Friday, February 27, 2015

The Sharing Economy and Jobs – I

It’s way past time that I looked at the newest major way for people to make money. 

The first time I read about it was a year and a half ago in a Thomas Friedman New York Times column.  Titled “Welcome to the Sharing Economy,” it described Airbnb, an accommodations-reserving company then less than five years old but gigantic, with places to rent available in 34,000 cities and 192 countries.  The piece was informative, but displayed two of Friedman’s most irritating tendencies.  First, it seemed giddy about the possibility of people selling access to their resources, combined with the let-them-eat cake mentality he has shown on other topics (“The skills required for any good job keep rising – a lot of people who might not be able to acquire those skills can still earn a good living now by building their own branded reputations, whether it is to rent their kids’ rooms, their cars or their power tools.”).  Second, he once again tied a barely related subject into green politics (“Just think how much better all this is for the environment – for people to be renting their spare bedrooms rather than building another Holiday Inn and another and another”). 

Yet the final two sentences of Friedman’s column were prescient:  “The sharing economy – watch this space.  This is powerful.”  Although Airbnb was, in fact, a huge company when he wrote the piece, it has continued to prosper.  It is joined by amateur taxi providers Uber and Lyft, the former of which does business in over 50 countries, and any number of other similar businesses with the same or other specialties.  A lot has been written more recently on the sharing economy, with views of it ranging from glowing to execrable, so it is clear to many that, somehow, it must be dealt with. 

So how can we assess this movement?  This week, the positives. 

First, the sharing economy is indeed a legitimate means for people needing money to get it.  The sharers not only pass along their resources for a price, but also invest their time, energy, and knowledge in the process.  All of these things are often surplus for them, especially among those without regular jobs.

Second, it is a proper descendant of eBay.  People have been selling their unneeded items there for almost 20 years now, with the company, as with Uber, Lyft, and Airbnb, not owning anything that changes hands but only taking money from those executing the transactions.  EBay has been a boon for vast numbers of people, for collectors, suppliers, and bargain shoppers as well as its investors, and it would be silly to say that its overall effect has not been positive.

Third, other sharing sites, such as TaskRabbit, help people get paid for their surplus time.  They have no minimum wage as such, but allowing the otherwise unemployed to earn something, somehow, is in itself a good thing.

Fourth, the sharing economy fits well with the times we are in.  Although there is a permanent jobs crisis, neither political side has been doing much of anything to end or even alleviate it, so, improving employment levels notwithstanding, many people are stuck not working.  It allows them ways of earning money, in some cases, even without being physically present.   It also helps those who have lost good-paying work without finding it at similar compensation but have fixed expenses, especially for cars and housing, by providing the means to defray them without giving up their houses and vehicles altogether. 

Fifth, it is strongly market-based.  With so many companies and providers, the amounts charged for tasks, rides, and night’s stays will settle at amounts determined by supply and demand.  There will be little concern about wide-scale overcharging, as the systems will allow others to easily undercut prices that are truly, as opposed to seemingly, too high.  Sharing applications also have the potential to slash market prices for products which are, in fact, grossly overpriced due to not enough people selling them.

Sixth, those offering resources through Uber and Lyft, and to some extent Airbnb, can be seen as franchisees, a well-established category of business with its own sets of strengths and restrictions.  More franchises, held by willing entrepreneurs, generally mean more solid, taxpaying business activity.

Seventh, it provides opportunity, even if often meager, for people to sell skills nationwide.

These seven points, of course, are only half the story.  For the problems and disadvantages of the sharing economy, along with how we should best handle it, come back in two weeks.  

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