, cutting down on industry pollution (such as reducing the carbon footprint and overall consumption of resources).
  • Lowering consumer costs by borrowing and recycling items.
  • Providing people with access to goods who can’t afford buying them or have no interest in long-term usage.
  • Accelerating sustainable consumption and production patterns in cities around the globe.
  • Increased quality of service through rating systems provided by companies involved in the sharing economy.
  • Increased flexibility of work hours and wages for independent contractors of the sharing economy.

True as all of the above may be (and I personally think most of it is) the sharing economy has been (is) controversial, and not without criticism -in areas such as:

  • job loss: many people join the sharing economy because they’ve recently lost a full-time job, including a few cases where the pricing structure of the sharing economy may have made their old jobs less profitable (e.g. full-time taxi drivers who may have switched to companies such as Uber).
  • work conditions: using non-regular workers, companies such as Uber can lower labor costs dramatically, often by 30 percent, since they are not responsible for health benefits, social security, unemployment or injured workers’ compensation, paid sick or vacation leave and more.
  • labor protection law: ¿are the people working for sharing economy companies contract workers or employees? The difference is very relevant because contract workers are not guaranteed any benefits and their pay can be below average, whereas employees are granted access to benefits and pay is generally higher.
  • data transfer: sharing economy companies do not share their reputation data with the very users who it belongs to. This is an issue since no matter how well people behave on any one platform, their reputation doesn’t travel with them.

But what worries me most is the difference between the sharing economy and sharing the economy (thus the title of this post). What I mean by that is that sharing economy companies extract profits from their given sector by successfully making an end run around the existing costs of doing business (taxes, regulations, and insurance) while forcing a race to the bottom in terms of wages and benefits.

Thus, these companies make lots of money (Uber has been valued at $50B and Airbnb at $30B) but that money doesn’t trickle down to the people that work for them -nor to the communities where they operate. That is, they don’t share the economy, even if they open doors to a new economic model still being defined.

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