Picking the winners and losers of the sharing economy

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Who will be the winners and losers in the sharing economy? That’s the question that’s raised — albeit indirectly — by Jeremiah Owyang’s latest blog post for the Wall Street Journal. Jeremiah and I co-authored the Vision Critical/Crowd Companies study, Sharing Is The New Buying, so I pay close attention to his work as one of the pre-eminent thinkers on the sharing economy. Part of what’s made our collaboration so fruitful is that we approach the collaborative or sharing economy through slightly different lenses, particularly when it comes to the distributive impact of sharing.

As Jeremiah writes in his post (co-authored with Alan Webber):

When it comes to the emerging sharing economy, the only thing that is clear is that there is no definitive ideological line.  Both liberals and conservatives see aspects of emerging companies and business models that they like and dislike. After all, in our view, liberals love job opportunities for the unemployed and disadvantaged, like online freelancer roles that enable many to work anywhere, anytime. However, they loathe how these workers must provide their own tools, health coverage, insurance and retirement benefits. Conservatives, meanwhile, love the entrepreneurial spirit and innovation surrounding the sharing economy, but loathe how startups are replacing traditional small businesses…From the liberal left to the conservative right, there’s no clear ideological perspective, as there’s something for everyone in this growing sharing economy.

Jeremiah’s right to point out that both liberals and conservatives have found elements to love and to loathe in the sharing economy. I’m less confident in his conclusion: while there may be something for everyone in the sharing economy, there’s no reason to be confident that there will be…at least not for long.

That’s because the sharing economy is such a new phenomenon that it’s yet to acquire the social and institutional framework that will determine who wins and who loses from these new forms of consumption and work. To the extent that sharing businesses already have radically different implications for different kinds of participants, it’s due to pre-existing economic, social and regulatory conditions: people who are already well-resourced can charge substantial rates for their luxury condos on Airbnb, or use freelancing sites to roll their own businesses at lucrative rates. Those same individuals stand to benefit as buyers, too: on-demand luxury services like Rent the Runway mean that you can live like a millionaire on a six-figure income, as Jeremiah himself has documented.

But at the other end of the income ladder, it’s not so clear that the sharing economy is a good-news story. On-demand housing sites like Airbnb may contribute to the spiralling cost of real estate, pushing home ownership out of the realm of possibility for even more people. The “microgig” economy may reduce wages and displace full-time jobs with lots of little pieces of work…work that comes without extended benefits. And virtually all sharing companies are set up so that the people who profit the most are not the actual suppliers and creators, but the entrepreneurs and investors behind the sharing network itself.

How can we shape this emergent space so that the benefits of a new economic model go some way towards addressing the ever-growing problem of income inequality? At last year’s Share Conference, SEIU VP David Rolf rocked my world by tackling this question head-on, in a way that I’d never have expected from organized labour. Pointing out the crucial role unions played in ensuring some measure of distributive justice in the last century, he observed that we need an analogous force or system to ensure distributive justice in the sharing economy — which may or may not be labour unions as we know them.

If we want the sharing economy to find some kind of path to distributive justice — as well as a way of delivering on the environmental vision of reduced consumption and better use of existing resources — we have only a limited window in which to set the right course. Governments are racing to establish the regulatory and tax frameworks that allow them to capture revenues from sharing startups, which means that now is the moment to set expectations for the environmental and distributive benefits those startups can offer. That could mean regulating and taxing so that we encourage rentals by residential home owners and renters, rather than investment buyers and real estate speculators; taxing sharing economy earnings differently when they offer profit-sharing to vendor/suppliers; and providing tax incentives to sharing startups that reduce resource consumption (e.g. Car2Go) rather than fuelling it.

There’s both a qualitative and quantitative difference between a recent university graduate launching her own craft business on Etsy, and a middle-aged taxi driver driving for Uber because he can’t get enough cab fares anymore. Which scenario proves more characteristic of the sharing economy is still to be determined…and you can bet that once the answer becomes clear, only conservatives or liberals will still see the sharing economy as their own particular darling.

2 Comments on this site

  1. Janni

    Great points and really bouncing it off of a book that I’m reading that notes that digital comm is part of the larger international political economy. However, I think that the other author is looking primarily at money making ventures and not the sharing economy.

  2. Ross

    A sharing economy has been around forever, with resources shared among families, neighbours, and friends. Time share resorts have been around for 50 years, and so have shared amenities in condo developments. But technology advances it further and introduces an array of new players, share-able assets, and payments arrangements. And market’s brokers, or middlemen, will always take a share of the economic rent. I’ll suggest that the real driver here is not the desire to reduce our environmental footprints, it is living with less – car sharing, for one, can save people money. The trend is clear that we will have fewer cars per household. The car companies and rental firms have had to adapt. Those with car assembly jobs may be laid off, as will hotel staff, and limo/taxi drivers. I am intrigued with how the SEIU might see a response.

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