The Sharing Economy or Gig Economy refers to peer-to-peer-based sharing of access to goods and services, coordinated through community-based online services using the Internet or your smartphone. The Sharing Economy allows individuals to more easily market and provide their extra capital. This is not a new concept, but recent technological progress has made entrepreneurial independent contractor work much cheaper and more efficient than the traditional workforce. This has opened endless quick fix possibilities for mutually beneficial exchange that were unheard of just a decade or two ago.
My strong business background encouraged me to write about how the Sharing Economy needs to become more regulated and how it is growing up last month. As entrepreneurs, companies and governments create rewarding opportunities in the Sharing Economy, they must also decide if the optimization of gig workers who have no benefits outweighs the luxuries of traditional workers. Perhaps we can find a happy medium. I love the Sharing Economy and everything it stands for and am lucky to have other means to take care of my benefits, but I am absolutely concerned with the concepts such as health care and a retirement plan. It makes me wonder what the effect will be now that more and more people are seeking flexibility and control over job security.
I see the sharing economy allowing workers increased flexibility, which many people seem to value for the quick fix more than the long term security of traditional workplaces.
It seems the idealism of the lifetime career and job security has temporarily been replaced by a new economy intent on replacing traditional full-time employees with independent contractors and temporary workers. Seeing how it is new, there are no long term employment measures of employment in the sharing or gig economy to determine whether or not this is the case, so we have to rely on indirect measures. For example, we are seeing a significant increase in gig-style employment aligned with multiple job holding, entrepreneurship and less permanent employee jobs.
The Sharing Economy is showcased by companies such as Airbnb or Uber, both of which were initially startups and now have a market value of billions. For those of you who do not know: Uber provides ride-sharing and Airbnb provides house-sharing. The high profits these companies are making highlights my question of why these Sharing Economy companies are not offering benefits to their employees. They can obviously afford it. Another downside of the Sharing Economy that needs to be taken seriously is the current tax and regulatory structure. Many of Airbnb's customers are not paying the taxes required under the law. Uber is currently in disputes with regulators over whether its cars meet the safety and insurance requirements.
When employers improperly classify employees as independent contractors, the employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation, ~ Department of Labor Administrator David Weil
The California labor commission declared last fall that one Uber driver was an employee and started shaking the Sharing Economy boat. That made shipping services gig company Shyp and delivery company Instacart decide to treat workers as employees rather than independent contractors. To add to that, the Department of Labor voiced concern that some Sharing Economy companies may be claiming some people as independent contractors who should have been classified as employees.
I have a feeling the entire Sharing Economy may be changed for the better after the outcome of these lawsuits. No sooner than Uber settled the pair of California and Massachusetts class-action lawsuits they now face a Nationwide Lawsuit. The Chicago Tribune agrees with me that this may set the pace for the entire Sharing or Gig Economy and you can read more about Hillary Clinton agrees with my ideas in my awesome coworkers “Will the Next President change the Sharing Economy?” blog. I come from a strong union background as well and currently collaborate in the Sharing Economy, so I see both sides. I think this is a sign that changes are coming and these Sharing Economy companies better adapt or die!
I realize the Sharing Economy is new, but the concept of the independent contractor and Gig Economy is not. The Huffington Post goes on to outline how the Sharing Economy is taking advantage of American workers here. The Sharing Economy describes a type of business built on the sharing of resources in allowing customers and neighbors to access goods without ownership. However, the Sharing Economy is turning out to be a way for people to make a quick buck and companies are taking advantage of that. I feel these Sharing Economy companies need to adjust in order to be sustainable in the long run or risk becoming extinct.