Who gets the crumbs in the ironically named “Sharing Economy”?
By Fabius Maximus:
America responds efficiently to change, but the new opportunities don’t necessarily leave us better off than before our changed circumstances. A life raft does not replace the sunken ship. Our increasingly unequal society, with the 1% grabbing all the productivity gains, responds with the “sharing economy.” New tech lets us work more hours and rent our lives in a desperate attempt to be middle class.
Uber & the sharing economy
Data slowly emerges about the companies building the sharing economy, as in this excellent study sponsored by Uber: “An Analysis of the Labor Market for Uber’s Driver-Partners in the United States” by Jonathan Hall and Alan Krueger, 22 January 2015 — “This paper provides the first comprehensive analysis of Uber’s driver-partners, based on both survey data and anonymized, aggregated administrative data.”
They start with the most banal opening possible, at a high level of abstraction. We’re concerned with the future of people, of our society.
Over the last few years, there has been much speculation as to whether the so called “sharing economy” will positively or negatively impact the future of work.
Who are Uber’s drivers?
The greater representation of younger people among Uber’s driver-partners is probably a reflection of the fact that Uber is a new opportunity, and older workers are less likely to change jobs, but it may also reflect entry barriers into the taxi driver and chauffeur professions that make it more difficult for younger people to obtain such jobs. … 7% of Uber’s driver-partners are currently enrolled in school.
Fully 80% of driver-partners said they were working full- or part-time hours just before they started driving on the Uber platform, and two-thirds of these individuals reported that they had a full-time job. Eight percent of driver-partners said they were unemployed just prior to partnering with Uber. Among the remainder, 7% were students, 3% were retired, and 2% stay-at home parent.
What a demonstration of opportunity in America! You too can spend a fortune on 2, 4 or more years in college — in order to drive a taxi! With middle class jobs so scarce, Uber makes it easier to supplement your income with part-time work. And you feel good about yourself as a “driver-partner,” an upscale title for an independent contractor.
Does Uber hurt workers?
Although the U.S. labor market has undergone significant changes in the last few decades, with a dramatic trend toward rising inequality and stagnant wage growth for large segments of the workforce, an objective look at the data reveals little evidence that a rise in contingent or alternative work arrangements has played an important role in driving these momentous labor market shifts.
… Claims that contingent workers represent a much larger share of the workforce generally count part-time workers as contingent workers, even though part-time workers typically are employed in a traditional employment relationship.
All true, but misleading. First, the last data on contingent work is from a ten years ago, a BLS survey in February 2005. Much has happened since then.
Second, this is missing the point. The hammering of the US labor force is driven by many trends: stagnant wages, the shift from full-time to part-time work (i.e., people working part-time who cannot find full-time work), and from employees (usually with benefits and some job security) to “independent contractors” (who have neither). The authors do quite a bit of hand-waving to hide these trends. The result 7 years after the crash…
- The fraction of the labor force employed full time has finally risen back to the 30-year lows (i.e., of 1984-2007).
- The number working part-time for economic reasons jumped 1/3 (from 3 million to 4 million) during the 2000 recession, doubled (to 9 million) during the crash, and has slowly declined to almost 7 million.
- However the number of workers holding multiple jobs (a full-time and one or more part-time) has not risen, perhaps constrained by the availability of jobs.
This created the opportunity for Uber and the sharing economy. Uber did not create these conditions; they just benefit by helping people cope with these conditions.
Misleading info about “the Uber economy”
Derek Thompson perpetuates a common myth about the income of Uber’s “driver-partners” in his article at The Atlantic. He compares the net earnings of employees in other businesses with the gross (revenue) of Uber drivers (both before taxes). Uber drivers have both operating and capital costs. Operating costs include insurance, gas, repairs, and increased maintenance of their car. Capital costs include increased depreciation of the car (i.e., it must be replaced more frequently). The repair costs are large in aggregate for drivers. Accidents are expensive, both to fix the vehicle and in the higher insurance costs that result.
The Uber economy and the law
Buzzfeed reported that Uber had suspended “at least a dozen drivers” who’d registered their newly bought Uber-financed cars as commercial vehicles in accordance with California law for vehicles that carry passengers for hire. But enforcement is lax, and most drivers ignore the law. Buzzfeed:
“We are showing your vehicle registration is actually a commercial vehicle registration,” a late-December email from an Uber representative to one suspended driver read. “We will need you to contact the DMV to have them update your vehicle registration to personal/automobile registration. We are unable to accept commercial registration on an uberX account.”
And if these drivers would want to drive for Uber again, they’d have to do what Uber told them to. Uber had its own explanation for this, according to Buzzfeed. But it fits neatly into the whole concept that the “sharing economy” gets part of its competitive advantage by conveniently violating regulations that everyone else has to follow.
Uber has succeeded in finding needs and filling them for both drivers and clients. People ask “Is Uber bad?” – with Americans’ traditional focus on moral questions, useless moral questions that distract from vital economic and political trends (which makes us easy to govern, a joy for the 1%). People ask if Uber is more efficient than taxi companies. Yes, but the 19th century economy was very efficient compared to prior economies, without labor, safety, and environmental laws — but a far less pleasant place to live.
Uber and Lyft let you more easily and effectively work longer hours. Airbnb lets you more easily and effectively rent out part of your home. Soon we’ll have aps to let you put your children to work, or sell your left kidney. The nifty technology should not mask the underlying desperation at work as the middle class crashes and burns, and as millennials find the ladder of opportunity runs like airlines — with First Class and Coach lanes.
It’s also the next wave of deregulation, evading a structure of laws built up over a century on the basis of hard-won experience.
The sharing economy shows the new America in stark clarity. The billionaire owners of these companies get rich; their workers sell more of what they have in order to stay afloat. But for the 1%, there is a silver lining inside the gold cloud: people busy working multiple jobs and renting their rooms are too busy for politics! By Fabius Maximus
And in the old economy, the one that pays real wages, the Atlanta Fed begins to fret. Read… Hit by Oil-Price Plunge? Manufacturing in Southeast Worst Since Financial Crisis