Can We Bend the Sharing Economy Toward Equity?

For all of its promises to increase prosperity and sustainability, the so-called “sharing economy” has a serious dark side.

Photoby flickr user Carlos Maya, CC BY 2.0

A red poster that says "Share" three times, each time getting larger and larger. The image signifies the sharing economy.

Photo by flickr user Carlos Maya, CC BY 2.0

We’ve all heard the stories. Homeless Homejoy cleaners. Uber drivers on food stamps. Grad students Airbnb-ing their extra rooms in gentrifying neighborhoods to cover their own rent.

For all of its promises to increase prosperity and sustainability, the so-called “sharing economy” has a serious dark side. As the sector undergoes explosive growth (25 percent in 2013), it is a force that those of us working to build more equitable and resilient cities need to be engaging with—and helping to shape. Experience shows that new tech platforms will not automatically plug low-income communities and communities of color in to their regional economies. Connecting the most vulnerable to this newfangled form of capitalism in positive, beneficial ways—and preventing the deepening of exclusion—can only come about through targeted strategies, policies, and campaigns.

Now is the time to start thinking creatively about how to bend the nascent sharing economy toward equity. Inclusion is not just the right thing to do—it is the key to building strong companies and sectors and a robust and resilient economy. Business owners, city leaders, workers, and community advocates all have a stake in making inclusion the reality. Here are some questions to start the conversation:

What Should We Call It?

The sharing economy is the most popular alias for the growing array of app-based tech platforms that connect the buyers and sellers of various goods and services: rooms, rides, funding, housecleaning, clothing, chores, dog-sitting, grocery shopping, copyediting, and more. The collaborative economy, the peer economy, the on-demand economy, and the gig economy are others.

Names evoke powerful frames, and the sharing economy conjures up a warmer, fuzzier form of capitalism that offers more access to goods and services at a lower environmental and financial cost, and without the burden of individual ownership. But as Catherine Rampell notes, calling this digitized version of commerce sharing is “an insult to the intelligence of existing businesses, regulators, and 5-year olds everywhere.” At the same time, the sharing economy is quite diverse, and some segments of it (casual carpools, for example) might actually pass a preschoolers’ sniff test.

On the whole, a better choice might be the “gig economy,” which emphasizes the types of jobs being created by these new online marketplaces: contingent, part-time gigs that offer flexibility and variety but not the regular hours, benefits, or protections of traditional employment. Some 53 million Americans—34 percent of workers—are freelancing to make a living, and that share is expected to grow to 40 percent by 2020.

How can the gig economy create good jobs?

While gig economy CEOs see themselves as unleashing new opportunities for legions of “microentrepreneurs,” workers express growing discontent over the terms of their labor. A key issue is that the gig economy’s online marketplaces are not structured as employers, but as intermediaries that help connect the sellers (who are independent contractors), with buyers.

Many worry that this model transfers too much risk to workers, with too few protections, and could significantly drive down wages and increase economic insecurity. As Robert Reich put it: “There is no economic security, there is no predictability, and there is no power among workers to get a fair share of the profits.”

Glimmers of a higher-road gig economy business model have emerged. Some companies decided that becoming employers who have relationships with their workers, pay them well, provide benefits, and train them to deliver high-quality services is actually a better business model. Others have raised wages and offered benefits.

These are promising developments that hint at a good jobs path for gig economy companies, and finding workable employee-friendly business models is critical. (And perhaps if they truly have a social mission, they could become certified B Corporations.) But in the face of a growing contingent labor force, policies that ensure strong legal protections for workers against wage theft and other violations, a minimum wage that is a living wage, benefits, a strong safety net, and the right to organize will be essential.

Can Vulnerable Communities Participate on Fair Terms?

Sharing economy businesses promise to make goods and services more available to everyday people, but the reality is that they are often still inaccessible to those who are already excluded economically. Take car-, ride-, and bike-sharing. Low-income communities and communities of color carry the heaviest transportation burdens and could benefit tremendously from flexible, low-cost transportation options. But as a recent study commissioned by Living Cities shows, they rarely use these transportation options and face multiple barriers to doing so, from the absence of facilities in their neighborhoods to the lack of Internet access and more.

Fair pricing is another challenge. There are no neutral platforms in a racially inequitable society, and on the seller side of things, there is a risk that people of color engaging in profile-driven platforms are not on a level playing field. A Harvard Business School study found that New York City Airbnb hosts who are not black charge about 12 percent more than black hosts for comparable properties.

It will take holistic, intentional strategies, policies, and long-term planning to extend the sharing economy to the most vulnerable communities. The Living Cities study concluded that there was no silver bullet strategy to make these systems work for low-income communities, but those that were most successful addressed multiple barriers at once. Equity leader Nikki Sylvestri describes how “accessibility, relevance, and relationship” are crucial.

How Will We Regulate the Click Economy?

As the fights over Airbnb, Uber, and Lyft in New York City, Philadelphia, Los Angeles, and dozens of other cities demonstrate, new sharing economy models are shaking up systems of regulation designed for the pre-Internet era. Regulation is the key challenge for the growth of sharing economy businesses, resulting in high stakes and fiery debates.

Equity advocates and community leaders need to be ready to engage in these debates and weigh in with their own ideas and proposals to make the click sector work for inclusive growth. Rapid gentrification in the 1990s gave birth to the community benefits agreement movement. In the face of rapid technological, economic, and demographic transformation, what will the next era of equity policy innovation look like? Those working in and for the most vulnerable communities have important knowledge to bring into these discussions, and need to be at the table.

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