With labor force participation at a 35-year low, we can't look to clothing re-sales and ride sharing as real economic solutions
These days, everyone's talking about the so-called sharing economy. Newspaper columnists, pundits and tech reporters are – for the most part – enthusiastically explaining how new rental, resale and sharing services like Uber, Lyft, TaskRabbit and DogVacay are revolutionizing how we consume, and fostering entrepreneurship, conservation, cost savings and community spirit along the way. The prevailing narrative is that startups like these are the bright spots in an otherwise lackluster economy, and that if we could all learn to be better micro-entrepreneurs, our economy would recover faster.
True, the emergence of innovative ways to share or rent everything from car rides to Wi-Fi access, and from clothing and jewelry to software and apartments, is making life easier and maybe even more fun for a growing number of users. But we must not get so starry-eyed with excitement about these services that we assume they can collectively save us from our economic woes, especially our most important one: the unemployment and underemployment crisis.
Unfortunately, talk of jobs is glaringly absent from most discussions of the sharing economy. While some "sharing" companies are funding economic impact studies that claim big benefits to cities like New York, independent economists say the data is murky. Until it becomes clearer, we'll have to rely on anecdotal information and common sense.
One big problem with claims that the "sharing economy" can lead the way out of our economic morass is that proponents often advocate less consumption. How can that be a solution for an economy that – for better or worse – is fueled by consumer spending?
If we all start renting the same person's car, boat or power tool, we'll need fewer people to make and sell cars, boats and power tools. (It's no wonder that the "sharing economy" first emerged just after the recession, when demand plummeted and people had to make do with less.) And what happens to the tax base if these transactions are happening under the radar?
The question of jobs got superficial treatment in a recent column by Thomas Friedman at the New York Times. He celebrates clothing resale website Tradesy and its founder, Tracy DiNunzio – "one in a wave of entrepreneurs who've been buoying our economy from below". The website allows users to sell new or used clothes and other items.
Friedman acknowledges that sites like Tradesy both create and destroy jobs, but says they're still "surely part of the answer" to our economic woes. What part, exactly? Certainly not the one that could employ significant numbers of people as designers, sales clerks, warehouse staff and construction workers – and help bring four million long-term unemployed people back into the workforce.
The same could be said for Ebay. The site can save users money – assuming they would otherwise have paid retail price for a similar item – and allow the seller to make a profit. But no one else's labor is needed. There is no sales staff, manager, security guard or cleaner.
There are other labor-related problems with the sharing economy. One is that being a micro-entrepreneur may sound sexy, but it offers no security, health insurance, pension or 401(k), workers' compensation, unemployment insurance, paid vacation, or paid sick days. Makes it all sound a little less glamorous.
The truth is that, especially in a down economy, most people want security. Though you'd never know it from all the glowing media coverage of startups and entrepreneurship, Americans have been starting fewer businesses and are now less inclined to change jobs. Clearly micro-entrepreneurship isn't for everyone.
Again, none of this is to say that the "sharing" model isn't doing great things for a growing number of individuals and communities.
While it's hard to define and quantify the "sharing economy", it's clear some sort of movement has emerged, complete with a "news, action and connection hub" called Shareable and other websites like CollaborativeConsumption.com. One group, mesh2013, held its first conference this year, sponsored by GE and Barclays. There's even a Global Sharing Day every June, which organizers say reaches more than 70 million people in 192 countries.
But the reality is that with the economy still more than a million jobs short of pre-recession employment levels, and with labor force participation at a 35-year low, we can't look to clothing re-sales and ride sharing as juggernaut solutions.
To that end, a reality check may be in order. I'd advocate renaming the "sharing economy", which can be a misnomer and just sounds absurd in the face of the highest rate of income inequality in nearly a century. How about the "renting economy" when people are renting something another person owns? Or the "reselling economy" when people are buying stuff someone used to own? Doesn't have the same ring to it – and marketing types will cling onto "sharing"– but it would be a lot more accurate.
We also need to force discussions of jobs amid the "sharing economy" buzz, and encourage innovations that create or preserve good jobs. Everyone knows about Ebay, but fewer know that 26 US states and Washington DC run job sharing programs that allow employers to prevent layoffs and workers to remain in the job market in slack periods? Such initiatives are succeeding both in the US and Germany, lowering unemployment and preserving good jobs. To me, they embody the true spirit of the term "sharing economy". Reported by guardian.co.uk 6 hours ago.
These days, everyone's talking about the so-called sharing economy. Newspaper columnists, pundits and tech reporters are – for the most part – enthusiastically explaining how new rental, resale and sharing services like Uber, Lyft, TaskRabbit and DogVacay are revolutionizing how we consume, and fostering entrepreneurship, conservation, cost savings and community spirit along the way. The prevailing narrative is that startups like these are the bright spots in an otherwise lackluster economy, and that if we could all learn to be better micro-entrepreneurs, our economy would recover faster.
True, the emergence of innovative ways to share or rent everything from car rides to Wi-Fi access, and from clothing and jewelry to software and apartments, is making life easier and maybe even more fun for a growing number of users. But we must not get so starry-eyed with excitement about these services that we assume they can collectively save us from our economic woes, especially our most important one: the unemployment and underemployment crisis.
Unfortunately, talk of jobs is glaringly absent from most discussions of the sharing economy. While some "sharing" companies are funding economic impact studies that claim big benefits to cities like New York, independent economists say the data is murky. Until it becomes clearer, we'll have to rely on anecdotal information and common sense.
One big problem with claims that the "sharing economy" can lead the way out of our economic morass is that proponents often advocate less consumption. How can that be a solution for an economy that – for better or worse – is fueled by consumer spending?
If we all start renting the same person's car, boat or power tool, we'll need fewer people to make and sell cars, boats and power tools. (It's no wonder that the "sharing economy" first emerged just after the recession, when demand plummeted and people had to make do with less.) And what happens to the tax base if these transactions are happening under the radar?
The question of jobs got superficial treatment in a recent column by Thomas Friedman at the New York Times. He celebrates clothing resale website Tradesy and its founder, Tracy DiNunzio – "one in a wave of entrepreneurs who've been buoying our economy from below". The website allows users to sell new or used clothes and other items.
Friedman acknowledges that sites like Tradesy both create and destroy jobs, but says they're still "surely part of the answer" to our economic woes. What part, exactly? Certainly not the one that could employ significant numbers of people as designers, sales clerks, warehouse staff and construction workers – and help bring four million long-term unemployed people back into the workforce.
The same could be said for Ebay. The site can save users money – assuming they would otherwise have paid retail price for a similar item – and allow the seller to make a profit. But no one else's labor is needed. There is no sales staff, manager, security guard or cleaner.
There are other labor-related problems with the sharing economy. One is that being a micro-entrepreneur may sound sexy, but it offers no security, health insurance, pension or 401(k), workers' compensation, unemployment insurance, paid vacation, or paid sick days. Makes it all sound a little less glamorous.
The truth is that, especially in a down economy, most people want security. Though you'd never know it from all the glowing media coverage of startups and entrepreneurship, Americans have been starting fewer businesses and are now less inclined to change jobs. Clearly micro-entrepreneurship isn't for everyone.
Again, none of this is to say that the "sharing" model isn't doing great things for a growing number of individuals and communities.
While it's hard to define and quantify the "sharing economy", it's clear some sort of movement has emerged, complete with a "news, action and connection hub" called Shareable and other websites like CollaborativeConsumption.com. One group, mesh2013, held its first conference this year, sponsored by GE and Barclays. There's even a Global Sharing Day every June, which organizers say reaches more than 70 million people in 192 countries.
But the reality is that with the economy still more than a million jobs short of pre-recession employment levels, and with labor force participation at a 35-year low, we can't look to clothing re-sales and ride sharing as juggernaut solutions.
To that end, a reality check may be in order. I'd advocate renaming the "sharing economy", which can be a misnomer and just sounds absurd in the face of the highest rate of income inequality in nearly a century. How about the "renting economy" when people are renting something another person owns? Or the "reselling economy" when people are buying stuff someone used to own? Doesn't have the same ring to it – and marketing types will cling onto "sharing"– but it would be a lot more accurate.
We also need to force discussions of jobs amid the "sharing economy" buzz, and encourage innovations that create or preserve good jobs. Everyone knows about Ebay, but fewer know that 26 US states and Washington DC run job sharing programs that allow employers to prevent layoffs and workers to remain in the job market in slack periods? Such initiatives are succeeding both in the US and Germany, lowering unemployment and preserving good jobs. To me, they embody the true spirit of the term "sharing economy". Reported by guardian.co.uk 6 hours ago.