Fixing the sharing economy

Fixing the sharing economy

Over the past decade, online platforms like Upwork, Uber, Airbnb, and TaskRabbit have helped the sharing economy to become a major part of the economy at large. The idea behind sharing is compelling: connect those who have things (e.g., talent, tools, rooms, rides) with those who want them.

While the concept of freelance or contract work is an old one, today’s technology has enabled participation on a massive scale. We’ve moved from having a temp industry dominated by clerical work to having sharing platforms for just about everything. Recently, even the medical and dental professions have begun using sharing-economy-type platforms to connect workers to the practices who need them.

It’s not all sunshine and roses

As the use of sharing-economy services has become more prolific, so has criticism of individual companies and the concept as a whole.

The discord can be seen in recent legal battles. Both Uber and Lyft have faced lawsuits surrounding their classification of drivers as independent contractors rather than employees. (Which is it? That’s still in dispute.) Airbnb took the city of San Francisco to court in an effort to block an ordinance that would penalize short-term rental companies when property owners flouted the rules.

The problems aren’t limited to legal disputes. Even outside the courtroom, critics argue that sharing economy platforms treat their workers unfairly by driving earnings down, denying them benefits such as health insurance and retirement savings, and leaving them to fend for themselves when legal issues arise.

Much of this stems from lack of regulation, either because the law hasn’t kept pace or because it’s not adequately enforced. Much of it comes from ethical concerns about the companies that control the online platforms. Consumers and workers both seek protections. It seems there’s a lot to be desired in the sharing economy.

What’s the appeal?

Despite all the criticism, matching platforms built on the sharing economy appeal to both consumers and service providers. In a world where corporations often prove themselves untrustworthy, there’s something attractive about circumventing the “middle man.” Workers are drawn to flexible scheduling and the ability to accept or reject tasks at will. In many cases, consumers enjoy lower prices and more personal service than they would get with a corporation.

Rachel Botsman, a renowned authority in collaborative consumption, has studied the sharing economy for years. In her TED talk We’ve stopped trusting institutions and started trusting strangers, Botsman explains that technology has enabled a “new era of trust.” “Today,” Botsman says, “many of us are comfortable getting into cars driven by strangers. We meet up with someone we swiped right to be matched with. We share our homes with people we do not know.” She says that this comfort is driven by the ability to see names, faces, and ratings through the platforms that facilitate these services.

The attraction is evident in the buzz and in the number of people actively participating. Freelancing in America: 2016, a report sponsored by Freelancers Union and Upwork, says that 35% of US workers are doing some form of freelancing. The report is a good start, but more detailed statistics are needed to fully understand the growth. The Bureau of Labor Statistics plans to collect new information on gig work in May 2017. It appears that even the US Department of Labor is interested.

Sites that match independent workers to jobs seem to be doing well. People are interested in the new economy and attracted by this new kind of trust. New industries, such as dental and medical staffing, are getting involved. The sharing economy won’t suddenly grind to a halt anytime soon. So, the logical next step in sharing is to address the criticism and, in the spirit of true sharing, work for the fair treatment of everyone involved.

Making it work

Things are nowhere near perfect. The sharing economy is just sort of stumbling in the general direction of ideal arrangements that benefit everyone. Laws are being made and lawsuits are being brought. But the government is only part of the picture.

Workers and clients are both essential parts of any agency, job-matching platforms included. People are attracted to contract work and project-based jobs due to their flexibility, but a worker will only stay with a job if it proves to be worthwhile. Consumers will only use a platform if they feel protected from fraud and damages. That’s where self-regulation comes in. Many companies see the need to cater to both workers and clients, and they’re actively working to evolve their business models.

Fair wages for workers

One of the primary criticisms of sharing platforms is that workers often take home less than the federal minimum wage. Even if a worker puts in a reasonable number of hours, there’s often no guarantee that their earnings will be worth the effort.

Low wages can be due to expenses or competition. Ride-matching services such as Uber and Lyft don’t help drivers with vehicle maintenance or gas. Online job platforms such as Upwork have minimum rates that are well below minimum wage, creating what many describe as a “race to the bottom” as freelancers from all over the world bid for work.

Some companies are hoping to attract business from both workers and clients by combating this. For example, Favor, a delivery service based in Austin, Texas, offers minimum guaranteed earnings.

There are other ways around the problem. Job-matching platforms often allow workers to set their own rates. This isn’t unique in the sharing economy. What’s different is the fact that workers compete only with locals and only with workers of comparable credentials. Medical and dental staffing platforms have a natural advantage over global free-for-all sites when it comes to making sure their workers receive professional rates. 

Other protections — for everyone

Certain tasks are naturally dangerous. Driving, making bicycle deliveries, and performing handyman tasks are a few examples of potentially hazardous jobs. Not only do workers need insurance for themselves and their property, they also must be insured against damage they may cause to other people and property.

Over the years, protections provided by the various platforms have evolved, and these protections often help both workers and clients. Uber and Lyft have both increased the insurance they provide to their on-duty drivers. TaskRabbit insures all of its users against injury and its clients against property damage and theft. Room sharing platforms like Airbnb and Vrbo provide anti-fraud guarantees to their clients.

Many job-matching platforms allow direct, real-time communication between service providers and clients. This ability to discuss the job and interview potential hires protects both the workers and the clients, allowing both parties the opportunity to learn more about each other before committing to a contract.

We’re getting there

Obviously, there’s a long way to go before workers, consumers, and platforms all feel they’re being treated fairly and doing good business. But there’s still a bright future for the sharing economy. The appeal of the talent – consumer connection is strong, and it’s worth pursuing. The better platforms in the industry are making changes to move in the right direction, building on the sense of trust that makes sharing so appealing.

This post is part of our contributor series. It is written and published independently of TNW.

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