The Sharing Economy » Mind Tools Blog

The Sharing Economy

March 1, 2016

©iStock/ChuckPlace

Divergent views of the new Sharing Economy abound. Award-winning social entrepreneur Benita Matofska describes it as a “socio-economic ecosystem” benefitting all suppliers and buyers. “Human rights are respected [… and] value is seen not purely as financial value, but wider economic, environmental and social value are equally important.” She concludes that it is “… business as a force for good.”

Sarah Kessler acknowledges that five years ago the sharing economy “seemed like a warm and fuzzy inevitability.” The concept continues to evolve but it seems to this observer that its name needs to change. “Sharing [is] to partake of, use, experience, occupy, or enjoy with others,” according to the Merriam Webster dictionary, yet its products and services are more accurately transacted by “the amount paid by a hirer of personal property to the owner for the use thereof.” This is the definition of “rent,” a word with far-less warm and fuzzy associations than “shared.” Because the actual providers are “individuals working as third-party contractors, rather than full-time employees,” Alex Hern calls it “the gig economy.”

The sharing economy’s most notable survivors – such as Uber, Etsy and Airbnb – take a significant share of the rent for their connecting the interested parties. Skeptics, such as economist Dean Baker, claim that the new sharing is “largely based on evading regulations and breaking the law.” How can Uber not make a profit when it operates without any expenses for cars, gas, maintenance, or employee benefits? It didn’t even have risk insurance until it lost a court case. But let’s drop these esoteric questions here. Sharing companies are certain to evolve under law and regulation; they are just as certain to be part of our future.

What thought should we have if we are considering joining a sharing economy organization?

Expect to be independent. There’s no water cooler to overhear gossip or others’ concerns. It will be nearly impossible to rally worker support against misguided management. Your boss will barely know you; for career development, you’re on your own.

One study found the top two draws for workers are directly related to our being independent contractors instead of employees. There is great flexibility is setting our work schedules. This is particularly useful when, as independents, we may have many conflicts with other gigs.

We also have the ability to earn more money than we would as employees – but be aware of your higher costs as you negotiate your pay. As non-employees, we have higher taxes and no paid leave. We are the providers of all tools, maintenance, operating supplies, and overhead (some of which we may need to purchase ahead of time). We have no medical coverage with our independent status, and we have far more exposure to lawsuits. Even with due diligence, we may vastly underestimate our insurance and legal expenses.

With little interaction with management, no one at our employer’s will see our competence on the job. Our performance is judged solely by customer ratings. So we must be warm and engaging with our customers, leading Rogers and others to call Sharing Economy work “emotional labor.” Customer feedback is highly subjective, and their biases result in disadvantages for racial minorities, some ethnicities, genders, ages, and so on.

The relative lack of management and peer collaboration in the Sharing Economy make career development a challenge. Owen Thomas says the “‘no-management’ structure is called Holacracy, where decision making is spread throughout the organization and people have roles rather than job titles.”

Airbnb VP of Engineering Mike Curtis told Thomas, “Managers are basically facilitators, [existing] to get obstacles out of people’s way.” Some anonymous employee reviews on Glassdoor describe the environment as “disorganized chaos.” Others call it “inspiring,” but acknowledge that employees must “take ownership” and solve problems rather than complain about them.

In summary, the Sharing Economy is here to stay, although who knows where its evolution will take it? It offers great independence and flexibility, but at the cost of losing the risk protections of traditional employment. With limited mentorship opportunities, workers must have an entrepreneurial mindset and the self-discipline to manage their own career development.

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