The economic cost of ‘sharing’ apps


Three summers ago my wife and I packed up a rental car and set out for an epic road trip from Vancouver to Yellowstone National Park. Through mountains and into big-sky country, we slept under the stars, listened to wolves and were traffic-jammed by bison. But the best part was that the trip was nearly free: we rented out our one-bedroom apartment on AirBnb for $90 a night while sleeping for anywhere between $0 and $10.

This was before AirBnb was its own labour category. Now we call it the sharing economy, on-demand economy or gig economy. While the terminology isn’t set, the sector is big business: $12 billion US was invested into companies like AirBnb, Uber, Fiverr and Ask for Task last year alone.

To put that in context, that’s the entire GDP of Mongolia.

The gig economy creating income inequity?

Last May, US Senator Elizabeth Warren published an op-ed in which she lamented declining workers’ rights in the age of the gig economy. While new technology will always cause disruption, the loss of benefits and consistent employment has been particularly acute in the last few decades. Warren suggests that—rather than improving equality by improving access to a form of income—gig companies are perpetuating inequality in an economic system that cannot afford it. “The much-touted virtues of flexibility, independence and creativity offered by gig work might be true for some workers under some conditions, but for many, the gig economy is simply the next step in a losing effort to build some economic security in a world where all the benefits are floating to the top 10%.”

Is this just a case of a hotel housekeeper losing his job? The problem extends beyond winners and losers: in an economy where real wages aren’t rising, we all lose.

A consumption based economy

Our economy has been intentionally built on consumption. With my extra income, I buy goods and services that generate jobs. The people in those jobs now have extra income to purchase things in turn. With more spending comes more jobs and therefore more national wealth. Outside investment then pours in because people want to have a piece of the growing pie—which then creates more jobs, spending, wealth and investment.

The reverse is also true: when I don’t have any extra income I stop spending. This puts the brakes on the whole process. Jobs are cut; money flows out; less spending happens. Bingo: you’ve got yourself a recession (this is why debt is such a feature of our modern financial outlook, but that’s a topic for another day.)

Economic suicide

Former secretary of labour under Bill Clinton, Robert Riech, has shown this to be the case. And this is exactly what Bernie Sanders is banging on about. When people don’t have money to spend it’s not only socially unfair, it’s economic suicide.

This is the true economic cost of ‘sharing’ economy apps. They may offer a cool service and save you money on a holiday, but the benefits are short-lived. If we want to change that around, we need to be investing in real, local and sustainable jobs. Just a portion of that $12 billion could do the trick quite nicely.

One arena that looks particularly promising is an evolving group of platform co-operatives looking to harness this labour disruption for the benefit of the workers themselves. These start-ups use online platforms to benefit both the worker and the purchaser, keeping profits within the network of users. Loconomics is a worker co-operative that manages short-term freelance jobs. Juno is an Uber competitor, but has reserved half of its equity for platform drivers. And then there’s ever familiar Modo—a true leader in the field. While these, and many like them, are in early stages, they hold promise to reverse the flow of economic benefit back to the commons.

With rising inequality, it’s time for online ‘taskers’ – hosts, drivers, freelancers and small-jobbers—to develop a community-based technology for the good of all.

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