The Sharing Economy Paradox

By Karen Sternheimer

You don’t have to look hard to find invitations to join the “sharing economy:” ads invite us to drive for Uber or Lyft, rent a spare room on Airbnb or sell your wares on eBay. These online services promote easy use for consumers, and a way to make money by working as much or as little as you would like, and on your own schedule.

The “sharing economy” is not exactly new; people have been renting rooms in their homes, selling used items, and providing rides for pay through more localized channels well before the Internet’s existence. In communities with many elderly residents who no longer drive, it is not uncommon for a “younger” retiree to offer rides to neighbors for a small fee, for instance.

Technology has made it easier than ever to sell a variety of services online, made simple by companies like those mentioned above who provide a platform to connect buyers and sellers. No longer are drivers limited to their neighbors or word of mouth in order to make money. With online reviews and user ratings, these platforms provide at least a little information for consumers to make informed decisions about the services they are purchasing.

Critics have questioned whether this is indeed sharing—isn’t sharing something we do without the expectation of being paid? But more centrally, we might ask how the profits from these industries are distributed. Are the companies whose success comes from the service providers sharing the wealth they generate?

A Los Angeles Times columnist decided to find out for himself by becoming an Uber driver. He signed up to become a driver, did some test runs, and took an entire day to drive from 9 am to 5 pm, and then again after 9pm that day to get a sense of how much he might make. After 9 hours on the job he earned $122.64, after Uber’s cut.

He also had to pay for gas, and of course the car insurance and maintenance. As an independent contractor, he had no access to benefits. The app made it easy for people to pay online so he didn’t have to worry about collecting fares. Maybe because of this he didn’t get any tips. While Uber has an estimated value of $50 billion, Lopez estimated that he made just over $12 an hour during his experiment.

While this is just one day—certainly a driver’s income will vary each day—at this rate working 8 hour days, 5 days a week for 50 weeks a year one might earn $24,000 a year before taxes. When you consider the cost of gas, insurance, and the car’s maintenance, and income taxes, an Uber driver would likely have a net income low enough to qualify for food stamps. The “sharing economy” may be a contradiction in terms.

Lawsuits in California, Florida, and Massachusetts have challenged that Uber drivers are employees, not independent contractors, and should be granted the same rights as employees. Aside from benefits many full-time workers enjoy like health care, sick time, vacation time and retirement, these and other lawsuits raise questions about whether workers might be entitled to worker’s compensation or disability pay should they become injured. Driving, of course, is not without its risks.

By contrast, other online services might better fit the term “sharing economy.” For instance, Meetup.com earns revenues from organizers who pay fees to maintain their group on the site. This service promotes a variety of social activities from book clubs to photography groups, networking groups for different industries, political organizing, and an endless list of possibilities for people to join others for activities. While some groups charge nominal fees to participants in order to recoup the cost of the site, most events are free for participants.

While on vacation earlier this year, my husband and I signed up for a Meetup group at our destination in order to enjoy some outdoor activities with people who know the area. The organizer was a retired man who wanted to keep fit and active, and so he regularly scheduled 5-7 activities every week ranging from hikes to canoeing trips to visits to local festivals.

We went on one of his posted activities and enjoyed a hike in an area near our hotel with his group. He told us that he likes meeting new people and sharing his hometown with others. It is a win-win: he gets to exercise, avoid isolation, and feel pride about being able to help people enjoy their visit. He was truly sharing, expecting nothing in return from participants other than our company.

New opportunities to exchange goods and services are changing the economy in many positive ways, and with some drawbacks. Many people love the flexibility of renting a room in their house or getting rides from Lyft. It’s just not always technically sharing.

What other examples of the sharing economy can you think of that might not be truly sharing? Other examples of the sharing economy that embody the spirit of sharing?

Comments

[romi adams]

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