Excerpted from Craig Shapiro (founder of the Collaborative Fund):
“It’s clear we’re living in a job-anxious landscape with high unemployment and frustrating under-employment. As startups like Skillshare or RelayRides gain traction, peer marketplaces are coming under the microscope. Economists and journalists question whether the technology boom of Silicon Valley actually creates jobs. The Kauffman Foundation reported that the number of new employer-enterprises (business that hire others) has declined since the 2008 recession, despite entrepreneurship rates increasing.
Apple, the most valuable company in the world, only employs 43,000 people, most of whom work in retail stores and earn roughly $25,000 a year. So we have to ask, do gigs–some full-time, some part-time–qualify as sustainable jobs? If I make the majority of my income selling jewelry on eBay or Etsy, or hosting guests in my spare room on Airbnb, is that my job? If not, what is a job?
In a partnership with design firm IDEO, Collaborative Fund attempted to answer this question by imagining ways people might sustain themselves in the future, and identified some of the businesses already reshaping our definition of work. We were prompted by the term the gig economy–a nation of freelancers that now includes one in three working Americans. While many of the new companies facilitating this lifestyle are young, the sector has shown rapid growth, and municipal and federal regulators are taking note.
Regulation of Internet-facilitated sharing has a standing history. Napster demonstrated how peer-to-peer sharing could wreak havoc on institutions, and even entire industries. Craigslist is still a buy-at-your-own-risk platform. And today, ride-sharing services like Uber–where black-car drivers act like on-demand taxis–has come under fire for operating in gray areas of legality. Airbnb has faced regulatory challenges at the municipal level in San Francisco and New York, and the California Public Utilities Commission issued a cease-and-desist warning to Lyft and SideCar, two popular ridesharing services based in San Francisco.
The regulatory instinct is to resist new forms of economic exchange to protect both buyers and sellers from fraud or danger. But beyond the questions of trust and reputation, regulators and investors alike are wondering: Does it slow down construction if we use Airbnb instead of hotels? Does it slow down Detroit manufacturing if we share cars and rides instead of buying new ones? Does increasing productivity from existing resources hinder economic growth?
The oft-cited Jevons paradox proposes that using a resource with more efficiency actually increases, rather than decreases, the use of that resource. But it’s not obvious that efficiency and growth are complements. So, should the laws of small business taxation apply to someone who is a full-time Skillshare teacher, like Avi Flombaum? Some worry that these new businesses will create an informal economy, which lacks the safety nets of social security, health insurance, anti-discrimination, and taxation. These are defining aspects of our social fabric, no matter your politics, and it’s time to rethink how we support them in this new economy.
Long term growth:
Most Lyft drivers or TaskRabbits we’ve encountered are just glad to have income coming from somewhere. And beyond individual gain, these marketplaces boost local economies. Airbnb hosts have contributed $56 million in spending to San Francisco; $43.1 million of that figure supported local businesses around the hosts’ homes. But platforms that facilitate opportunity to create wealth must be built to last. Otherwise their impact is nominal, if not damaging to the ecosystem long-term.
You have to be wary of over-exuberance by entrepreneurs and investors, who could latch onto this trend for quick gain instead of creating a true foundation and scalable businesses. Remember the post-The Inconvenient Truth enthusiasm for startups targeting the green and eco-friendly audience? Much like the “Airbnb-of-everything,” today, then we saw the “Eco-of-everything.”