This month, thousands of college students will graduate into a job market that’s looking much better than it has in the past, but still isn’t stellar. And, just as things were looking up, the first quarter of 2015 posted some dismal numbers – employment, job creation, wages and spending are not exactly in a place that we want them to be.
It’s no surprise that people from all walks of life are readily embracing alternative means of consuming – and earning.
I’m talking, of course, about the sharing economy, the likes of which has been the target of a few high-profile pieces that compare the concept of businesses such as Uber, Lyft and Airbnb to medieval feudalism.
It’s definitely a shock tactic, but the issues that thought-pieces, such as this weekend’s “How Everyone Gets the ‘Sharing’ Economy Wrong” in the Wall Street Journal, are certainly worth thinking about, even if you fundamentally disagree with the arguments that they present.
The Argument
The latest round of discussion was headed by presentations at the OuiShare Fest, a “festival about the collaborative economy” in Paris this past week. The conference was a three-day examination of how the sharing economy can continue to thrive within the “existing capitalist framework.”
The issue, as Izabella Kaminska writes over at the Financial Times, is that “the sharing economy is a rent-extraction business of the highest middle-man order.” Or, in other words, most of the sharing economy’s success is a result of companies either (1) leveraging existing networks, such as letting everyday homeowners rent out their homes while they’re away, and/or (2) creating a monopoly on services that don’t allow for their users to transfer credentials to other services (think about an Uber driver who suddenly wants to work for a competitor but realizes that his ratings and comments, which serve as verification for his ability, would disappear if he were to switch).
Those two issues are manifestations of another, much larger problem: the companies who were there first mostly monopolize the sharing economy. Companies like Airbnb and Uber dominate any conversation about the sharing economy – and thus affect our ability to control the way that we consume or work for the platforms that comprise this new economy.
This monopolization hurts workers who are unable to negotiate their salaries or contracts and are stuck working for services that don’t look out for them. It also hurts us consumers who are no longer free to choose the best possible services for the best possible price.
Rethinking “Work”
As the companies that comprise the sharing economy grow, labor laws and our understanding of what constitutes “employment” will need to grow alongside them.
Both Kaminska over at the Financial Times and Christopher Mims at the Journal write that the sharing economy is creating a new type of “feudal system.” Under this system, employees are able to work more flexible hours, but have lost the negotiating abilities, minimum wage guarantees and other benefits that older, traditional work contracts promise. Meanwhile, the lack of transferrable credentials means that employees are more apt to stick with an employer that they don’t like. Unfortunately, it’s harder for them to prove their abilities to other employers.
Kaminska discusses the possibility of developing a new guild system like the one that developed in the medieval ages, which allowed independent verification for the abilities of tradespeople.
Mims, on the other hand, proposes that the U.S.’ labor laws need a revision. He believes that it’s time to develop a third category of employment to cover workers in the sharing economy sector, instead of lumping them into one of two categories as we do now (“employees,” who reap the benefits of laws designed to protect them and “independent contractors,” who are offered few real protections). These employees would receive access to certain labor protections, such as anti-discrimination laws, but would likely still not be covered by policies such as minimum wage laws.
Protecting Start-Up Culture
At the same time, it’s vital that we continue to develop laws and regulations that protect workers while helping these start-up businesses grow and thrive. The meteoric success of web-based services like Uber has proven that there’s a large base of consumers that are tired of paying for the status quo. And, by the same token, the growing number of moonlighters and freelancers – about 53 million Americans work in some sort of “contingent” or freelance arrangement – shows that there’s still high demand for the types of jobs that these services create.
Ultimately, sharing economy employees are not bound by contracts or agreements. The services that companies like Uber provide allow workers to embrace their entrepreneurial spirit and work for themselves without shouldering the burden or risks of launching their own business or negotiating their own contracts. In doing so, however, those employees also lose a bit of the autonomy that a true freelance job would provide.
What remains to be seen is whether or not consumers will continue to support businesses that they see as unfairly treating their workers. With the growing debate around labor laws in the United States, however, that issue will likely be solved soon.
