the sharing economy and its discontents


I know lots of people who love Uber (by which I technically mean Uber X, the "budget" option in which riders are transported in the drivers' private cars), and I can see where it would actually solve some of my own transportation problems. But I will not download the company's app or use any of its services. The reason for this refusal is that I despise the so-called "sharing economy" model by which businesses like Uber and the spare bedroom purveyors Airbnb (among many others) allow people to rent out their property to strangers. I hope to write about this loathing in more detail at some future point, but my various concerns boil down to three:

  • The model itself creates poorly-paying jobs which the technophilic new economy hype machine markets as fantastic wage-earning innovations. There are a lot of outlandish claims floating around regarding what Uber drivers earn. The amount they take in can sometimes make it look like a great deal, but the intake is unsteady and the nature of the sharing economy makes it very easy to overlook such things as gas, automobile maintenance, car insurance, and depreciation in calculating one's actual wage. Philadelphia City Paper reporter Emily Guendelsberger actually became an Uber driver for a while in order to get some hard data. In her article, she provides a great deal of information for anyone who wants to crunch the numbers, but the upshot was that "if [she] worked 10 hours a day, six days a week with one week off, [she would] net almost $30,000 a year before taxes." Those kinds of jobs will not be the backbone of the 21st century post-manufacturing American middle class.
  • These transactions only look attractive because people have so few other options. Thus what is often sold as the rise of an exciting new employment niche is really evidence of just the opposite: that there are so few good jobs available.
  • One of the main reasons that these companies can offer such good deals for customers is that they work very hard to evade applicable laws. Taxis, for example, are heavily regulated, for very good reasons: people put themselves in quite a vulnerable position when they get in a stranger's car. Adhering to those regulations costs money, which will increase the cost of these services to the cusomter. But Uber and its ilk claim that they are not a taxi or limousine service, so they do not have to follow the laws that apply to these firms (including the Americans with Disabilities Act). Cities and states are increasingly disagreeing. A parallel argument is true of hotels, which must follow all kinds of laws so that people can feel safe sleeping in a strange room in a city where they may not know a single person. Yet a 2014 report from the Attorney General's office in New York State concluded that 72% of Airbnb rentals in New York City "appeared to violate" state and/or local laws. These systems may be in need of reform (there are many complaints about local taxi medallion systems in particular) but the solution is not to create a new category of services that disobey the law.

Until I post the imagined more-detailed sharing economy rumination, I point the reader's attention to someone else's complaints about the subject. Yves Smith of the blog naked capitalism wrote this morning about the sharing economy. Smith noted that the Wall Street Journal technology columnist Christopher Mims recently argued that Uber drives wages down. (The actual WSJ story is behind a paywall, but it is copiously quoted in the naked capitalism piece.) Writes Mims:

Uber and its kin Lyft, which is more generous with its drivers but has a similar business model, are remarkably efficient machines for producing near minimum-wage jobs. Uber isn’t the Uber for rides—it’s the Uber for low-wage jobs.

Smith also notes Maureen Dowd's recent column on Uber, in which the New York Times columnist took issue with the service's much-vaunted ratings service.

Dowd, who found Uber drivers weren’t terribly willing to pick her up by virtue of her having a low rating (by virtue apparently of having made some drivers wait for her), is dealing with that by colluding with drivers to boost her rating by colluding with drivers to boost theirs. In other words, the driver rating of passengers is debasing the entire ratings process by forcing users to give drivers high ratings to assure that they get high ratings. This form of grade inflation of course works marvelously for Uber, since over time everyone will be in on the con.

Sharing is touted as an innovative model, made possible by new technology, for work and commerce. Is it the future of the American economy? I, for one, hope not.

historians in Salon

a liberal economic framework