There is no share economy. Let’s stop pretending it exists.
Three big reasons why we need to think differently about online platform jobs.
On the same day last week that Ottawa became the latest Canadian city to recommend ‘legalizing’ Uber, the MaRS Solutions Lab released its “Sharing Economy Public Design Report”, the goal of which was to outline considerations for how municipalities might “help build a sharing economy that benefits the city”. For those unfamiliar with the term, the report offered a definition: “The ‘sharing economy’ is a paradigm of peer-to-peer lending that enables the sharing, borrowing or bartering of underutilized assets in exchange for goods, services or money… It is a fundamentally community-driven approach.”
There’s just one problem: this is hogwash.
In reality, there is actually no such thing as the “sharing economy”. And it’s about time we dropped the term completely, along with any definition similar to the one MaRS provided.
Not only are the words “share economy” inaccurate in describing what’s going on, they give a false sense of benignity to corporate entities that are anything but benign. This matters, not merely for reasons of accuracy, but for the way the public interprets what’s happening and, subsequently, how we all approach regulation.
The Farce of Equality
It has been pointed out before that there really isn’t a lot of sharing going on in the so-called share economy. That’s true. What’s mentioned less often is the connotation associated with the word “share”. It lends to ideas of mutual benefit or equality — that two or more parties have equal access to something. But not only is it not the case that people have equal access to these services (Uber and AirBnB require credit cards and, frankly, assume a certain level of wealth to use them), it turns out these platforms might even be exacerbating existing inequalities.
Recently the JP Morgan Chase Institute released a study based on what it calls the “open platform economy” (perhaps a more accurate term, since we’re on the subject). The analysis evaluated randomized, anonymized, high frequency data from a sample of one million Chase customers between October 2012 and September 2015. The result was “a dataset of over 260,000 individuals who have offered goods or services on one of 30 distinct platforms”, which the institute calls the “largest sample of platform workers to date.”
The study looked at both labour and capital platforms — the former being things like Uber, which rely on human labour, and the latter being something like AirBnB, which relies on assets users already have.
The first important finding was that there are literally two sets of people using each kind of platform (or app). The study found that, “among all participants over the three years, 21 percent participated in labour platforms, 78 participated in capital platforms, and 2 percent participated in both.” This means there is little chance that your Uber driver is also an AirBnB host or vice versa — there is very little overlap between the two sets of users.
The second key revelation was that those using capital platforms were more likely to be supplementing income, whereas those using labour platforms were substituting income. Additionally, the study found that the monthly median income for capital platform users was $3,218, whereas the monthly median income for labour platforms was just $2,514.
Put more bluntly, this basically means that people who already own things have a demonstrable earnings advantage in this new “share economy” than those who don’t, and that the labourers (like an Uber driver, for instance) aren’t doing all this work to catch up, but rather just to keep up. Those at an advantage will continue to be at an advantage in the online platform economy, and those who aren’t will continue to not be.
As for those people without that advantage – Uber drivers, for instance? As Douglas Rushkoff puts it in his new book, ‘Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity’, they will suffer the final indignity “when they are replaced with the automatic cars currently in development by Uber investor Google” — the very same driverless cars for which the Canadian government has devoted $7.3 million over two years to developing laws to, well, regulate.
There isn’t anything necessarily wrong with some people being at a disadvantage and others being at an advantage, nor is it Uber’s responsibility to solve that. However, it does mean that we’re not only describing this new “economy” inaccurately by suggesting it’s based on sharing, but also in so doing, completely overlooking what’s really going on. These new online platforms for work are not leading a revolution in equality either in access or in incomes; they may actually be contributing to the opposite.
The Farce Of Shared Space
Beyond their advertising language that sells ideas of entrepreneurship or support for middle class families, what Uber and AirBnB in particular are really selling to people is the idea of space. Specifically, this means that we can make use of space that might have otherwise been closed to us — in private homes or in private cars, respectively. This otherwise unused space has now earned a special status in many cities around the world: because it can be easily monetized, it has taken on more interpreted value. AirBnB demands we look at an extra room in an apartment very differently than we once did — it’s a premium space, rather than superfluous. Same goes for the extra seats in your car.
We value that space, now more than ever. But the space beyond it — the cities we live in — is really that which we literally share with one another on a daily basis. And though we may not think of it as having the same value as we now do our guest bedroom, it is still important. As are the rules that govern it. No platform like Uber or AirBnB has gone so far as to suggest that their business model ought to apply to anything outside of private property, but nevertheless, both have still shown an almost total disregard for shared space (cities) in one key way: They don’t care about the rules.
For the past few years, Uber and AirBnB (along with a few others) have been using what some call “corporate nullification” to push legislators to accept their business models. They begin operating in a city and intentionally flout existing laws to gain popularity and thus traction to aggressively force that city to change those laws in favour of Uber or AirBnB’s own corporate interests.
“Consistently, these nullifying companies claim they are striking a blow against regulations they consider ‘out-of-date’ or ‘anti-innovation’. Their major innovation, however, is strategic and manipulative, and it’s meant to undermine local needs and effective governance,” Frank Pasquale, professor at the University of Maryland School of Law, and Siva Vaidhyanathan, professor of media studies at the University of Virginia, wrote last year at the Guardian.
You can see this happening right now in Canada. It’s at the heart of why Ottawa city council was eventually forced to regulate in Uber last week. As it has in many other cities, that decision went Uber’s favour. Uber offered its service (which, to be fair, is more convenient and cheaper than the status quo), which people liked a lot, and used that popularity to ensure politicians re-wrote legislation in its favour.
Whether you think this is necessarily a bad thing or not might depend on what you think of local politicians. But regardless of even that, there is perhaps another reason to recognize the issue this presents: that is, what happens if every company starts doing the same thing?
Pasquale later put the problem this way to the CBC: “If [Uber] get away with it, every company will do this; every company will become a platform and just say ‘oh, the laws don’t apply to us.’ If we enter into that stage, then it’s game over for vast swathes of business regulation.”
That might be a bit extreme. Elected representatives — who probably should be more responsive to change, especially the kind people like — are gradually regulating Uber and AirBnB, after all. But while Uber or AirBnb are not at fault for offering a good service that people enjoy, should they not be faulted for disregarding our laws in order to offer it? There is a reason we have them. Because even if the laws they are specifically flouting are only those related to their business, there is something bigger at play. What these companies are in reality demanding is a more general concession from all of us: that we citizens, collectively, are no longer in charge of legislative decisions.
We may ultimately decide that their products are great and that they fit into the larger space we all occupy — that is, a city — but we should not be forced into that decision on Uber’s corporate timeline.
Both Uber and AirBnB — these monopolies of a so-called “share economy” — have arrived in cities with the attitude that the rules that have been written for the space we all occupy must be rewritten for them and the small spaces they need to monetize, and that they are entitled to that kind of decision-making power. It is a winner-take-all attitude. There is no sharing happening.
The Farce of ‘Economy’
What do we mean when we use the word “economy”, anyway? The word in this context has essentially become a stand-in for “jobs”. When someone says the “online platform economy” or the “share economy”, really they mean jobs facilitated by an app, or jobs coming from the exploitation of labour or assets for money. But how many jobs are we talking about?
It turns out, it’s quite difficult to tell, exactly. Thanks to the JP Morgan Chase Institute report, we have at least one figure attached to how many people in the U.S. have earned money from work related to an online platform — about 0.4% of adults. How many more? It could be quite a few, but according to a 2015 McKinsey study, these workers account for less than 1% of the total working-age population in the United States.
In Canada, we probably have even less of a clue. What we do know at least is that self-employment jumped 3.4% in 2015 — or by 92,000 jobs — in 2015. That’s a pretty large bump, and one would have to assume that was more likely due to commodity prices falling than people making a living from, say, Uber.
That example is deliberate, because according to one study, the reality is that what we call the “share economy” might in actual fact merely be one company’s activity. Labour economists Lawrence Katz and Alan Krueger last week released a report on the rise of what they call “alternative” work and the “‘gig’ economy”. When they’d previewed their findings earlier, according to Quartz, “the two describe Uber as the ‘quintessential employer of gig work.’ They also cite Google Trends data showing that searches for ‘Uber’ are double those for all other gig companies combined (i.e., Lyft, TaskRabbit, Hany, Instacart).”
The Wall Street Journal expanded on that finding a bit. “The rise over time in searches for Uber has correlated with the number of active drivers that Uber says it has on its platform,” it explained. “Surging traffic isn’t as evident for many other platforms. That’s not to say nobody is earning money from those other sites, just that they seem to be gaining much less traction than Uber.”
In fact, according to the Katz and Krueger report, Uber alone could represent anywhere from half to two-thirds of all online gig work. And while the number of people getting jobs from online platforms is on the rise in the U.S., they assert that offline “alternative” work (i.e. any type of temporary gig or contract work) “swamps” online gig work.
Which means when we’re talking about an “economy”, really we might just be talking about Uber.
It’s arguable that at one time, there was more to the “share economy” than just one app, but we might be passed that point now. In the years immediately following the recession, companies devoted more to actual sharing than Uber or AirBnB popped up all over the place — Ecomodo, Crowd Rent, Share Some Sugar, NeighborGoods, Thingloop, OhSoWe, SnapGoods all appeared between 2007 and 2010. It seemed like the potential for growth in the area was unlimited — in fact, it can still feel that way.
But as FastCompany pointed out, of that list, only one — NeighborGoods, where people share household items that they would otherwise own but use very little — still remained as of last summer. Granted, some of the car sharing services like Zipcar and Car2Go are still around and seemingly performing well, and in some cities even still expanding. And they have largely been more amenable to working within existing laws when they arrive.
However, some of the companies that remain from the frenzy around the end of the last decade have changed their ways. Like Lyft, Uber’s only remaining serious rival in the transport realm. While it “may have debuted its service as a more neighborly, peer-to-peer version of Uber — encouraging people to greet their drivers with a fist bump,” FastCompany noted, “now it’s competing on price instead.”
It’s possible that the real “share economy” was just a blip of activity over a few short years, and what we’re dealing with now are just one or two remaining, large, companies. Knowing this should change the conversation slightly. And it might make regulation even easier, for municipalities are not charged with the daunting task of legislating an entire economy, but, essentially one or two companies.
Ending the Farce
Let’s stop calling any online platform that allows people to either work for low wages in the hours they aren’t at another job, or one that lets people monetize their private space, as the “share economy”. If there ever was a “share economy”, it’s gone. And the system that is left is neither based on actual sharing, nor is it anywhere as big as an economy.
This is not to say that temporary, gig, work will have no impact into the future; likely it will. Same goes for websites that help people get jobs. But when it comes to regulating some of those things — the ones that need direct government regulation because of their business practices — it’s deliberately obfuscating to mis-categorize them.
Here’s one last thing about the word “economy”. Its continued usage and adoption conjures up the idea that government is trying to run, or interfere, with an “economy”, which immediately creates a dichotomy with a long history: that of capitalist free market versus state control. This is the conflict that many of the tycoons of Silicon Valley are bent on having the free market win. But while government unfortunately can sometimes stifle business growth and the free market in the wrong circumstances, it’s not a given. In fact, most of the time, the opposite happens. It’s important to remember that.
As is this: the online platform economy is certainly going to be part of our future, but we all — not just the platforms — get to decide how big, or what kind, of a part it will play. That starts with calling what it is. Or at least knowing what it’s not.