Exploring peer reviewed, academic journal articles on the gig economy’s global socio-economic impact
We touch on six and list three in full below. The first hails from the New Zealand Journal of Employment Relations  with the second from the International Journal of Education and Management Studies  focusing more on India. The third, from the Notre Dame Law Review  takes a more optimistic counter-point from a legal framework perspective. All have been published in late 2018 and with an estimated 398.6 million workers having “poor quality” jobs on the sub-continent alone, for what may soon become the majority of the world, it is apparent that shifting working structures through digital influences offer a newly palpable, albeit possible broadly challenging reality
As facilitated primarily by online platforms and mobile applications, there can be a deep depersonalization of working relationships through digitally led, worker role repositioning. For businesses, someone once considered an employee can today be a faceless, or at the very least highly distanced, method of task completion
Although employment has long been segmented from a holding of the formerly and once stereotypical ‘9 to 5’ lifetime position in a single institution, the ongoing ramifications of gig economics raise a host of noteworthy considerations;
- New technologies have been introduced to support, bolster, streamline or otherwise improve existing business methodologies and requirements. Introduction of the gig platforms and applications is a first phase transition
- Technological advancements may threaten anywhere from 4% to more than 40% of existing jobs over the next decade with the majority facing major restructuring [according to some estimations by say the 2018 OCED study, with the G7 variation here]. The fastest growth potentials currently exist with such sites like AirBnB and Uber – the gig based accommodation and passenger transport booking sectors
- Gig site structures may be recreating a digital system that is more akin to interconnected feudal control, as say through directly or indirectly limiting prices alongside subsequent user profitability and ranking or score algorithms promoting some whilst burying others into obscurity. This can be through a strict cap on totals or more insidiously, suggestions and setting of ‘averages’. Yet with traditional employment structures removed and only per-contract set, ongoing corporate liability or wealth sharing and ‘employee benefits’ from either the gig site's operating entity and centralized government towards the now gig-only workers can be all but removed. The solution is an autonomous defining of all terms throughout conscious participation, which we touch on later and in other articles
- It could be erroneous to classify users of the above mentioned gig sites as ‘micro-entrepreneurs’. The above websites and digital services sustain both subtle and direct restrictive structural forces which prohibit the commonly perceived extent of freedom often believed as inherently prescribed through participation. Counter points to facilitating a 'sharing' of realized utopian ideals through the current structures can be easily drawn in light of ongoing evidenced widespread rises in inequality - particularly among the countries with the highest adoption rates of gig economics [full report here]
Quite simply, we cannot claim to achieve the benefits of a 'sharing economy' if profits and conditions are not autonomously managed
1. gig economy & the challenge for labour lawyers
The emergence of new technologies in the last decade has had a profound impact on contemporary labour markets, and the arrangements under which many people work. An extensive literature is emerging on the impact of what has variously been described as the "sharing economy", the "collaborative economy", and the "gig economy". We are living in an era where artificial intelligence and computer processing are influencing the way we live, the way economies operate and, most relevant to our concerns here, the way many people now work.
The gig economy, typified by digital platforms such as Uber (in the "rideshare", or passenger transport business) or Airtasker (in the odd job business), involves the intermediation by a digital platform, for a profit, of work contracts between customers or clients who require a service, and workers willing to provide that service. Some platforms offer physical and local services (transport, odd jobs); others provide services remotely (data entry, graphic design, coding), and can involve transactions between engagers and providers in different countries. The OECD Digital Economy Outlook 2017 estimates that, of the 49 million users of the digital services of "Upwork" and "Freelancer" in 2016, there were 10 times as many clients of the services in high income countries, and 4.5 times more providers of services from low income countries.
Gig work does not necessarily require a long-term commitment from the worker (although it is clear that some workers are now making full-time careers as Uber drivers5). Typically, gig economy workers are engaged to complete a particular task (the gig) within a defined time with no expectation of future work. As a result, and depending upon jurisdiction, these workers are (generally) denied access to the statutory benefits and rights that employed workers' access, such as a minimum wage and the right to organise. And this has been the focus of much of the emerging literature on the labour law implications of gig economy work.
Of course, the fragmentation of work into short term "gigs" is nothing new. Labour law scholars have long observed that "employment" is no longer synonymous with full time work in a single enterprise. Three decades ago, Pollert observed that many modern organisations are comprised of a small core of full-time workers supplemented by an array of peripheral or "distanced" workers engaged on a part-time, casual or contract basis. Nevertheless, recent technological advancements are accelerating the growth of peripheral work. A 2015 report by consulting firm Price Waterhouse Coopers suggests that up to 70 per cent of existing occupations are likely to be replaced or altered by technological advancements over the next five to 10 years. In the United States, the proportion of the labour force working in the gig economy more than doubled in the five years to 2015 (up from 7.2 per cent to 14.4 per cent). A similar spike in gig work has been recorded in Australia. Approximately 4.1 million or 32 per cent of Australia's working population had undertaken some form of freelance or gig based work in 2014, and this is projected to increase rapidly in the future. According to the OECD Digital Economic Outlook 2017, the greatest "exponential" growth is in the platforms offering accommodation (AirBnB) and passenger transport (Uber and its rivals).
Much labour law scholarship has been focussed on the risks of exploitation of the growing army of gig economy workers providing physical and digital services, and a common solution appears to be to test the prospects for categorising this kind of work as "employment", and the platform intermediaries as employers. The admirable object of this scholarship is to guarantee decent working conditions, living wages and a measure of job security for these workers, such as is enjoyed by employed workers. Another solution to the risk of exploitation of labour in the gig economy, and one which accords with some of the rhetoric of the gig economy as an enabler of "micro-entrepreneurship", is to focus instead on the ownership and control of the enterprise, and to consider ways to enable gig economy workers to share in the profits derived from their labour, and to exercise a greater measure of control over their own work. One way for platform-based entities to be owned and controlled by the workers themselves is to establish worker cooperatives, and new experimentation with worker cooperatives is already occurring around the globe.
2. the corporate employer model
Before we consider the features and potential benefits and pitfalls of worker cooperatives, it is useful to review the dominant organisational form in our economy (the for-profit corporation) and the relationship between the corporate employer and the worker. With the exception of those managerial employees who take up positions on the board of directors, employees are treated as "outsiders" in contemporary corporate law doctrine. The board of directors owes allegiance to the best interests of the company, and the company's interests are generally confined to the interests of shareholders. The predominant philosophy of Anglo-American corporate law is that directors of corporations are bound to serve the interests of shareholders who effectively "own" the company, so workers' claims to share in corporate wealth must be satisfied by bargaining for wages and working conditions. Negotiations with employees - especially when conducted collectively with employee representatives (typically trade unions), are characterised as contracting with external service providers. In this model, the only employees who share profits are those (usually managerial) employees who negotiate for performance-based bonuses. Employee share ownership schemes (where they are available) may provide an avenue for employees to share in the profits of the enterprise, but only in their capacity as shareholders. In our current corporate governance model, minority shareholders have a weak voice in corporate governance, and very little control over management. But that is another story.
Most online platforms which populate the gig economy are no different from traditional "bricks and mortar" for-profit corporations, despite the rhetoric of "sharing". Uber, for example, is a corporate group, created no doubt for the primary purpose of generating a surplus from the combination of investment in the "app" technology and the labour of drivers, to feed back to the innovators/owners. Critical scholars have argued that, as the demand to extract surplus in traditional organisations intensifies managerial prerogative increases, inflexible work practices develop and, most disturbingly, workers are commodified. This trend is intensified in the gig economy for a number of reasons. Firstly, the process of surplus extraction is contingent on the owner of the digital platform skimming a proportion of the fee paid to the gig worker by the end-user while at same time avoiding liability for any obligations to workers. Uber has sought to achieve this by classifying its contracts as contracts for the provision of telecommunication services by Uber to drivers, rather than as contracts for the provision of transport services by drivers to Uber. On this basis, gig based work is not easily characterised as a traditional employment relationship, nor even as work performed under a service contract between a principal and a contractor. Characterisation of the driver/worker as an independent client of the telco platform is also consistent with the requirement that the worker provide the tools necessary to perform the work (in the case of Uber, the motor vehicle) and take the risks associated with ownership and operation of those assets. The significant burden of ownership and maintenance of the fleet of vehicles necessary to provide this passenger transport service is 'outsourced' to the individual drivers. And yet, apart from driving 24/7 to maximise revenue from their investment, drivers have little potential to improve the profitability of their micro-business because Uber sets prices for them, and fixes its own commission on fares (at 25 per cent according to the 2015 contract).
Uber's reservation of an entitlement to vary prices and its own commission rates without consultation with drivers has produced disputes in some markets. See, for example, the protests in New York in the United States in 2016, when Uber cut fares without warning by 25 per cent.
Notwithstanding the clauses in the contract characterising drivers as telco customers, and denying any employment or other work provision relationship between Uber and the driver, the contract terms assert considerable power of discipline over the driver, by way of a right to block the driver from using the platform if the driver's passenger approval ratings fall below an acceptable level.26 This facility in the contract has produced complaints from some drivers that they enjoy no job security. Oze-Igiehon v Rasier Operations BV27 is a case in point. Mr Mike Oze-Igiehon was a driver, who had undertaken substantial financial obligations to purchase a vehicle suitable for Uber work, but was blocked from the Uber app because of some adverse ratings. It was accepted that his contract with Uber was not an employment relationship, so his only claim against Uber was for breach of contract. In all the circumstances, it was held that Uber had not breached the contract by deactivating his use of the app following complaints, and indeed that Uber had no obligation under the contract to "prove that each complaint received was truthful and accurate".28
In summary, under the contractual arrangements with Uber, the drivers undertake the financial burdens and expenses of fleet provision and maintenance, they cannot set their own prices and so influence the profitability of their own work, and they have no guarantee of protection from capricious dismissal. In some respects, they are business people in their own right, owning their own vehicles and determining their own hours. In other respects, they are treated as servants, subservient to the dictates of the platform. In all respects, they have little say over the organisation of their work, and little opportunity to share in any wealth created by the enterprise.
3. Identifying alternatives
There are respectable arguments that the working people who contribute much of the wealth of corporate enterprise should not be treated as outsiders, but as stakeholders with a legitimate claim to share in the wealth created from their collective endeavours.29 Our concern is to investigate the potential for a different organisational form, better designed to ensure that the workers in a venture derive not just a minimal fee-for-service (as is presently the model for many gig economy platforms), but an opportunity to share in the profits of the venture, and to facilitate an efficient sharing of the risks inherent in equipment ownership. The for-profit corporation is not the only organisational model available in modern economies. Among alternative organisational forms is the co-operative.30 We argue that cooperatives may provide a more appropriate organisational structure for gig economy businesses, given that gig economy businesses already rely heavily on investments made by the workers themselves.
4. Why cooperatives?
We argue that the current contractual arrangements in the gig economy risk delivering inequitable outcomes because platform owners are able to take a disproportionate share of the surplus derived from gigs, while bearing none of the liabilities of employing labour. If workers were part-owners of the enterprise, or formed their own cooperative enterprise to negotiate terms with the telco platform, gig economy workers may secure greater influence over the organisation of work, and over how income derived from the enterprise is distributed. Worker ownership may also contribute valuable knowledge to improve the provision of services by the enterprise. After all, the people working at the "coal face" in businesses can often see most easily the opportunities for further innovation and improvement. The question, then, is whether the cooperative is the right form of business organisation to achieve these ends.
There has certainly been encouragement of this form of business organisation by the International Labour Organisation (ILO) in the past and now more recently. The origins of cooperatives can be traced back to the International Co-operatives Alliance (ICA). This was a non-profit international association established in 1895 to help advance the cooperative model.
The Mondragon Corporation, established in 1956 as a federation of worker cooperatives, is perhaps the best known example of worker co-operative enterprise in Europe. There has been renewed interest in recent times in the worker co-operative. Economic downturn and business crises have generated interest in the potential for worker takeovers of failing companies. In 2002, the ILO adopted a Recommendation (No 193) on Promotion of Cooperatives. The Preamble notes that cooperatives can play an important role in "job creation, mobilising resources, generating investment" and generally contributing to the economy. It also notes that "stronger forms of human solidarity at national and international levels are required to facilitate a more equitable distribution of the benefits of globalization". Recommendation 193 encourages the "promotion and strengthening of the identity of cooperatives" (Art 2) by governments providing "a supportive policy and legal framework" (Art 6) to enable the development of effective cooperatives. A word of warning is sounded in Art 8(1)(b): National policies should "ensure that cooperatives are not set up for, or used for, non-compliance with labour laws or used to establish disguised employment relationships".
And particular reference is made to the potential value of cooperatives to address the phenomenon of the gig economy. Article nine provides:
Governments should promote the important role of cooperatives in transforming what are often marginal survival activities (sometimes referred to as the "informal economy" into legally protected work, fully integrated into mainstream economic life.
Recommendation 193 is ambitious in its aims, but appears to have had some traction. According to a review conducted in 2015, "cooperatives are weathering the turmoil of the financial and labour markets relatively well". In 2009, the ILO published a Global Jobs Pact that recognised the role of cooperatives in job creation. And 2012 was declared the UN International Year of Cooperatives.
a. Cooperatives in New Zealand
New Zealand has a long and strong history of cooperatives, beginning with the establishment of the Southland Building Land and Investment Society (now SBS Bank) in 1869. The UN listed New Zealand as the most cooperative economy in its 2012 Year of Cooperatives. Recent estimates place the total revenue of cooperative enterprises in New Zealand at almost $43 billion per annum, by far the largest contributor being Fonterra (at almost $19 billion). While the earliest cooperatives were in the agriculture (notably dairy) and development finance sectors, cooperative enterprises in trades (plumbing, hardware) developed after the Second World War. Cooperative enterprises are governed by the Co-operative Companies Act 1996 (NZ). First among the reasons for enacting this legislation, listed in its preamble, is "To reaffirm the value of the co-operative company as a means of facilitating its shareholders carrying on business on a mutual basis".
b. Cooperatives in Australia
While there is a new interest in worker cooperatives in Australia, like New Zealand, most Australian cooperatives have been in the agricultural or financial sectors (such as credit unions). In Australia, however, cooperatives have never been seen as the preferred organisational form for generating growth in the economy for a number of interrelated social and regulatory reasons, dating back to the time of Federation.
According to Lyons, cooperatives struggled to find favour at this time because of Australian society's tendency to emphasise individualism and consumerism rather than the cooperative ideals established by the ICA. From a regulatory perspective, cooperatives failed to gain national recognition, because the Commonwealth power to regulate incorporated enterprises (in section 51 of the Constitution, commonly referred to the Corporations power) covered only foreign or "trading or financial corporations formed within the limits of the Commonwealth". Co-operatives did exist, but they were local or state-based entities which, due to their non-corporate status, were unable to operate or expand across state boundaries.
Some of these regulatory limitations have now been addressed with the introduction of uniform cooperative legislation across Australian states. So despite initial social and regulatory obstacles, cooperatives have continued to grow in significance and coverage, particularly over the last five years as demand for more sustainable and democratised organisational forms increase. In 2016, there were over 2000 registered cooperatives in Australia comprising 29 million active members. The top 100 cooperatives had a combined turnover of over $30.5 billion as well as a total asset holding of $143.7 billion and operate in a number of key sectors of the economy including primary produce, financial services and consumer markets. These include financial cooperatives, such as credit unions, agricultural cooperatives, community cooperatives as well as worker cooperatives.
c. Worker cooperatives
Worker cooperatives are already found in various sectors of the economy, including transportation, construction and professional services. See, for example, a relatively new cooperative of health care nurses in California. Rather than work as employees for a labour hire outfit, these health professionals have established (with the assistance of legal and business advice from the United Health Workers West Union) a cooperative to employ themselves. In Perth, the owners of a family business providing technical and repair services for scientific equipment have converted the enterprise into a worker-owned cooperative, called Galactic Scientific.
Co-operatives UK Worker Co-operative Council publishes a guide to setting up and managing worker co-operatives (although there is presently no special cooperative legislation in the United Kingdom). The elements of ensuring an effective collective include establishing an appropriate governance and management structure. Depending on size, the cooperative may adopt a flat management structure, where all members participate in management decisions, or a more complex structure. A team based structure can concentrate decision-making about aspects of the business into 'semi-autonomous teams' dedicated to that aspect of the business, and who elect representatives to form an overall governance body. A more hierarchical model may involve the selection (by election from members, or by recruitment of a specialist) of a general manager or managers to handle governance. In all cases, however, democratic control by members is a key principle of the cooperative model.
Another key principle is economic participation by all members. The UK Worker Cooperative Code recommends (as its third principle) that members agree to allocate a percentage of surpluses to reinvestment in collectively owned capital and reserves; agree to a pay and benefits structure for work; facilitate additional investment by members in the enterprise; and ensure that surpluses are distributed fairly and equitably among members according to contribution. The fourth principle is that cooperatives should be careful in any external capital raising that they do not compromise their independence and autonomy, and should adopt sound risk control and prudential practices.
Through this kind of enterprise, workers are able to jointly own and control the assets associated with the provision of their services, as well as share equitably in the proceeds from their own labour. The gig workers who are presently incurring significant financial debt to equip themselves to secure work (such as the Uber drivers who are required to own a late model motor vehicle), might share those costs and possibly secure some economies of scale, by ensuring that the co-operative owned and maintained the fleet.
The benefit of a governance model requiring democratic decision-making is that members of the cooperative can participate in decisions about the terms and conditions of the work they will undertake and, by doing so, may avoid the "take it or leave it" contractual arrangements presently associated with much gig economy work.
A further potential benefit of the cooperative governance model involves the more intangible benefits of autonomous and self-directed work. Social capital is generated, where organisations with a positive organisational culture or clear common purpose witness informal interactions between workers aimed at improving service delivery to customers. This social capital helps to generate a common language amongst workers, facilitate future information sharing, generate greater trust, and help capture technical skills and develop tacit knowledge.48 This type of human capital is crucial for allowing organisations to solve complex problems, and to innovate. The type of innovation generated from enabling workers themselves to fashion their own work is another untapped resource that may be ignored in the rigidly regulated commercial exchanges of much gig economy work. Workers in a cooperative share a common objective and so have the incentive to share information and identify ways in which to continually improve the way their labour is deployed in organisation.
The authors' research on cooperatives and their potential to provide better labour market outcomes for gig economy workers is still at a very early stage. The authors know that some worker cooperatives have failed, spectacularly on occasions, in the past, and there will be lessons to learn from interrogating the reasons for those failures. But the authors believe this is a project worth investigating. Gig economy workers are already shouldering significant investment costs in their work, so the argument that gig economy workers will be too impecunious to share in the investment and risk sharing aspects of cooperative endeavour seems misplaced.
Many already experience a level of personal autonomy in decisions about when to work, but have limited (if any) avenues to negotiate the terms upon which they provide their labour. If these are truly "micro-entrepreneurs" presently running their own nano-scale businesses, it is surely worth investigating the scope for formation of collectives, governed on the basis of cooperative principles, to better promote the ideals manifested in ILO Recommendation 193. While this solution may not suit all gig economy activities, it may provide an avenue for some of these self-employed workers to enjoy similar economies of scale to the enterprises that presently engage their labour, and similar opportunities to share in the wealth created by technological innovation. The "sharing economy" may live up to its own rhetoric.
Gig economy is not a passing fad or a temporary phenomenon. It is the reflection of turbulence in socio-economic sphere where traditional full time jobs are becoming scarce and part time or temporary jobs are becoming popular in the upcoming period of time. As per the definition, it is being stated that gig economy mainly refers to the labor market characterized by prevalence of short term contracts or freelance work as opposed to permanent jobs (BBC News). The benefits of gig economy is that the people can claim flexible hours for their work and have control over time devoted for the j ob at hand and juggle other priorities in their lives in a hassle free way. Employers are also benefitted in this new trend as they only pay for the stipulated work without incurring the cost of hiring and keeping the person in the pay-roll.
On the other hand, as there is no full time contract agreement with the workers, company does not get worried about redundancy payment or payment of paid holidays and allowances for medical treatment for the sick employees. Although it puts strain on workers as they are compelled to pay for all uncertainties of life as job security and job oriented benefits are becoming a thing of past. Sometimes, zero hour contractors are mixed up with gig economy workers, but people on zero hour contracts are regarded as employees because they are entitled to get holiday pay which gig economy workers are deprived of. Due to emergence of gig economy the employment in the service sector which includes personal care and social service will be less structured and employees would be less protected by laws.
Gig economy is mostly technology driven and bolstered by apps based facilities. It gives access to an extremely scalable workforce and allows a level of flexibility not so familiar in the business world in the past. Just-in-time workforce are hired for specific work and being compensated on a pay-as-you-go basis. This model is gaining momentum in the recent time. Gig economy has created opportunities for website designers, gaming app designer coding expert of artificial intelligence, content writer, and event manager which have a lot of traction in white collar space.
As per the cofounder of Team Lease, the pool of project based professional is estimated to be 2 million which constitutes 8% of formal workforce in India. The market for gig economic workers is growing by 20% year on year basis and will continue to do so with changing mind-set. The nascent market is expected to contribute 20% of overall work force by 2022-25 (ET, 9th July, 2018). The other dimension is being captured in informal work which refers to crowd work and work on demand led by mobile apps. Personal outsourcing of activities provides more leverage to standardize terms and conditions of contracts to assignment based work and it helps to keep considerable control over business process and output. "Humans-as a service", rightly interprets the idea of an extreme form of commodification of workers which is prevalent in the labour market in the transformational phase of globalization and that will get aggravated in the changing scenario.
Gig economy leads to crowd work system which conceals the workforce as apps driven service, does not quantify them in a structured form. Almost no human contact happens in most crowd work formation which contribute toward creation of a new group of' invisible-workers". Although they are not invisible in the right sense, but they operate in a new fashion. In the new system workers can be called by the client and customers at the click of a mouse or a tap of the mobile and workers will perform their task and disappear in the crowd in no strings attached framework. This would run flawlessly and smoothly when network and Wi-Fi connectivity works efficiently and consistently. So, we find crowd work and work on demand via apps progressing as a trend to manifest casualization of labour (Bowles & MacPhail, 2008; Campbell, 2004).
Literature of Review
In the book "The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want", published in November 2016, Mulcahy pointed out the change in pattern of work in US where short term jobs, contract work and freelance assignments are gradually increasing in number. Regular job is becoming less secure and workers are trying to leverage their skills, knowledge and network to generate their own career trajectory insulated from whims of the employers. In the research loaded book author has provided various strategies relevant for professional and amateurs to develop niche in the competitive job market.
In the book 'Thriving in the Gig Economy: How to Capitalize and Compete in the New World of Work' written by Marion McGovern in 2017 has referred about how the pattern of work has gone through a sea- change due to technological intervention. In the gig economy best- in-class professionals are attracting attention and getting a preference over ordinary workforce. In the new digital centric work environment wide variety of business models are giving preference to precise high value skill set which is fulfilling the requirement appropriately. Specialized knowledge, high end skill set and impeccable network connectivity will give the professionals much needed competitive edge to sustain in gig economy.
In the book ' Gig Economy: The Good, The Bad and the Ugly published in February 2018 by Kuiper, it has categorically mentioned about the positive aspect and downside difficulties of gig economy. It has highlighted the opportunities and challenges of new workplace environment which is being influenced by political set up, tax structure, labour laws and technical interventions. In the shrinking job market surplus labour force are at great disadvantage when regular jobs are gradually vanishing with the advent of new technologies such as artificial intelligence, machine learning, internet of things, virtual reality and robotics. In the age of automation work opportunities are narrowed down and requirement of definite skill set becoming intense. In 100 page book, author has highlighted about the significant factors instrumental in transformation of job market and guided workers to find a way out necessary to earn a living.
In the article 'Vulnerable employment and the rise in gig economy' published in TOI dated April 6, 2018,by Dabhadkar, we find the evidence of grim realities hitting the job market in India, Asia and rest of the world. The tumultuous impact of automation has created a huge uncertainty for the existing and upcoming workforce where the regular jobs are receding at an alarming rate. STEM best skill sets are going to have better prospect in job market in the coming days. Technical expertise, high end sophisticated skill set will get priority in time bound project work and challenges in the job market will make workers migrate to distant economies where customized services are required in public and private sector.
In the article, ' Thriving in the Gig Economy' by Petriglieri, Ashford, and Wrzesniewski in March -April 2018 issue of HBR has presented the fact about personal, social, economic anxieties emerging in the current world about the transition in job market. The upcoming system will reward the skilful and talented professionals enormously, but unskilled labourers would be beaten out badly. The four dimensions of new work regime such as place, routine, purpose and people will play a pivotal role in gig economic atmosphere. The flexibility of working from home and transforming the home into workplace will provide necessary impetus for dedicated professional. Self-made professionals will try to optimize their work schedule so as to deliver quality service to their clients. In the gig economy disciplined and competent workers will have an edge over casual workers. The sense of satisfaction would be higher for the accomplished worker who would receive recognition for the time bound work accomplished successfully. In gig economic environment meaningful human interaction will reduce substantially and social connectivity will stay limited in social networking process and apps based services.
objectives of the study
to track the changing scenario in the job market that can drive economic transition;
to find out empirical data and facts that will substantiate the emergence and progress of the gig economy.
The research has been conducted in an exploratory descriptive process. The relevant information has been gathered from numerous authentic sources. Comparative study has been conducted to validate the fact. In this research work the objective was to get the knowledge about the new trend gaining momentum in economies across the world. Attempt has been made to connect ideas to understand cause and effect of new trend. The data applied in research is secondary in nature to narrate the fact of new economic pattern.
In the exploratory research process attempt has been made to find out secondary data from various reliable sources which highlights various aspects of gig economy. The data collected from different sources appropriately elucidates changing work culture and socioeconomic paradigm. The data has been analysed to derive the status, progress and prospect of gig economy. Analytical explanations have been given to clarify dynamics of new economic trend which will get regularised as new economic order.
the emergence and growth of gig economy
Since global meltdown in 2008, organizations across the world have understood the significance of reduction in redundant workforce which causes unnecessary cost burdens on them. It has been realized that survival and sustainability of business organizations is possible when emphasis is given on upgraded systems, lean supply chain management system, technological integration and efficient workforce. The bulky organization with enormous manpower creates strain on top line and bottom line growth and endanger the organization to be less competitive in the market. So in the last one decade it has been observed that companies are interested in reducing workforce and compensate it by automated process which requires human intervention at minimized level.
Organizations are interested to keep key players and efficient workforce in the pay roll and outsource their peripheral work to third party who can provide service to save time and cost effectively. Globalization induced labour displacement is a constant phenomenon that contributes labour shortage and labour redundancies occurring simultaneously over the globe and putting pressure on organization across geographies to innovate in order to move up in the value chain. As refugee crisis and geopolitical tensions are dividing the economies in today's world, immigration policies are getting stricter to squeeze securing job opportunities in advanced economy. Organizations across the world taking the vibes from new scenario and trying to build up capacity with local talent pool and heightened leverage to technical breakthroughs. When compared with other countries in South Asia, the vulnerable employment level of India will continue to be higher.
Out of an estimated 535 million Indian labour workforce in 2019, 398.6 million will have poor quality jobs. The official unemployment rate for fresher’s, those under 24 age group has been pegged at 10.7% in 2019. As per the report published by ILO in January 2018 it has been predicted that about 77% workforce of India will face vulnerable employment due to gradual transition in economy. This prediction presents a grim reality where the job aspirants cannot afford to be complacent in their approach. Persistent efforts are required to grapple with the situation and hone skill and expertise in consistent way to match up to the expectations of employer.
The job like subject matter expert, computer programmers, software developers or interior designers remain available where high end talent and dexterity is required more than conventional wisdom. In the service sector customized and tailor made service will be in high demand when consumers across the world try to get privileged treatment. Jobs would be promoted through apps based employment sites and network will work to the benefit of professional to tap the coveted opportunity. With the increase in the subscriber base reduction in data service and communication expense workers will get more exposure in virtual work space and it will provide guidance towards necessity driven assignments where talent and skill would be helpful to earn a living.
future prospect of the gig economy
Digital connectivity in the world is progressing at faster rate. Telecom service providers are on a competitive duel to provide data and calling facility at a lower rate to enhance subscriber base. With the mission like digital India movement, India would be wrapped up by fibre-optic across the length and breadth of the country. With easier connectivity, better network facility information flow would be faster and competition would be intense. This would be phenomenon across developing and developed nations. In this trend organization would have to spruce up its product pipe line and strive for providing better quality merchandise or services at lesser possible cost. Attainment of customer satisfaction will be the main focus and it will get tougher in upcoming days.
As customers are spoiled for choice they will always clamor about best in class service, on time delivery at affordable rate. All the companies would be on their toes to face this massive challenge. Old business models would be done away with as it would not create value for ever demanding customers. Companies would have to put effort to develop a new business model, innovative work, sophisticated product development technique, system up-gradation and innovative style in brand promotion and product distribution. In a world engulfed with data overflow big data analytics and data science will be essential component in business operations. With the emergence of artificial intelligence (AI), robotics and 3D manufacturing in the heavy engineering new jobs will be created which will call for high end technical expertise, analytical skill and resource management ability.
Jobs will not decline due to automation it would rather open doors for new arena of activities with sophisticated skill and knowledge. In India, agriculture process would be mechanized with application of scientific tools and equipment’s such as drone which will contribute to higher productivity at the expense of lesser physical exertion. It might lead to labour migration from rural to urban area. In manufacturing automation and robotics will reduce time for manufacturing and cost of production would decline substantially. But it will render factory workers jobless. Job opportunities will be higher in service sector where robotics and artificial intelligence will not be able to replace artistic performance. Whether it is chef's cooking at restaurant, painters sketching on canvass, actor's performance in theatres or massagers treatment at health spa it would keep growing as demand for services will never slow down. So service sector would provide plethora of opportunities in various types of jobs in coming future. So more the people try to develop their unique skill, unbeatable style and indomitable expertise, higher will be the prospect in gig economic scenario.
merits and demerits of the gig economy
Gig economy provides opportunity to workers to have flexible work schedule, so work-life balance is well maintained when job hours is not rigorous and stereotyped. The people with strong domain knowledge get the scope of being hired and efficient people will make money easily when their expertise are on demand. Life style disease caused by sedentary life style will be on declining trend as flexible work schedule will put less strain on human physique and give chance to relax and rejuvenate adequately.
The gig economy is beneficial for the employer as well when obligation to keep people on pay roll reduces substantially. Cost to company for hiring people and providing allowance and incentive will go down significantly. Whether the web developer or computer programmer or project manager, the accomplished person will be hired from time to time to carry out necessary course of action without providing annual increment. The problem of handling issues related to employees and workers could be minimized if the designated task is conducted through outside experts.
The issues such as interdepartmental conflicts, grapevine, absenteeism, attrition of employees could be averted quite easily. Utilization of resources and financial capital could be done in a rational way. Wastage of financial resources on training, compensation, bonus, perks, and incentives could be reduced to a great extent. From lean manufacturing, company can proceed toward lean workforce based organization which is need of the hour in competitive environment. At the time of liquidation, company would not have to worry about redemption of dues to huge workforce which is generally a very painful process.
There is a flip side of gig economy work structure. If the right person is not available on time then project will get delayed. It would affect performance of the organization if the company would have to hire amateurs in absence of experts, the quality of work will deteriorate. Then quality management will face a severe blow and company will lose competitive advantage in the market place. It is mostly possible for companies in service sector where quality of work is critical for creating a benchmark. If the standard of service is affected due to absence of competent workers, company might earn dissatisfaction of end users. It is detrimental when loyal customers start complaining about degradation of services offered. In gig economy, job market would be more competitive as race for earning a living would be more intense.
In an economy with surplus labour force, the unemployment rate might go high in absence of regular continuous job because in economy like India, Bangladesh, Myanmar, hordes of unskilled and semi-skilled labourers would be redundant in gig economic environment and that might lead to social unrest. In gig economy although earning option for experts are high, wage standard determination is difficult in absence of pay scale standard for workers of different hierarchies. The possibility of workers being exploited might increase significantly at the time of economic downturn when job is less and workers are struggling to find their means of livelihood.
Change is the law of universe and it is perceptible in the work environment of 21st century unequivocally. With the emergence of gig economy the transition in job market is clearly perceivable as automation and technological intervention creating disruption in every sphere of activity. Regular jobs are getting scarce day by day and traditional work pattern is going into obsolescence at faster rate.
Companies are trying to reduce work force drastically to manage cost and replace it by automated systems to reduce attrition, absenteeism and undue demand of the workforce. The newly emerging work culture in the gig economy will give opportunity to efficient workforce who have necessary skill set to perform the job up to the level of employer's satisfaction. Scientists, technocrats, engineers and mathematician will have higher preference in the job market as data science and technical knowledge will be highly warranted in techno driven world. Blue collar and white collar jobs would get fine-tuned and limited in new work environment. The flexibility for gig workers will amplify to a great extent which will work in favour of them as time will be used economically for every job performed. As the technology is taking centre stage for our existence, new class of professionals will be personified by higher domain knowledge, intense analytical skill and stupendous cognitive power.
Human bondage for the workers will reduce substantially and stay limited within networking periphery. Labour migration will happen consistently as job opportunities will fluctuate from time to time across different economies. So it is need of the hour for the existing and upcoming workforce to gain expertise and have specialized knowledge in the selected domain of activities to sustain in challenging future work environment.
Today many claim that economic inequality is the most pressing social problem of our time. (1) But that contention sits uneasily with the rise and ubiquity of information technology that gives the middling classes more equal consumption of many things to which the rich have long had easy and excellent access. Information itself is one example. In years past, the rich had large private libraries and even librarians. Today most of the world's knowledge is available to be shared on the internet.
Beyond specific examples, basic economic principles show that an information society necessarily has important equalizing aspects. The most salient trend of our world is the way it is dematerializing. Information technology is making distance and material things relatively less salient. And since material things are scarce and often cannot be consumed jointly, but immaterial things, like information and virtual reality, are easily shared and can be consumed by everyone at once, consumption becomes more broadly distributed.
This Article considers how one transformation driven by the rise of information technology and computation--the sharing or gig economy--provides an example of an equalizer in our world. The sharing economy provides equalizing benefits on the both the supply and demand sides. On the supply side, its dematerializing qualities make possible markets in property and human capital, in which the middling classes possess a disproportionate share of their assets. On the demand side, it creates online agents that give middling classes opportunities for consumption once available only to the rich.
On the supply side, these markets particularly redound to the benefit of the nonrich, because they hold wealth predominandy in those kinds of assets rather than the securities and businesses that the rich disproportionately hold. As a result of the rise of the sharing economy, for instance, a homeowner or a car owner can generate income from his home or car through Airbnb and Uber.
The gig aspect of the sharing economy also creates new kinds of opportunities for supply by creating spot markets for jobs, like driving a car for hire or cooking, that are accessible to people with modest skills. These jobs also have amenities like flexible hours, which the rich have long enjoyed and which economists have shown are so much in demand that they can represent as much value as a substantial portion of the wage earned.
On the demand side, the dematerialization of the world reduces search and contracting costs, allowing online agents to be substituted for physical agents. Thus, instead of standing out in the street to hail a cab with the uncertainty of finding one, Uber gives much greater assurance of having a car at your door within minutes. One of the defining aspects of being rich previously was having agents to avoid hassles, but online agents today provide close substitutes. Having an Uber app on one's smartphone is a lot closer to having a chauffeur--a service only the rich once enjoyed.
Law and economics illuminate not only the efficiencies of the sharing economy but also these equalizing effects. On the supply side, a great law and economics theorist of the developing world, Hernado de Soto, showed that poor people stayed poor in no small part because they did not have property rights in their homes and other assets that they controlled. (2) As a result, they had difficulty generating income from the property in the form of a mortgage, or accumulating family capital by bequeathing their property to relatives. (3) De Soto argued that this was a substantial source of inequality. (4)
While the middle class in the developed world has long enjoyed formal property rights, information technology allows people to make effective divisions within them that can be sheared off and pooled to generate income. (5) It does so with real property, like homes; personal property, like cars; and human capital, like the capacity to cook excellent meals. Thus, it enlivens their capital, just as formal rights enliven the capital of the less well-off in the developing world. (6)
Given that taxation has not caught up with these sources of income, they are imperfectly measured in government income statistics. Moreover, for the mass of people who have little or no income beyond their salary, this income is worth more than additional salary income dollar for dollar, because it diversifies sources of income and protects against life's risks. Thus, if hours on regular jobs are cut back, or one gets sick, another source of income is available to fall back on.
Relevant to the demand side, Ronald Coase showed the centrality of transaction costs, including search costs, to the economy. (7) Sometimes the costs of transactions are so high that the transactions cannot occur. (8) Examples of such transactions include many short-term room rentals and car hires. But information technology has sharply reduced such transaction costs. (9) And that has also redounded to the advantage of the middling classes. The rich could bring agents into their household even for transactions that were hard to get on the market, like reliable on-time drivers. Their help could find places to stay and guides that perfectly match their peculiar interests. But now these services are broadly available online.
The law and economics of the equalizing aspects of the sharing economy also show that regulations of this economy must be careful not to undermine its equalizing features. For instance, forcing Uber drivers to be employees with regular hours would harm both middling workers and consumers. It would make it harder for the workers to have the completely flexible hours that are valuable to them. And it would make it more difficult for the supply of cars to match the needs of passengers and give them reliable, real-time service, because this supply varies widely depending on time, weather, and events that are impossible to predict in advance. While some regulation is compatible with preserving equalizing features, there has been far too little attention to these dangers to equality.
This Article proceeds in five Parts. First, it briefly uses Airbnb as an example of the sharing economy, emphasizing its equalizing features. Second, it shows how to categorize and understand these equalizing features in terms of the law and economics theories of de Soto and Coase. Third, it responds to possible critiques of the equalizing thesis, such as the concern that the sharing economy makes its investors rich and has put some employees out of work. Fourth, it provides a taxonomy of the regulations proposed for the sharing economy--regulations that variously protect incumbents, prevent regulatory arbitrage, and address what are perceived to be new problems created by the sharing economy. It then suggests that focusing on the equality-creating features of the sharing economy helps determine which of these regulations are beneficial.
Finally, it argues that the sharing economy provides a window into the wider range of equalizers of the modern information economy. Even when we consider only income as a measure of equality, some new and growing sources of income may be hard to measure in government statistics, like much of that from the sharing economy, because technology is changing work structure so much that taxation has trouble keeping up. But even more importantly, technology is creating better nonmonetary conditions for jobs of average income workers, like flexibility and safety, that are also a part of the material condition of employment and of life. Finally, technology is creating aspects of consumption that redound particularly to the broad middle of society, like the ability to summon a quality ride wherever and whenever needed and to have fast access to information--benefits that were once largely the province of the rich. Only by accounting for such matters can one come to a fair assessment of whether equality of material condition is increasing or declining.
It should be noted that this Article does not argue that the sharing economy tempers the problem of poverty, although aspects of it may help some poor people. Inequality must be contrasted with poverty, both conceptually and empirically. (10) Poverty concerns the inability to meet basic needs and can be defined absolutely once the basic needs of society are determined. It also often involves various incapacities that prevent people from working at all. Inequality concerns the relative position of the rich and less well-off and thus is a distinct issue.
I. AN INTRODUCTION TO THE SHARING ECONOMY
The sharing or gig economy provides an excellent example of how technology can both increase economic efficiency, and narrow the difference in material living experiences of the middle class and the rich. It does both by creating more liquid markets in more kinds of assets, unlocking the incomegenerating potential of the property that middle-income groups own, and the skills that millions have. It also creates online agents, making possible bargains that rich people with their paid physical agents could already strike. It gives greater flexibility and autonomy to middle-income groups that many higher-income professionals already enjoy.
The growing and vibrant sharing economy is a child of computation and the internet. (11) It combines our greater connectivity and calculating power to facilitate transactions that would have been impossible even ten years ago. (12) Thus, it shows how the dematerialization of the world through the power of information processing can be an equalizer among all of those who have the discipline and skills to use it.
The essence of the sharing economy is that it uses online agency to create markets in property and jobs that were not nearly as effective previously. As a result, people, particularly those of modest means, can more easily enter markets with a new supply. (13) The online agency aspects of the sharing economy reduce search, information, and agency costs, making available better and cheaper services and products for those who demand it. (14)
Take Airbnb, the company that helps bring property owners and short-term renters together. (15) A classic intermediary earning revenue from both guests and hosts, it uses an internet platform that allows owners of houses and condominiums to advertise and rent out rooms, apartments, or houses to travelers they have never met through a website maintained by the company. (16)
To be sure, people have been renting out their houses or rooms for a long time. But the information technology provided by Airbnb makes the transactions much easier and more attractive for both property owners and renters. The owners get to advertise to a much larger potential pool of renters because people from all over can inspect their properties online, and potential renters get to inspect a larger pool of properties. The owners get standard form legal contracts and insurance against damage to their property. (17) As a result, they can rent out their homes for stays of much shorter durations and with much greater confidence that they will find guests.
Being able to rent out your property at short notice and for both short and longer durations enhances economic well-being by providing a stream of income. (18) Some property owners will use the rental income to do more travelling themselves. More leisure for travel is a historical marker of being rich. And the increased travel creates even more demand for Airbnb rentals.
The renter, in turn, gets an expanded selection of rental properties that can be rented with little notice. By providing cheaper accommodations, Airbnb helps travelers stay in places they could not have afforded or lets them live more comfortably than they could have with friends or family. And even for those travelers who could afford a hotel, settling in someone's home often provides a richer and more distinctive experience of a particular location. A shingle house evokes New England's past. The Pueblo style summons up the history of the Southwest. And the uniqueness of an individual's home contrasts with standard hotel accommodations that look more and more the same everywhere. Airbnb's slogan, "Belong Anywhere," captures both the reach of its operations and the personal touch of living in someone's house. (19) The rich have long been able to enjoy such distinctive experiences.
Airbnb's online agency permits both the host and the guest to gain confidence in one another because travelers rate the host and their rental properties and the host rates the travelers--what the CEO of Airbnb calls a "design[ ] for trust." (20) Renting a room in a house before the advent of Airbnb often seemed a risky proposition, because the owner might turn out to be a criminal, including a sexual harasser. The rating system reduces the possibility of dreadful results. It helps assure hosts that the guest will treat their properties with respect and makes the traveler expect that the property will live up to its specifications. This new system is also a direct result of the dematerialization of the world. Word of mouth--the phenomenon that a rating system perfects--is a term that itself reflects the more laborious physical origins of distributing information. (21)
This use of such information technology is more of a boon to those of modest means than the rich. First, consider the property owners. For most people of moderate means, real property is their greatest asset. (22) Airbnb allows them to monetize their property and turn it into a stream of income. (23) According to data provided by Airbnb, the typical host who rents out a single property makes $7530 a year--no small sum, and about fourteen percent of the median income. (24) And most of Airbnb's hosts are not rich. (25) This kind of income provides an additional advantage: it is independent of employment and thus represents a kind of diversification in sources of income. (26)
In contrast, higher-income people generally have their wealth invested in traditional financial assets that diversify their income beyond that gained by employment. And those rich people who do rent out their grand properties are well-placed to demand security deposits that assure that their property will be treated well. Airbnb uses the internet to allow average people to monetize their property, generate income, and democratize the kind of trust and confidence that before was available only to higher-income groups. (27)
Next, consider the travelers and how they benefit from Airbnb. For those of modest means, Airbnb provides a low-cost place to stay at prices that are often $50 to $100 cheaper per night compared to a hotel. (28) In contrast, higher-income groups can easily afford hotels when they travel and do not need to search for low-cost accommodations. And for those travelers who value a more personal experience when vacationing, Airbnb can provide a richer and more diverse experience of the place they are visiting than a hotel. The rich can already choose some of the most historically distinctive lodgings of the world, like the Waldorf Astoria in New York City or the Statler Hilton off the Spanish Steps in Rome. Thanks to the new entrepreneurial sharing economy, affordable Airbnb rentals are often not so distant from high-end luxury hotels in such cities.
II. THE LAW AND ECONOMICS OF THE EQUALIZING FEATURES OF THE SHARING ECONOMY
It is not a contingent fact about the world that this new economy improves the lot of the bottom ninety-nine percent more than the top one percent or even the top ten percent. Instead, it is the equalizing effect of the new information technologies. The new collaborative platforms benefit average households as owners, because the peer marketplaces create more liquid markets in new areas where a large swath of the population, not just the rich, can monetize their capital and generate income.
Technology also helps the middle class as consumers because it creates online agents to connect consumers to products and services in real time. The rich already have agents of their own--like private secretaries, maids, landscapers, chauffeurs, and cooks. The reduction of agency costs in the form of rating systems also benefits both producers and consumers by reducing monitoring and search costs for services--costs that the rich have had agents to address.
A. De Soto and Enlivening Capital
The ideas of two famous law and economics scholars illuminate how creating markets in more kinds of real and personal property, through virtual assistance, helps both the earnings and consumption of the middle class. A native of Peru, Hernando de Soto recognized that much of the capital in developing nations was locked up in the informal economy. (29) Importantly, for instance, squatters lacked property rights in their houses even after decades of living there and improving the land. (30)
As a result, many people's most important capital asset--their home--was inert or, as de Soto put it, "dead." (31) For example, the lack of legal title means that real property cannot be pledged to support a mortgage, to start a small business, or to pay for private education. Property could often not be easily sold or rented, because the squatter had no formal rights with which to contract. (32) Thus, because of poor legal institutions and a lack of property rights, lower-income groups in the developing world remained impoverished for generations, because they were not able to access their "dead capital" (33) as a path toward a better life. (34)
Prompted by de Soto's ideas, many nations around the world have improved their legal systems for recording property and giving legal title to people who converted abandoned property into homes. (35) These legal reforms have greatly enlivened the real property in those nations. (36) When a squatter becomes a property owner, he has more capital than he previously enjoyed and greater capacity to put that capital to productive use, as with a mortgage. The advantages of these legal reforms affecting real property go almost entirely to people of modest means. Not only did the rich generally always have formal title to their real property, that property is a much smaller proportion of their total assets, which are mostly invested in the form of financial securities (e.g., stocks and bonds) and other forms of legally protected assets.
Similarly, the sharing economy enlivens capital in the developed world, and it also focuses on the kind of capital to which people of modest means have access. Even in the United States, where the vast majority of people have formal title to their real and personal property, their property often lies fallow when it could be earning money. (37) When a homeowner is away on vacation, he can legally rent his home for a short time. He also can rent out a spare bedroom or a suite over a garage when his children are away at college. But the practical obstacles to do so for a reasonable price were previously prohibitively large. (38) That is where Airbnb's service makes the difference, by giving a homeowner access to a global pool of potential renters, and by creating an off-the-shelf contract and insurance to facilitate making the rental transaction as easy as possible from a legal standpoint.
Just as in the developing world, the benefits of enlivening and monetizing the capital in people's homes that would otherwise be dormant redounds more to the middle class than the rich because real property is a greater proportion of their total assets and net worth than it is for the wealthy. For most average nonwealthy people, their home is their largest asset. (39) In contrast, for higher-income households, their homes are a much smaller proportion of their total net worth. (40) Because of the relative insignificance of the value of their homes to their total assets, upper-class Americans are less likely to be interested in renting out their real estate in the first place.
The sharing economy enlivens all kinds of property, even beyond the most familiar example of Airbnb. For example, the website Spacer allows you to rent out extra space in your home or garage for storage. (41) There are also peer-to-peer web platforms that do for personal property what Airbnb does for real property. For example, Turo is a website that helps arrange peer-to-peer car rentals so that car owners can rent their vehicles to individuals when those vehicles would otherwise sit idle. (42) Peer-to-peer rental and sharing platforms like Spinlister do the same for bikes. (43) You can now offer your bike for rent anywhere in the world. (44)
More famously, app-based platforms like Lyft and Uber allow car owners to monetize their personal vehicles when they become drivers for the ridesharing companies and pick up passengers. (45) The ridesharing business model enlivens capital in automobiles--another big-ticket capital asset for most people.
But ridesharing also enlivens another wholly different kind of capital--human capital--because an owner's return from turning his or her vehicle into a taxi comes not just from the return on the financial capital invested in their car, but also from the money earned from the ridesharing services. (46) This part of the sharing economy is less commented upon, but it may turn out to be even more important because of the variety of human capital for which markets are not practically available.
As with real and personal property, the problem was that without the internet it was difficult to make a market in different kinds of human capital, particularly where employed in short-term jobs. (47) Those who wanted to hire people for short-term and part-time jobs did not have nearly as good a way to find a pool of willing applicants. (48) And those who wanted to work in this area did not have nearly as much access to a pool of employers. (49) Just as information technology allows people to segment their personal and real property in a way that makes it more saleable, information technology has the same effect on human capital.
Some of these companies specialize in human capital markets for very specific purposes. Rover, for instance, facilitates dog sitting. (50) Others are more general, like Thumbtack, (51) Fiverr, (52) and TaskRabbit, (53) which are peerto-peer platforms that connect those who are willing to be hired to perform a variety of services with those who are willing to pay somebody to do those services. For example, using Fiverr, you can hire freelancers to perform services including logo design, illustrations, web design, infographics, business copywriting, translation, animation, legal consulting, financial consulting, and birthday greetings. (54)
Airbnb is now enlivening human capital as well as real property by extending its peer-to-peer platform to include the opportunity for travelers in unfamiliar locations to make arrangements to meet with "hosts" through the new service called "Experiences." (55) For instance, if you are a local expert on the history of the Civil War and the geography of Gettysburg, Pennsylvania, the Airbnb platform can connect you to those travelers who want a private tour of the battlefield. (56)
The websites BonAppetour (57) and Eatwith (58) similarly connect those who have a passion for cooking with travelers who want the experience of a home-cooked meal in a new city. Some people are great cooks, while most lack the ability to make a souffle. But most such cooks never get the opportunity to cook for anyone besides their friends and family. With BonAppetour and Eatwith, passionate cooks who enjoying entertaining can now host travelers from all over the world in their homes and monetize their homes and cooking skills.
Thus, the peer-to-peer sharing economy allows people to more easily make money from their vocations or avocations and generate income in ways that were never possible before. The wealthy already have high-paying jobs and enough assets and net worth that make raising their incomes less important. Moreover, many high-income individuals have reputations, like well-known lawyers, that are self-advertising and need no pooling market for their services. These peer-to-peer services primarily help those of more modest means.
And these jobs generate not only income but also personal satisfaction that other jobs do not. Just as most college professors get a lot of personal job satisfaction beyond their financial compensation because they are able to teach and write about their favorite topics, the same is true with chefs and night club guides. (59) They are being paid for what they love to do. (60)
The formal law and economic perspective on this benefit comes from the analysis of compensating differentials. (61) An unpleasant job has to offer people a wage premium to be equivalent to jobs requiring the same skills. In contrast, a gratifying job leads people to accept lower wages. (62) For example, a coal miner is paid more than other jobs requiring equivalent skills because the job is both unpleasant and dangerous. (63) It follows directly that the more utility one gets from a job outside compensation, the less compensation will be required, holding skills equal.
Thus, it is important to note that significant gains from the sharing economy in human capital come in the form of nonmonetary compensation that does not show up in income statistics at all. For most of human history, most people have not enjoyed the jobs they have, because they are burdensome or even dangerous. The rich have often been an exception to the reality that work involves unpleasant toil. Being a captain of industry allows a chief executive scope for creativity and command that most find pleasurable. As the sharing economy allows people to profitably pursue their passions, they are improving their life satisfaction and thus equalizing human happiness.
Moreover, even besides opportunities to combine passions and vocations, the gig economy and peer marketplace have other characteristics, like autonomy and flexibility, that increase the value of those jobs beyond the wages received. For example, a freelance job for an illustrator through a website like Fiverr or TaskRabbit can be completed according to a timeframe that works for both the buyer and seller. As discussed below, flexibility can be worth forty percent more than actual wages earned compared to a job with inflexible hours. (64) This is not surprising; temporal flexibility allows one to take care of family responsibilities as needed. Geographic flexibility allows one to avoid long commutes. This kind of autonomy and flexibility is usually only enjoyed by those who are very well-off--like tenured professors or many of the rich.
Furthermore, that same flexibility allows people to work part-time. Part-time work can be worth more per hour to people than full-time work if they only want to work part-time. It is valuable because working only for a portion of the day at hours of one's choosing allows ample time to take care of families, pursue a career as a writer, actor, or artist, or take care of chronic medical conditions. (65)
One study found that this flexibility is a significant incentive for individuals who choose to drive part-time for Uber: eighty-seven percent expressed a desire "to be my own boss and set my own schedule," eighty-five percent wanted "to have more flexibility in my schedule and balance my work with my life and family," and seventy-four percent wanted "to help maintain a steady income because other sources of income are unstable/unpredictable." (66)
Thus, the information connectivity that is the hallmark of the sharing economy makes key nonmonetary aspects of job more like the jobs that the well-off have traditionally had. These aspects of converging nonmonetary compensations represent gains for equality.
B. Coase and the Reduction of Agency Costs
Another law and economics scholar, Ronald Coase, showed how the costs of engaging in market transactions are an important part of economic life. These costs of using the market come at every stage of a transaction. Each of these costs is so important that economists give them a name: the costs of finding someone with whom to deal are "search costs." (67) The costs of writing the agreement are "contract costs." (68) And the costs of making sure that the contract is performed are "monitoring costs." (69) Sometimes these costs, collectively called "transaction costs," can be so prohibitively high that they can prevent otherwise mutually beneficial deals from taking place. (70)
Coase pointed out that one result of high transaction costs is that large corporations have many agents on the payroll. (71) It makes economic sense to perform many services internally when transaction costs with outside contractors or suppliers are high. (72) For instance, if the company employs someone full-time to look for merger partners, it does not have to contract with an investment bank to perform those services. Of course, there are costs to performing tasks internally that include the compensation expenses of hiring full-time employees. We often speak of corporate bureaucracy, because a large corporation sometimes resembles the inefficiency of a government bureaucracy in terms of generating a lot of paperwork and relying on administrative orders rather than the market. (73) Nevertheless, corporations exist because often these costs of internal production are less than the transaction costs of using the market for individual contracts. (74)
Similarly, one of the defining features of being rich through the ages has been employing people within the household to avoid the transaction costs of using the market. For instance, it is often hard to be sure of obtaining instant and reliable transportation by relying on a spot market for transportation. But by hiring a chauffeur, the rich could enjoy quality on-demand transportation services.
The sharing economy reduces transactions costs at every stage. First, the peer economy makes it easier for providers of services and consumers to find one another, reducing search costs. For instance, Airbnb uses the scale of the internet to list millions of rental properties to a large pool of potential renters. According to a recent report, Airbnb now has four million listings in 191 countries worldwide, an amount that tops the 3.3 million room listings globally held by the top five hotel brands combined (Marriott International, Hilton Worldwide, Intercontinental Hotels, Wyndham Worldwide, and Hyatt Hotels). (75)
Second, the sharing economy reduces the cost of entering into a legal contract. Airbnb provides a standard form legal contract that regulates the rights of both the property owners and the guests and provides property owners with insurance coverage that would be difficult for them to find on their own. (76) Finally, the peer-to-peer sharing economy for rental properties through Airbnb significantly reduces monitoring costs by allowing property owners and their guests to rate one another after each transaction. The guests rate the quality of the rental property and the service provided by the host and the property owner rates each guest. This dual rating system provides powerful incentives for each party to follow through on the terms of the contract to assure the opportunity for more contracts in the future. (77)
Importantly, the consequences of reducing transaction costs matter much more to the middle class than to the rich. First, agency costs tend to be relatively fixed for a particular good or service. Thus, those costs constitute a larger share of the total value of the exchange for less expensive properties, goods, or services. As a result, fewer of these properties, goods, and services will be offered when transaction costs are high, and that reduction in exchange is considered to be a market failure that harms both providers of goods and services and consumers.
Second, the sharing economy equalizes the quality of services and reduces the difference in quality that previously existed between high-income groups and the average middle-class group. (78) The peer economy substitutes online agency, like a mobile app or the internet, for the real, human agents. This online agency makes less difference to the rich who employ full- or part-time agents in their household. These agents can drive cars, find the places to stay that will match their deepest preferences, and generally get the right people to work for them even for short-term tasks.
For instance, the founders of Uber began the service in part because San Francisco's radio car services and taxis offered such poor and expensive service. (79) Uber and Lyft are thriving today because, by using modern information technology with its online agents, they offer superior services to traditional taxis at prices that are often cheaper. (80) By eroding the distinction between the hail-and-dispatch markets, these on-demand apps provide far more frictionless transportation services than traditional taxis. (81)
By radically changing the costs of search, Uber and Lyft now provide transportation services to the average person that more closely resemble having a chauffeur, because the ridesharing services deliver drivers to riders on demand at the press of a cell phone. (82) And these benefits clearly help people of modest means because cabs are disproportionately used by people who may not have market alternatives for transportation, like the poor and disabled. (83) Some of these benefits may be large, even lifesaving. A recent study has shown that ambulance rides decline when ridesharing comes to town, showing that ridesharing can in some circumstances be a more reliable form of transport to the hospital even for serious matters. (84) Besides the radically improved convenience, the cost is lower too. (85) And costs are particularly lower for the high-value trips, like those to and from airports. (86)
And just as Airbnb has innovated and expanded on its original single service, so have ridesharing companies expanded their offerings on a regular basis. Uber and Lyft now allow consumers to share their rides with others at a reduced fare through the options called uberPOOL and Lyft Line. The GPS capabilities of the ridesharing apps make this kind of service more possible than before, because it can easily match people going in similar directions along similar routes, making ridesharing cheaper for all passengers while ensuring the same compensation for the driver. Uber Express Pool charges even less by picking people at designated places. (87)
UberPOOL provides an example of how innovative information technology is equalizing services down the income scale. UberPOOL is replacing some public transportation. (88) And yet the difference in quality between a pooled car and public transportation is even greater than between a ride summoned by an app and a taxi. Thus, such innovations suggest how the sharing economy may move to deliver benefits down the income scale.
III. MEASURING THE EQUALIZING BENEFITS OF THE SHARING ECONOMY
As with many new technologies, the distinct advantages that the sharing economy provides--in this case particularly the advantages to the bottom ninety-nine percent--are often hard to measure. Quantitatively, the issue is to determine the size of two kinds of benefits. First, what additional consumer surplus is created by the sharing economy and how is it distributed among different economic classes? Second, what do the largely nonrich participants and hosts earn from the sharing economy and what other nonpecuniary benefits are earned?
Even without exact quantification it is easy to conclude that the consumer surplus of the sharing economy is large and growing. Many consumers now recognize that they would have to wait a lot longer and pay a lot more to summon a taxi compared to using an on-demand ridesharing service like Uber or Lyft. (89) And Uber and Lyft's phenomenal growth rates in revenues are some of the highest of any company in the history of the world, and Airbnb's growth is not far behind. (90) The impressive growth rates of these companies suggest that they are hitting the sweet spot for millions of consumers. (91)
But in the case of Uber we have harder data, because another aspect of the sharing economy is its creation of a huge amount of market data detailing the number of drivers, passengers, and the prices at which they contract for each ride. (92) This detailed market information allows the supply and demand curves to be estimated and with them the surplus or value generated for consumers from ridesharing services. University of Chicago economist Steve Levitt found that in 2015 alone the additional consumer surplus within the United States generated by Uber was about $7 billion. (93) And that number does not include the surplus added by smaller competitors like Via, Gett, and Lyft.
According to yet another economic study, Airbnb has also boosted consumer surplus by offering consumers lower prices and increased selection. (94) In 2014, the surplus was estimated to be about $350 million for the top ten U.S. cities alone. (95) A reasonable estimate of total surplus for the United States might be about $700 million. Given the increase in bookings Airbnb is experiencing, this surplus could have reached more than two billion dollars in 2017 and is likely to increase another tenfold by 2025. (96) These benefits to consumers do not count any that are provided by new, smaller housing services that have arisen to compete with Airbnb. (97)
And then to properly account for all of the increase in consumer value from the peer economy, we would have to include the added consumer surplus from all other smaller companies and web platforms in other areas of the sharing economy. There might be an additional annual consumer surplus of a few billion dollars generated directly by the companies themselves, for a total of between five and ten billion dollars from the sharing economy. And given that the sharing economy is supposed to grow by a factor of ten in less than seven years, we can expect a surplus soon in the hundreds of billions of dollars. (98)
These numbers do not include all the added consumer surplus generated by the improvements in incumbent services because of the entry of ridesharing companies, for example, by taxis that have improved their service and/or lowered fares in response to competition from the ridesharing services. (99) For instance, the number of complaints against traditional taxis substantially decreased following the arrival of ridesharing services. (100)
The other equalizing effect of the sharing economy is the new utility, both income and improved working conditions, that is being generated for service providers. Services like Airbnb can unlock large amounts of underused capital assets. (101) We have already noted that the average income of a single property Airbnb host is very substantial, about fourteen percent of the average wage. (102) Airbnb hosts observe that because of the infrastructure and service provided by Airbnb, the time they spend on management tasks for their rentals is not hugely burdensome. (103) But for those property owners who would prefer to outsource these services to somebody else, companies have grown up recently to handle the details of Airbnb reservations and cleaning the spaces to be rented. (104)
There is also strong reason to believe that ridesharing has improved the employment opportunities of many of its drivers. Ridesharing has attracted many drivers--one estimate has suggested that Uber may have a million drivers in the United States alone. (105) Second, studies funded by Uber suggest that drivers earn substantially more than the minimum wage, and more than taxi drivers. (106) But even if Uber drivers earned only a litde more than the minimum wage, the job would be worth a lot more to them than most minimum wage jobs. (107)
One advantage is that Uber and Lyft drivers do not have a set schedule, but instead work completely flexible hours at their own convenience. That flexibility allows ridesharing drivers to schedule their time to do other work (sometimes full-time jobs), do chores, go to school, or care for family members. For those drivers, their only other alternative to a fixed-hour work schedule might be going on welfare or disability. And it is important to note that rideshare drivers have substantially more flexibility than taxi drivers who could rent a cab for a day, because rideshare drivers make stop/start decisions continuously throughout the day at their own convenience.
A recent study found that having complete flexibility over the number of hours worked is worth as much to Uber drivers as forty percent of the value of their total earnings, or about $150 a week. (108) In other words, most Uber drivers prefer a flexible driving schedule with lower wages to a job that pays higher wages with a fixed work schedule. If they were required to be employed on fixed schedules they would reduce their hours by two-thirds. (109) This is a powerful example of the improved working conditions that the sharing economy can provide employees.
Moreover, another great advantage of working for ridesharing services is safety. Traditional taxi drivers have faced risks of bodily assault and even death at the hands of passengers who are disgruntled or have targeted them for robbery. (110) Indeed, in years past they have often been at greater risk of fatality from homicides than driving accidents. (111)
Yet, because all Uber and Lyft customers must provide credit card information to use ridesharing services, the passengers are identified and traceable, and thus are less likely to commit assaults or crimes against drivers or damage their vehicles. (112) Further, nonpayment risk is reduced since the passengers' credit cards are on file and charged for each ride. (113) And because passengers receive ratings from drivers after each ride, those passengers who are abusive or disorderly will receive low ratings and can be avoided by Uber and Lyft drivers. (114) The rich, similarly, have generally had safe, hassle-free jobs.
To be sure, most of the previous discussion of reasons that the consumer surplus has tended to go disproportionately to the nonrich has been a qualitative argument rather than quantitative. But one recent study of one aspect of the sharing economy does provide quantitative evidence that the gains to suppliers and surplus to consumers redound to the nonrich. Economists measured the effects of Getaround, (115) a service that permits peer-to-peer rentals of cars. (116) They found the gains to the automobile industry's consumer surplus to be substantial. (117) And the gains were concentrated in those with below-median incomes. (118) The reasons for this dispersion of consumer surplus were twofold. First, below-median income consumers were more likely to rent their cars. (119) Second, below-median consumers were more likely to forego purchasing cars because they could rent them more easily and cheaply when they wanted. (120) It is not clear that the rest of the sharing economy delivers benefits disproportionately to people below the median, but the same reasoning suggests that it will deliver its benefits disproportionately to people who are not high income. People of modest income will be more interested in being providers and consumers in these markets than the rich.
Some critics of the sharing economy claim that it is destroying some jobs, like those of traditional taxi drivers or housekeepers at hotels. This type of argument has been made for centuries, ever since the Luddites famously argued in the 1800s that new kinds of weaving machines were taking away jobs from those who had previously been weaving textiles by hand. (121) Economists almost universally view the Luddite movement as presumptively invalid. (122) It even gets its own name as a characteristic error in social thought: the "lump of labor fallacy." (123) The fallacy, or mistake, is to view the number of jobs in society as fixed. (124) In reality, new jobs are always created when some jobs disappear, but the number of new jobs always outnumbers the jobs destroyed, leading to a net increase in jobs. (125) The number of jobs is never limited, because people's desires for goods and services are potentially unlimited. (126) And in the long run the new jobs have paid higher wages than the old jobs lost, because of the greater wealth and economic growth that result from innovation and advances in technology. (127)
But even setting aside this general argument, we can see some particular ways that the sharing economy itself is likely to create more jobs than it eliminates. Airbnb serves many people who might not stay at a hotel, because they cannot afford one, prefer a more intimate setting, or value a larger living space than a hotel room. (128) This expansion of travel experiences through Airbnb creates more jobs. Cleaning staff, for instance, are employed to tidy up rental spaces after guests leave. (129) The "host" jobs that Airbnb is generating for local guides have no counterparts in the hotel industry and few in the travel industry in general. (130) At least so far, the hotel industry and its employees do not seem to be suffering. Hotel occupancy rates remain high, suggesting that Airbnb is not generally taking business away from hotels as much as it is expanding travel experiences by bringing in new renters. (131)
Similarly, ridesharing services have expanded the number of people using transportation services and hiring cars driven by others. Thus, the total number of jobs for car drivers has gone up. (132) To be sure, the ridesharing services have taken away some business from traditional taxis, which has certainly reduced the number of traditional taxi drivers. (133) However, it is not clear how much that change substantially harms those who were previously driving traditional taxis for a taxi company, because they can easily choose to instead drive for ridesharing services with the advantages of safety and greater flexibility in scheduling. (134)
It is true that some owners of taxi medallions have been harmed. (135) When government-enforced scarcity of taxi medallions is eroded by new technologies, those who previously profited from the government regulation are indeed worse off. But this kind of regulation that limits entry is unlikely to help address income inequality overall because it prevents those with limited capital from entering the taxi business. Like ridesharing companies, the owners of medallions were also intermediaries between drivers and passengers, but they offered experiences that were less equalizing for drivers and passengers alike. The drivers lacked the valuable flexibility of making their own decisions when to drive, and passengers did not get the luxury of online ride hailing.
In fact, U.S. courts have, specifically in the case of Uber, recognized the value that the sharing economy brings to a particular city. (136) In a decision finding that Uber's entry into the Philadelphia market was not anticompetitive, the Third Circuit highlighted the benefits Uber brought to consumers--benefits such as "lower prices, more available taxicabs, and a high-tech alternative to the customary method of hailing taxicabs and paying for rides." (137) Furthermore, the court noted that Uber's economic efficiency is also advantageous and should "be encouraged, because that often translates to enhanced competition among market players, better products, and lower prices for consumers." (138)
Another equality argument against the sharing economy is that it makes a few people very rich: Travis Kalanick, the founder of Uber, and Brian Chesky, the founder of Airbnb, have become so rich that they are members of the Forbes 400. (139) This accretion of wealth to a few individuals counts somewhat against the equalizing effects of the sharing economy, but not as much as one might think. First, most of the value of startups goes to venture capital funds and much of the money in venture capital funds in turn comes from other actors, like pension funds, where profits redound much more diffusely. (140)
Moreover, the market cap of these firms is much less than the consumer surplus they deliver. For instance, the market cap of Uber is about $50 billion (141) and the yearly consumer surplus is currently $7 billion. (142) At a discount rate of five percent, the future stream of surplus is worth about $140 billion, assuming that surplus remains the same. But Uber has such a high valuation precisely because it is thought that it will grow to deliver much more consumer surplus in the future.
And the market is almost surely right, because the equalizing effects of the sharing economy will grow in importance as the younger generations age and become an even more important demographic group of consumers. (143) Seventy-two percent of all Americans have used the sharing economy for at least one transaction. (144) About a third of those who are under forty-five have used the peer economy for transactions with four different services. (145)
Thus, the differential use of the sharing economy by age groups shows that in a technologically accelerating society, age can become a fundamental axis of inequality. (146) Younger people are more likely to take advantage of technological advances than older people because they are comfortable with technology. (147) As technology accelerates, this axis makes the young systematically better off than the old. But substituting this kind of inequality for more material forms of inequality reduces inequality in any morally disquieting sense. First, the old have far more assets than the young. (148) Second and even more importantly, most of the young will become old and likely face technological disadvantages vis-a-vis the future generations.
And further developments are likely to make the sharing economy even more favorable for workers and consumers as compared to the investors in companies that facilitate these markets. Blockchain provides a decentralized intermediary for the sharing economy that is an alternative to a corporation managing the distribution of goods and services that is the essence of the sharing economy. Blockchains can create a peer-to-peer network for financial transactions on top of the internet. (149) It allows participants in a sharing economy to create a network cooperative. (150) The transparent verification process can assure that these rules are enforced among participants. (151)
Thus, essentially, a sharing economy cooperative using blockchain would eliminate the corporate intermediary that manages the network of service providers through its administration. This development can also be explained in terms of Coasean law and economics. By providing a transparent way of enforcing contracts and eliminating opportunism, blockchain so much lowers the transaction costs of enforcing long-term complex contracts that groups of people can collaborate in a network rather than use a corporate intermediary that charges them for administration. (152) It is another step in the ongoing dematerialization of the world, which equalizes the positions of people along the income scale because they no longer have to pay for agents. (153) Just as sharing economy companies replaced less efficient intermediaries, like owners of taxi medallions, so may blockchain in turn displace these companies.
Already, small-scale blockchain cooperatives are appearing. For instance, Swarm City provides a blockchain to be an intermediary for ridesharing. (154) As blockchains mature and millennials more comfortable with such technology become a greater portion of the workforce, these kinds of cooperatives can grow. Even if they do not displace more traditional ridesharing companies, like Uber and Lyft, they will put pressure on these companies, requiring them to give better deals for their drivers.
IV. REGULATION'S DANGER TO THE EQUALIZING FEATURES OF THE SHARING ECONOMY
Given the benefits of the sharing economy for equality as well as efficiency, care should be taken to avoid regulations that would undermine these features. Proponents of increased regulation of the sharing economy often exaggerate the benefits they expect the regulations to produce and downplay the likelihood or extent to which greater regulation can stifle innovation, be subject to regulatory capture by established businesses, harm the poor and the marginalized, and produce uncertainty. (155) And, in many cases, the proponents of these regulations fail to take into consideration the unique features of the sharing economy, such as the jobs available and the individuals willing to do them.
The desire to regulate the sharing economy must be balanced against not only the unintended harms that poorly thought-out regulations can produce, but also the myriad benefits that the sharing economy creates for society at large. Uber, for example, can provide greater job and income-earning opportunities for racial minorities and immigrants, a "multiplier" effect of "increased consumer spending and revitalization of downtown commercial areas" to which consumers have easier access, increased tax revenues, and even safer roads. (156) And, despite critics' claims that Airbnb has led to shortages of affordable housing and increased rents in densely populated urban areas, there is little evidence to back this up. In fact, there is greater support for the propositions that stringent regulatory policies have led to these negative consequences and that Airbnb helps alleviate this problem by giving low-income individuals and families an opportunity to earn extra income. (157)
This Part offers a framework for evaluating regulations, including a number of those that scholars have for some time predicted would emerge at the state and local levels. (158) Regulations that are simply designed to protect incumbents are obviously detrimental, because the sharing economy expands entry to the benefit of both consumers and new providers. Some new regulations may be justified as ways of preventing sharing economies from engaging in regulatory arbitrage. Through such arbitrage these companies make money by getting around public-regarding regulations that applied to the old economy. But whether regulatory arbitrage is in the public interest depends upon whether those prior regulations are delivering the same benefits as they did before the advent of the sharing economy. In many cases, as with regulations of driver safety for passengers and regulation of the employment relationship with companies, they need to be reconsidered because of technological change that redounds to the benefit of efficiency and equality. In contrast, the sharing economy should not be allowed to exploit loopholes in taxation, because the need for progressive taxation of economic activity remains unchanged with the sharing economy. Finally, some regulations focus on new risks that the sharing economy may be creating. For instance, some jurisdictions have prohibited home sharing on the grounds that it will raise the price of housing in the jurisdiction. Such regulations need to be scrutinized, however, to determine whether they are counterproductive and pretexts for incumbent protection.
A. Incumbent Protection
Much of the opposition to the peer economy comes largely from legacy incumbent businesses, like traditional taxi companies or hotels. (159) The incumbent businesses are frequently well-organized special interest groups and many have long-established connections with local politicians. (160) The result has been attempts to ban outright the expansion of the innovative and generally equalizing services that have emerged in the peer economy. (161) These efforts would obviously undermine the greater quality in income production and consumption that the sharing economy brings.
Some incumbent businesses have made blatant claims for being protected from competition. For instance, in Milwaukee, traditional taxi companies argued that since the city had granted a specific number of licenses for taxis, permitting Uber to operate at all was a "taking" of their property by the city government. (162) Richard Posner, the former Seventh Circuitjudge who is also a famous law and economics theorist, dismissed this argument. Judge Posner held bluntly that "taxi permits issued by the Milwaukee city government are property, but have not been 'taken,' as they do not confer on the holders a property right in, amounting to control over, all transportation by taxis and taxi substitutes... in Milwaukee." (163) Then he noted that the cab drivers' losses are simply the result of the operation of the free market: "Undoubtedly by freeing up entry into the taxi business the new ordinance will reduce the revenues of individual taxicab companies; that is simply the normal consequence of replacing a cartelized with a competitive market." (164)
Philadelphia taxicab companies also alleged that Uber attempted to monopolize the market in violation of federal antitrust laws. But in another example of courts upholding Uber's legality against claims of anticompetitive behavior, the Third Circuit rejected this argument, reasoning that Uber "bolstered competition by offering customers lower prices, more available taxicabs, and a high-tech alternative." (165) The court added that "[r]unning a business with greater economic efficiency" is not anticompetitive; in fact, it "enhance [s] competition" by leading to "better products, and lower prices." (166) As discussed before, this market delivers equalizing benefits to both providers and consumers.
B. Distinguishing Good from Bad Regulatory Arbitrage
A more plausible kind of regulation is one premised on the notion that sharing economy firms are profiting from avoiding regulations that are in the public interest, not just the incumbents' interests. Thus, the regulation should be imposed to close the loopholes the sharing economy has exploited. But regulatory arbitrage can be good, if it forces rethinking the need for particular kinds of regulation that may need modification in a world where transaction costs have changed.
Consider the effort to argue that it is in the public interest for safety that these new services be placed under the same regulatory scheme that their incumbent taxi competitors face. (167) Thus, Uber drivers should face the same requirements as taxicab drivers, such as being fingerprinted and going through a background check.
But applying the same existing regulations to these new ridesharing services ignores the innovations that Uber and Lyft bring. Uber and Lyft platforms set up legal contracts between the driver and the rider using the ridesharing app that also transfers funds from the passengers. (168) It is no longer the anonymous relationship of that which exists when a passenger hails a taxi on the street. Uber and Lyft vet the drivers, and the riders provide credit card information to the ridesharing services. (169) The driver rating system used by each passenger after each ride then also gives drivers far greater incentives to behave well than those faced by a typical taxi driver. (170)
Coase's analysis of agency costs helps show why regulation of ridesharing services is less necessary to protect safety. Government regulation may be essential when high transaction costs make it difficult to establish a workable contractual relationship where each side has confidence in the other's performance. But one of the greatest successes of the sharing economy has been to reduce transaction costs and make a greater variety of low-cost contracts workable and practical. When the buyer and seller of a service have greater assurance of each other's good behavior for ridesharing services, less government regulation is needed.
Simply applying the same rules to ridesharing companies with ratings systems without allowing for the effects of these systems on safety creates a form of anticonsumer incumbent protection. Moreover, if requiring costly background check obligations causes ridesharing companies to withdraw their services, both riders and drivers will lose the benefit of their equalizing features. (171) Indeed, if a rating system provides more safety over time for both driver and rider, one of the non-price-equalizing features lost will be greater safety for people of modest means, the kind of safety the rich have always enjoyed.
It does not follow that because the ratings system strengthens the reputational road to safety, that no other regulation other than permitting such a system to satisfy safety requirements is needed. (172) But any safety requirement needs to be reconsidered in light of the safety that such a rating system brings. Then taxi companies should be given the option of using a ratings system to enjoy the advantages of the ratcheting down requirements. (173)
Another concern is that the sharing economy's business model depends on treating those offering services as independent contractors rather than as employees. (174) The arguments that this is a form of regulatory arbitrage differ in detail, both because the sharing and gig economies differ in their details from one area to another, and because the distinction between employees and contractors differs legally depending on the exact situation and the specific jurisdiction. But the basic argument is that a company like Uber exercises sufficient control over its drivers that they should be classified as employees and not as independent contractors. (175)
But if the traditional rules undermine the benefits of the sharing economy, they should be updated if the gains to both equality and efficiency are to be realized. (176) Just as treating new workers in the emerging peer economy under the same public safety regulations as the old economy ignores the significant safety advantages that the sharing economy brings to customers, so treating gig economy workers for all purposes as traditional employees reduces the advantages that workers get from the sharing economy--autonomy, safety, and flexibility.
Thus, many regulations that would force Uber drivers to work a certain set of hours or force ridesharing companies to monitor their drivers closely would deprive drivers of the autonomy and flexibility that are big benefits of the sharing economy. For instance, many drivers keep their apps on even when they are not working and switch among different ridesharing companies. (177) While this promotes flexibility and autonomy for the driver, it is inconsistent with many of the legal duties attributed to an employer. (178)
Moreover, the ability of drivers themselves to enter the market at the hours they want is also crucial to expanding supply at the appropriate times to match demand. A traditional employee-employer relationship, where hours are under the employer's direct control, would undermine the benefits of the sharing economy in ridesharing. Each individual driver makes a decision to drive based on how likely he is to obtain customers. This judgment is obviously unpredictable, depending on such matters as the exact weather conditions and public and private events in the area. The market will reach equilibrium faster when more participants are able to make decisions about entering it, exploiting the wisdom of crowds. This important economic reality allows ridesharing to deliver its equalizing benefits.
Regrettably, a recent California Supreme Court ruling (179) threatens to impose this corporate-employee relationship on companies providing services in the sharing economy. (180) In a case involving a delivery company, the California Supreme Court "ruled that employers must treat workers who do work related to a company's 'usual course of business' as full-fledged employees." (181) The key feature of this ruling is that the presumption will be that workers are not independent contractors, but rather are employees, and companies trying to classify their workers as independent contractors must satisfy each element of the California court's new test. (182)
Consequently, scholars predict that prices of sharing economy services in California will likely rise, as the higher payroll taxes and additional expenses that accompany the conversion of independent contractors to employees may "increase an employer's costs by about 25 to 40 percent per worker." (183) Furthermore, smaller companies could have a much more difficult time breaking into the sharing economy, (184) and the ruling could undermine the quintessential benefit of the sharing economy--flexible hours and work arrangements that give more people an opportunity to take advantage of the sharing economy. (185)
Once again, Coase's analysis of agency costs helps to understand the issue at hand. Advances in technology have made it possible for individuals to contract efficiently with one another directly (peer-to-peer) without requiring them to be part of the same company. (186) Getting rid of the corporate-employee relationship eliminates the rigidity and inefficiency of that traditional relationship, which can restore valuable autonomy and flexibility to an individual contract worker. And that flexibility and autonomy can provide great value to an independent contractor.
Some have suggested that the way to handle sharing economy workers is to have hybrid classifications, giving independent contractors some of the regulatory benefits of being an employee without creating structures that would lead Uber to eliminate the benefits of the sharing economy, such as flexible hours. (187) For instance, a jurisdiction might try to assure that Uber drivers are getting a minimum wage for hours worked. (188) From an egalitarian standpoint, there is nothing intrinsically wrong with such proposals, but the equalizing features of this economy suggest the checklist that such hybrid regulations should satisfy. First, they must not undermine the equalizing benefits, such as regulations that make it impossible for workers to enjoy the autonomy and flexibility of setting their own hours. Second, they must not be so burdensome as to make it more difficult for sharing economies to offer their services, thus limiting the circle of those who benefit. Third, in setting out notions of equality, regulations must take account of the nonpecuniary benefits of the sharing economy. Thus, if a hybrid regulation tried to provide a minimum wage, it should include in its calculation the benefits of the very flexible hours offered by sharing economy jobs. Otherwise, the minimum wage laws will have the perverse effect of penalizing jobs that offer workers more overall utility.
But there are also examples of regulatory arbitrage that consist of avoiding the incidence of justified regulations, like taxes. Many observers have noted that because of the current tax system, much of the income from the sharing economy is unreported. (189) Sharing economy companies must report to the federal government income that is paid by a consumer to a service provider using their platforms, but only if that income exceeds $20,000 a year. (190) However, many participants use more than one service to earn income, such as when car owners drive for both Lyft and Uber, thus taking advantage of ways of staying under that threshold.
Commentators have made thoughtful proposals to correct this problem by a combination of creating more capacious withholding and, at the same time, writing regulations with which it is easier for small business owners to comply. (191) Some of the complaints about taxation, however, while initially well founded, turn out be efforts at incumbency protection. When Airbnb tried to enter into an agreement with New York to collect occupancy taxes, the hotel industry, which had objected to tax avoidance by Airbnb providers, then tried to prevent the agreement for fear that that these agreements would give Airbnb legitimacy. (192)
C. Protecting Against New Threats
A final kind of regulation seeks to protect against new threats that the sharing economy is supposed to pose. New threats may indeed demand new regulation, but many of the proposed regulations would cramp the sharing economy, including its equalizing features, without delivering substantial benefits.
For instance, the equalizing effects of the sharing economy should also make us hesitant to expand consumer protection law to apply new requirements to the sharing economy. Of course, consumer protection law should apply to false advertising and other instances of fraud as much as it does anywhere else. But Ryan Calo and Alex Rosenblat want to retool such laws to attack practices in the sharing economy that are not fraudulent or otherwise in violation of current law. (193)
First, some of their complaints about specific practices, which they claim are manipulative, should be rejected, because the practices are either needed to make the sharing economy work or are trivial. For instance, they observe that Uber (and presumably other ridesharing firms) uses its technology to effectively require drivers to pick up all rides without allowing them to choose whom to pick up. (194) But this requirement makes the market more reliable and beneficial for consumers who can be more confident of getting a ride--the very thing that makes Uber attractive and equalizing. Indeed, public regulation legally imposes the same requirement on taxis. (195) They also complain that Uber uses an algorithm to make prices seem attractive to consumers, which they themselves admit is like lot retailers pricing a product for $9.99. (196) If the government does not punish such trivial conduct in the latter case, it should certainly not investigate algorithms for that reason.
More generally, they believe the government should fund researchers to look into the practices of ridesharing companies, even if their practices have not been found to be illegal.' (97) This kind of outsourcing of research creates bad incentives, because those who do not like the sharing economy, including incumbents in the same business space, are the ones most attracted to investigating it, giving reason to doubt their findings. For good reason, we do not generally fund volunteers to do the work of law enforcement. Finally, they are sympathetic to punishing behavior even if it is not deceptive, so long as the conduct "involve[s] using information about a consumer against her or introducing other material or structural disadvantages." (198) But retailers even in the nonsharing economy do this all the time, as when they decide to offer discounts to some but not to others based on their past purchasing practices. Furthermore, a sharing economy company will have trouble figuring out ex ante what is prohibited by such a vague prohibition. (199) As a result, that selective invigoration of consumer protection law means we will get less sharing and innovation, and thus fewer equalizing effects.
Another concern is the sharing economy's new threats to third parties--citizens who are neither sellers nor consumers in the sharing economy but who are indirectly affected by the transactions of others. (200) While these regulations are never presented as attempts to protect incumbent businesses against competition, that is often their practical effect and possibly even their true intent. A prime example was the effort of New York City Mayor Bill de Blasio to cap the number of rides Uber and other ridesharing companies could offer in the city. (201) The justification was that limiting ridesharing would relieve congestion in the city. (202) But this policy singles out ridesharing companies for discrimination. When used for individual rides, the ridesharing vehicles cause no more congestion than taxis. In fact, uberPOOL and Lyft Line may reduce congestion, because one car is carrying more than one passenger. (203)
Undaunted by the battle over this ride-cap regulation, regulators in New York City even more recently proposed regulations that would impose on ridesharing companies like Uber and Lyft a minimum earnings requirement of $17.22 per hour, such that if a driver's weekly earnings were less than this amount, the companies would be forced to make up the difference. (204) Though a minimum earnings requirement is not synonymous with a minimum wage requirement, the negative effects are similar: increasing the price of rides, driving down employment in ridesharing, and, ultimately, reducing choice for consumers, who would be forced to take less preferred means of transportation.
New York City's proposed minimum earnings requirement epitomizes the faulty assumption upon which many potential regulations of the sharing economy rest--namely, that jobs in the sharing economy, like driving for Uber or renting out a property through Airbnb, are no different than other jobs with fixed hours and work arrangements, such as working in a restaurant or retail industries. These regulations ignore the tremendous flexibility afforded by jobs in the sharing economy. Setting one's own hours can be significantly beneficial because it allows individuals to pursue other work and interests, address personal issues or limitations, and generally maximize the efficiency with which they go about contributing to society.
Regulators ignore these nonmonetary benefits of the sharing economy at the risk of great detriment to those the regulations are ostensibly designed to help. That is so frequently the case with many of the states' regulatory concoctions: the stated intentions of these schemes are to, among others, protect the vulnerable from being taken advantage of, but they often leave us all worse off.
Airbnb is even a more frequent target of legislation ostensibly designed to protect third parties. Legislatures in places as diverse as New York City and Asheville, North Carolina, have tried to prohibit property owners from renting out their homes for short durations. (205) The justifications for these prohibitions are varied. First, supporters of such legislation argue that transient renters disrupt the peace and quiet of a neighborhood. (206) Of course, travelers do the same at hotels, but the legislation never applies to hotels. More focused legislation has attempted to restrict Airbnb in areas that are zoned for residential housing on the theory that the Airbnb hosts are using their property commercially. (207) But even here it is doubtful that property owners renting out their houses to a limited number of occupants are causing any more disruption than their neighbors who have guests and parties. (208) A solution to any incremental rise in disturbances from Airbnb rentals that is more consistent with preserving its equalizing effects would be to more strictly enforce existing regulations against littering and excessive noise. (209)
Much of the legislation against Airbnb has come in cities like San Francisco (210) and New York, (211) which are dominated by cooperatives, condominiums, and rental apartments. (212) In those cities, the government legislation restricting Airbnb because of potential disturbance to neighbors is even less justified because the neighbors most likely to be disturbed by short-term rentals can use co-op, condominium, and rental rules to prevent that activity in their buildings. (213) That kind of private ordering at the building level is much more likely to accurately gauge the costs and benefits of permitting short-term rentals than is municipal legislation, because hotel owners will not have as much influence in shaping the rules established by individual buildings. (214)
Indeed, the sharing economy naturally creates markets to address these conflicts, mediating between the different stakeholders in an apartment building and making short-term rentals easier and less disruptive. Pillow Residential, for instance, provides contracts with building management and renters to permit short-term subleases. (215) These agreements specify the number of nights available for rentals and provide mechanisms for monitoring compliance with rules. (216) Both management and owners get part of the revenue earned through such rentals. (217) This is another example of how the sharing economy solves the problem of agency costs: a new kind of agent, made possible by the information age, facilitates an agreement that makes both owner and long-time renters better off.
Another justification for legislation restricting Airbnb is that those rentals raise the costs of housing for local residents by bidding up the price of housing. Analyzing these regulations under an equality framework requires distinguishing between those that restrict the operation of owner-occupied homes and larger commercial enterprises. Both use sites like Airbnb, but it is owner-occupied homes that create more equality for those owning a home, although both may contribute to equality for travelers by reducing prices for short-term rentals in high-priced locations.
Restricting the ability of owners to rent out their apartments is hard to justify under the idea of making housing more affordable. First, this supply is not likely to be available but for services like Airbnb. Thus, not surprisingly, the empirical work that has been done suggests that permitting owner-occupied housing to list rental space for short-term allotments has relatively little effect on home prices. (218) Moreover, an equality perspective on Airbnb reminds us that its services should help affordability in an important respect: in a well-functioning market, the opportunity for short-term rentals should actually lower the effective cost of housing for those renting out their home on occasion. Those who are financially constrained can now use their property to take in short-term renters on occasion, defraying their housing expense.
The effect of housing listed by those who do not occupy it is more complicated. Researchers have suggested that easier access to listing commercial housing on Airbnb drives up the price of housing, no doubt because owners can get more money for some properties by short-term rentals than by long-term ones. (219) But it is not clear that in the long run, as opposed to the short run, such rentals will increase the cost of housing. By giving owners the opportunity to switch from long-term rentals to short-term rentals depending on circumstances, it will provide developers with greater incentives to build new housing, which will increase the supply of housing in a given area. Basic principles of economics make this self-evident: developers will want to build more houses because Airbnb makes them more valuable to the owner. Another way of putting this is that many owners will now be able more easily to rent out their homes or portions of their homes. This added source of income effectively makes homes more affordable and thus effectively cuts their price.
It is true that existing zoning laws may prove to be an obstacle to building more housing units in cities like San Francisco and New York in the long run. Regulation can prevent supply from meeting new demand. But in that case, an approach more consistent with promoting equality is not to restrict Airbnb, but instead to relax existing zoning laws. Numerous studies have shown that it is restrictive zoning regulations that drive up the price of housing, making housing in such cities unaffordable to the middle class. (220)
All of these regulations ignore the advantages of permitting easier short-term rentals by those who want to visit rather than live in a jurisdiction. Increasing the ability to travel widely and affordably is one of the best ways to equalize the life experiences of the rich and the rest of society. How to weigh these advantages against any higher housing costs for those who want to live in the jurisdiction is a difficult question. But these advantages need to be considered in any evaluation of whether restricting the sharing economy in housing contributes to the equality of material condition.
V. THE MORE GENERAL IMPLICATIONS OF THE SHARING ECONOMY FOR EQUALITY
The sharing economy has more general implications for the debate over inequality. It shows that the dematerialization of the world brought on by information technology creates important equalizers between the wealthy and most of the rest of society. First, even were we only interested in income, the sharing economy shows how technology can make that hard to calculate by changing the structure of work. The sharing economy can outrun taxation and thus make it hard for government to measure unreported income. (221)
But more importantly, income is only a proxy for material inequality. In fact, what we are most interested in is total utility from work together with consumption. The sharing economy creates good conditions of employment for people that may not have had that before. Driving for a ridesharing service is more flexible than a limousine service and safer than taxis. (222) And while the changes made by the sharing economy can dramatically improve the utility from work, it seems very likely that working conditions outside the sharing economy are generally improving. Millions of people telecommute, a working condition that gives valuable flexibility and avoids the monetary costs and physical hassles of commuting as well as a better balance of work and family life. (223) Tens of millions of people today, for instance, have access to a computer at work of which they also utilize for personal use. That too is a valuable kind of flexibility, previously available to the well-off through control over their time or access to secretaries. A world where the conditions of work are converging among income classes is a more equal world, even if that equality is not reflected in income.
Finally, the consumption created by the sharing economy redounds particularly to those who are not rich. They can now summon quality rides from the comfort of their homes and gain access to meals and housing in the center of places they would love to be. Who is enjoying the consumer surplus of the new economy is yet another issue that is needed to evaluate equality. To provide another example of the consumption of the new economy, it is almost impossible to count all the free goods that people enjoy today. But one can begin with the free good that connects more than a billion people and is also an example of the sharing economy more broadly considered, because an intermediary connects people virtually. The average time people spend on Facebook is fifty minutes per day. (224) That comes to a total of 304 hours per year. To estimate that consumption, let us assume that it is worth a modest value close to the minimum wage of ten dollars per hour or at about 3000 dollars over what they could otherwise do with their time. (225) Given that the cost is free, these are equalizing dollars, available to the rich and those of modest means.
It might be objected that Facebook is not really free. To get access, we give up personal data that is valuable to Facebook since they can steer advertisers to us. First, the data is not worth much, if anything at all, until it is aggregated. Facebook is creating value of something that without its own or similar technology would be close to worthless, just as Airbnb is creating value by pooling information about properties. But let us assume that the data could be sold in an individuated market. Its value then cuts in favor of the even greater equalizing force of Facebook. In general, the wealthier a user, the more valuable is his or her data. (226) Thus, if we are to calculate the net benefits from Facebook, those of modest means are getting a substantially greater boost than the wealthy.
It is hard to dismiss these issues as anomalies of the sharing economy, because recognizing the advantages to the nonrich of the sharing economy immediately calls to mind other examples. That is not surprising, because the same dematerialization that permits segmentation of property and reduction of agency costs is going on elsewhere. It is that fundamental trend that is responsible for phenomenon as disparate as telecommuting and Facebook. Only by understanding how the fundamental change created by the information society is affecting the material conditions of life can we hope to gauge the direction of the material conditions of equality.
The entrepreneurial sharing economy is a force for equalizing life experiences, broadly reflecting the capacity of innovative technologies to dematerialize the economy by facilitating electronic transactions. Because these economic connections are so inexpensive, they help the middle class more than wealthy individuals. For middle-class consumers, the sharing economy creates deeper and more liquid markets and reduces prices by increasing the available supply of goods and services. Through the use of online agents, collaborative platforms can elevate the experiences of the average consumer closer to the experiences of the wealthy who have their own agents, like chauffeurs and cooks. The sharing economy democratizes the ability of consumers to have distinctive experiences, like renting properties through Airbnb in unique surroundings or enjoying the company of tour guides in distant locations tailored to their particular interests.
The peer production economy also provides new sources of income for providers that are predominantly enjoyed by the middle class, because people of modest means are now able to easily rent out their real and personal property. The emerging sharing economy also provides new kinds of jobs that have the flexibility and autonomy that workers greatly value. The most important way to promote equality in this area is to prevent burdensome regulation from slowing down the equalizing dynamic of the sharing economy.
John O. McGinnis (*)
[c] 2018John O. McGinnis. Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.
(*) George C. Dix Professor in Constitutional Law, Northwestern University Pritzker School of Law. Thanks to Colin Monaghan and Christian Riess for excellent research assistance and for comments from Alex Lee, Nelson Lund, Mark Perry, Jim Speta, and participants at a Northwestern faculty workshop.
(1) As articulated by politicians and social theorists alike. See Neil H. Buchanan, Yes, the Political and Economic Issue of Our Time Really Is Inequality, VERDICT (Sept. 21, 2017), https://verdict.justia.com/2017/09/21/yes-political-economic-issue-time-really-inequality; Richard McGregor, Inequality Is 'Defining Issue of Our Time,' Says Obama, FIN. TIMES (Dec. 4, 2013), https://www.ft.com/content/0cf55624-5d0f-l Ie3-a558-00144feabdc0 (quoting Barack Obama, President of the U.S., Remarks by the President on Economic Mobility (Dec. 4, 2013)).
(2) See Hernando de Soto, Excerpts From The Mystery of Capital, 6 BRIGHAM-KANNER PROP. RTS. CONF. J. 9, 13 (2017) (noting that the poor in undeveloped countries "hold [their] resources in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them").
(3) See id. ("Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan, and cannot be used as a share against an investment.").
(4) See id. at 15 (noting that societies that participate in capitalism without capital are marked by inequality).
(5) See Ryan Calo & Alex Rosenblat, Essay, The Taking Economy: Uber, Information, and Power, 117 COLUM. L. REV. 1623, 1641 (2017) ("The sharing economy promises to unlock various resources with excess capacity, such as a household's guestroom.").
(6) Where Does the Wealthy Investor Place Their Money?, SPECTREMGROUP, https://spectrem.com/Content/wealthy-investors-portfolio.aspx (last visited Dec. 22, 2017) (noting that high net worth individuals store their wealth primarily in investable assets, compared with sixteen percent of wealth held in a principal residence).
(7) See R.H. Coase, TheProblem of Social Cost, 3J.L. & ECON. 1, 10 (1960) ("With cosdess market transactions, the decision of the courts concerning liability for damage would be without effect on the allocation of resources.").
(8) Id. at 15.
(9) See Vanessa Katz, Note, Regulating the Sharing Economy, 30 BERKELEY TECH. L.J. 1067, 1075 (2015) (noting that the sharing economy has decreased transaction costs through "decreas[ing] the information cost of determining whether a provider is trustworthy").
(10) See generally Andre Beteille, Poverty and Inequality, 38 ECON. & POL. WKLV. 4455 (2003).
(11) See Elia Brugnoni et al., Innovation and Governance: The Rote of Sharing Economy, in ICT FOR PROMOTING HUMAN DEVELOPMENT AND PROTECTING THE ENVIRONMENT 195 (Francisco J. Mata & Ana Pont, eds., 2016) https://files.ifi.uzh.ch/hiltyA/Literature_by_RQs/RQ%20305/2016_Brugnoni_Polzonetti_Sagratella_Innovation_and_Governance.pdf (arguing that the sharing economy is a consequence of Moore's law and the internet).
(12) See Martin Kenney & John Zysman, The Rise of the Platform Economy, ISSUES SCI. & TECH., Spring 2016, at 61, 61.
(13) See Christopher Koopman et al., The Sharing Economy and Consumer Protection Regulation: The Case for Policy Change, 8 J. Bus. ENTREPRENEURSHIP & L. 529, 540 (2015).
(14) See infra Section II.B.
(15) See Georgios Zervas et al., The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry, 54 J. MARKETING RES. 687, 689 (2017).
(16) See id.
(17) See infra note 76 and accompanying text.
(18) See Calo & Rosenblat, supra note 5, at 1644 ("Airbnb takes the stance that the income people earn through its platform allows them to afford their rent.").
(19) See Brian Chesky, Belong Anywhere, AIRBNB: BLOG (July 16, 2014), https://blog.atairbnb.com/belong-anywhere/ ("You see, a house is just a space, but a home is where you belong. And what makes this global community so special is that for the very first time, you can belong anywhere." (emphasis added)).
(20) Charlie Aufmann, Designing for Trust: Observations From My First Year at Airbnb, AIRBNB, https://airbnb.design/designing-for-trust/ (last visited Oct. 10, 2018).
(21) See Zachary Crockett, How the Sharing Economy Makes Us Trust Complete Strangers, HUSTLE (Apr. 14, 2018), https://thehustle.co/sharing-economy-trust ("Arun Sundararajan, author of 'The Sharing Economy,' tells us these technologies have essentially 'expedited' the process of gaining trust.").
(22) See The 2016 Survey of Consumer Finance, FED. RES., tbls. 8 & 9 https://www.federalreserve.gov/econres/files/scf2016_tables_public_real_historical.xlsx (last updated Nov. 15, 2017).
(23) See supra note 5 and accompanying text.
(24) See GENE SPERLING, How Airbnb Combats Middle Class Income Stagnation 8 (2015), https://www.stgeorgeutah.com/wp-content/uploads/2015/07/MiddleClassReport-MT-061915_rl.pdf.
(25) In Los Angeles, for instance, the median income of an Airbnb host is $49,241 and in New York it is $53,058. Id. at 11. Even in San Francisco it is $78,724. Id.
(26) See RACHEL S. SIEGEL & CAROL YACHT, INDIVIDUAL FINANCE 63-64 (2012).
(27) See Calo & Rosenblat, supra note 5, at 1623 (noting how economic value is provided by "[s]haring economy firms such as Uber and Airbnb [who] facilitate trusted transactions between strangers on digital platforms").
(28) See Talia Avakian, Here's Where It's Cheaper to Book an Airbnb Over a Hotel Room, Bus. INSIDER (Feb 18, 2016), http://www.businessinsider.com/is-it-cheaper-to-airbnb-or-get-a-hotel-2016-2.
(29) See de Soto, supra note 2, at 13 (noting that poor countries have vast significant amounts of wealth that cannot be leveraged "outside of narrow local circles where people know and trust each other").
(30) See id. at 31 (noting how the "integrated property market," which was gradually created in the United States as Congress formalized the "property rules created by millions of immigrants and squatters," helped "fuel[ ] the United States' explosive economic growth").
(31) Id. at 13.
(32) Id. at 55 (noting how "legal apartheid" constrains the poor in developing countries to real estate transactions "restricted to closed circles of trading partners, keeping the assets of extralegal owners outside the expanded market"). For discussion of how insurance contracts by an intermediary solve agency problems, see Thomas A. Weber, Intermediation in a Sharing Economy: Insurance, Moral Hazard, and Rent Extraction,]. MGMT. INFO. SYS., Winter 2014, at 35, 37. For Airbnb's offer of insurance, see Host Protection Insurance, AIRBNB, https://www.airbnb.com/host-protection-insurance (last visited Sept. 4, 2018).
(33) De Soto, supra note 2, at 13.
(34) See id. at 55 ("Blocked from entering the bell jar, the poor could never get close to the legal property mechanisms necessary to generate capital.").
(35) See Breathing Life into Dead Capital, ECONOMIST (Jan. 15, 2004), http://www.economist.com/node/2328596.
(37) See Calo & Rosenblat, supra note 5 and accompanying text.
(38) See Katz, supra note 9 and accompanying text.
(39) Jacob Goldstein, A Lost Decade for American Families, NPR: PLANET MONEY (June 11, 2012), http://www.npr.org/sections/money/2012/06/11/154782513/a-lost-decade-for-american-families.
(40) Compare Where Does the Wealthy Investor Place Their Money?, supra note 6 (noting that high net worth individuals store their wealth primarily in investable assets, compared with sixteen percent of wealth held in a principal residence), with Goldstein, supra note 39 (noting homes are the single largest asset for many middle-class families).
(41) SPACER, https://www.spacer.com/ (last visited Feb. 18, 2018).
(42) TURO, https://turo.com/ (last visited Feb. 18, 2018).
(43) SPINLISTER, https://www.spinlister.com/ (last visited Feb. 19, 2018).
(44) Natasha Baker, Spinlister App Connects Bike Owners with Renters, HUKFINGTON POST (Aug. 5, 2013), http://www.huffingtonpost.com/2013/08/05/spinlister_n_3706373.html; Kirsten Korosec, The Airbnb of Cars Just Bought a Startup From Its Newest Investor, FORTUNE (Sept. 6, 2017), http://fortune.com/2017/09/06/turo-mercedes-daimler/.
(45) LYFT, https://www.lyft.com/ (last visited Feb. 21, 2018); UBER, https://www.uber.com/ (last visited Feb. 21, 2018).
(46) See Calo & Rosenblat, supra note 5, at 1641 (noting that the sharing economy-unlocks money-making potential in people's time by "provid[ing] more and more diverse opportunities to make money," allowing those whose schedules are not conducive to normal jobs to still earn money).
(47) See id. at 1642 (first citing Alex Rosenblat & Luke Stark, Algorithmic Labor and Information Asymmetries: A Case Study of Uber's Drivers, 10 INT'L J. COMM. 3758, 3761 (2016); then citing Jonathan V. Hall & Alan B. Krueger, An Analysis of the Labor Market for Uber's Driver-Partners in the United States 11-12, 16 (Princeton Univ. Indus. Relations Section, Working Paper No. 587, 2015), http://arks.princeton.edU/ark:/88435/dsp010z708z67d) (noting that the nature of the sharing economy allows workers the freedom to switch fluidly between jobs, benefiting those who require short-term or temporary jobs for whatever reason)).
(48) See Hall & Krueger, supra note 47, at 1 (noting that Uber's "flexibility is appealing to driver-partners," as they "can choose to pursue other work opportunities or spend time taking care of non-work obligations" even while they remain eligible on Uber's platform).
(49) See id. at 10 ("The fact that over one-third of driver-partners partnered with Uber without actively searching for a job suggests that Uber provided a new alternative that enticed a large number of people to engage in work activity that was not previously available.").
(50) ROVER, https://www.rover.com/ (last visited Feb. 19, 2018).
(51) THUMBTACK, https://www.thumbtack.com/ (last visited Feb. 20, 2018).
(52) FIVERR, https://www.fiverr.com/ (last visited Feb. 19, 2018).
(53) TASKRABBIT, https://www.taskrabbit.com (last visited Feb. 20, 2018).
(54) See FIVERR, supra note 52.
(55) Host an Experience on Airbnb, AIRBNB, https://www.airbnb.com/host/experiences?from_nav=l (last visited Feb. 19, 2018).
(57) BONAPPETOUR, https://www.bonappetour.com/ (last visited Feb. 19, 2018).
(58) EATWITH, https://www.eatwith.com/ (last visited Feb. 19, 2018).
(59) See Louis PUTTERMAN, THE GOOD, THE BAD, AND THE ECONOMY: DOES HUMAN NATURE RULE OUT A BETTER WORLD? 69 (2012) (noting that professors are paid less because of the autonomy and other satisfactions they enjoy).
(60) See Leonard A. Schlesinger et al., Choosing Between Making Money and Doing What You Love, HARV. BUS. REV. (Mar. 29, 2012), https://hbr.org/2012/03/choosing-between-making-money.
(61) See, e.g., Peter F. Kostiuk, Compensating Differentials for Shift Work, 98 J. POL. ECON. 1054, 1054 (1990).
(62) See Tom Lehman, Countering the Modem Luddite Impulse, 20 INDEP. REV. 265, 270-71 (2015) (noting "lower monetary earnings to those workers employed in more-attractive occupations" like a professor or family doctor, as opposed to more stressful occupations, like emergency room physician).
(63) See Devin Dwyer, Craving Coal Dust 'Like Nicotine': Why Miners Love the Work, ABC NEWS (Apr. 7, 2010), https://abcnews.go.com/US/Mine/west-virginia-coal-miners-allure-dangerous-profession/story?id=10305839 (explaining that the dangerous profession of coal mining includes a high starting salary).
(64) See infra notes 108-09 and accompanying text.
(65) Most part-time workers want to work only part-time for these reasons. See BARRY HIRSOH, EMPL'T POLICIES INST., THE RELATIVE COMPENSATION OF PART-TIME AND FULL-TIME WORKERS 4 (2000), https://www.epionline.org/studies/r17/.
(66) Hall & Krueger, supra note 47, at 11.
(67) See P.K. RAO, THE ECONOMICS OF TRANSACTION COSTS xvi (2003).
(68) See id.
(69) See id.
(70) Coase, supra note 7, at 15 ("[Transaction costs] are often extremely costly, sufficiently costly at any rate to prevent many transactions that would be carried out in a world in which the pricing system worked without cost.").
(71) See R.H. Coase, The Nature of the Firm, 4 ECONOMICA 386, 396-97 (1937) (proving that firms will grow to the extent that organizing transactions in the firm are cheaper than contracting on the open market).
(72) Id. at 392.
(73) See id. at 388 (noting that a firm substitutes the pricing mechanism of the market with "the entrepreneur-co-ordinator, who directs production").
(74) See supra notes 71-72 accompanying text.
(75) Updated Infographic: Look at Hotel Industry's 'Largest,' HOTEL NEWS NOW (Feb. 14, 2017), http://hotelnewsnow.com/Articles/115537/Updated-infographic-Look-at-hotel-industrys-largest.
(76) See Ron Lieber, A Liability Risk for Airbnb Hosts, N.Y. TIMES (Dec. 5, 2014), https://www.nytimes.com/2014/12/06/your-money/airbnb-offers-homeowner-liability-coverage-but-hosts-still-have-risks.html?mcubz=0.
(77) See Steven Tadelis, Reputation and Feedback Systems in Online Platform Markets, 8 ANN. REV. ECON, 321, 328-29 (2016) (concluding that such mechanisms are crucial to success of such markets).
(78) Katie Benner, Airbnb Tries to Behave More Like a Hotel, N.Y. TIMES (June 17, 2017), https://www.nytimes.com/2017/06/17/technology/airbnbs-hosts-professional-hotels.html?mcubz=0.
(79) See ADAM LASHINSKY, WILD RIDE: INSIDE UBER'S QUEST FOR WORLD DOMINATION 71 (2017).
(80) Sara Silverstein, These Animated Charts Tell You Everything About Uber Prices in 21 Cities, Bus. INSIDER (Oct. 16, 2014), http://www.businessinsider.com/uber-vs-taxi-pricing-by-city-2014-10?IR=T.
(81) See James B. Speta, Southwest Airlines, MCI, and Now Uber: Lessons for Managing Competitive Entry into Taxi Markets, 43 TRANSP. L.J. 101, 111 (2016).
(82) See id. at 117.
(83) Id. at 115 (citing Adrian T. Moore & Ted Balaker, Do Economists Reach a Conclusion on Taxi Deregulation?, 3 ECON.J. WATCH 109, 109 (2006)).
(84) See Leon S. Moskatel & David J.G. Slusksy, Did UberX Reduce Ambulance Volume? 9 (Univ. of Kan., Dep't of Econ., Working Papers Series in Theoretical and Applied Economics No. 201708, 2017), http://www2.ku.edu/~kuwpaper/2017Papers/201708.pdf.
(85) See Speta, supra note 81, at 118.
(87) Josh Constine, Uber 'Express POOL' Offers the Cheapest Eare if You'll Walk a Little, TECH-CRUCH (NOV. 10, 2017), https://techcrunch.com/2017/11/10/uber-express-pool/.
(88) See Regina R. Clewlow & Gouri Shankar Mishra, Disruptive Transportation: The Adoption, Utilization, and Impacts of Ride-Hailing in the United States 27 (Inst, of Transp. Studies, Univ. of Cal., Davis, Research Report UCD-ITS-RR-17-07, 2017) (finding a net six percent decrease in public transit use in major cities as a result of ride-hailing substitutions); Nicole Sadowsky & Erik Nelson, The Impact of Ride-Hailing Services on Public Transportation Use: A Discontinuity Regression Analysis 11-12 (Bowdoin Coll. Econ. Dept. Working Paper Series, Paper No. 13, 2017) (estimating that competition between Uber and Lyft depresses ridesharing prices sufficiendy to serve as a "public transportation substitute"); Jeff McMahon, UberPool and LyftLine Eind the Gaps in Public Transit, FORBES (July 29, 2016), https://www.forbes.com/sites/jeffmcmahon/2016/07/29/uberpool-and-lyftline-find-the-gaps-in-public-transit/#2623da0e53cd (assessing where these services are superior to public transport).
(89) Silverstein, supra note 80; see also Chungsang Tom Lam & Meng Liu, Demand and Consumer Surplus in the On-demand Economy: The Case of Ride Sharing 29 (Oct. 11, 2017) (unpublished manuscript), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2997190 (noting that a large share of consumer surplus derived from ridesharing applications is a result of shortened wait time with a small amount of consumer surplus attributable to price).
(90) See Eric Newcomer, Uber, Lifting Financial Veil, Says Sales Growth Outpaces Losses, BLOOMBERG (Apr. 14, 2017), https://www.bloomberg.com/news/articles/2017-04-14/embattled-uber-reports-strong-sales-growth-as-losses-continue. See generally Chiara Farronato & Audrey Fradkin, The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb (Oct. 18, 2017) (unpublished manuscript), https://marketing.wharton.upenn.edu/wp-content/uploads/2017/08/10-19-2017-Fradkin-Andrey-PAPER.pdf.
(91) See Lam & Liu, supra note 89, at 9 ("[T]he sheer volume of realized transactions on Uber and Lyft indicates consumers' valuation, by revealed preference.").
(92) See Adam Creighton, Uber's Pricing Formula Has Allowed Economists to Map Out a Real Demand Curve, WALL ST. J.: REAL TIME ECON. (Sept. 19, 2016, 11:01 AM), https://blogs.wsj.com/economics/2016/09/19/ubers-pricing-formula-has-allowed-economists-to-map-out-a-real-demand-curve/.
(93) Id.; see also Peter Cohen et al., Using Big Data to Estimate Consumer Surplus: The Case of Uber 5 (Nat'l Bureau of Econ. Research, Working Paper No. 22627, 2016), https://ideas.repec.org/p/nbr/nberwo/22627.html.
(94) See Farronato & Fradkin, supra note 90, at 3-4.
(95) See id. at 2.
(96) See Clay Dillow, Can Airbnb Book a Billion Nights a Year by 2025?, FORTUNE (Apr. 11, 2016), http://fortune.com/2016/04/11/airbnb-bookings-one-billion-a-year/.
(97) HomeAway may be the biggest of these. See HOMEAWAY, https://www.homeaway.com (last visited Oct. 11, 2018).
(98) See Niam Yaraghi & Shamika Ravi, The Current and Future State of the Sharing Economy 3 (Brookings India IMPACT Series No. 032017, 2017), https://www.brookings.edu/wpcontent/uploads/2016/12/sharingeconomy_032017final.pdf.
(99) SCOTT WALLSTEN, TECH. POLICY INST., THE COMPETITIVE EFFECTS OF THE SHARING ECONOMY: HOW IS UBER CHANGING TAXIS? (2015); see also Adi Gaskell, Study Explores the Impact of Uber on the Taxi Industry, FORBES (Jan. 26, 2017), https://www.forbes.com/sites/adigaskell/2017/01/26/study-explores-the-impact-of-uber-on-the-taxi-industry/.
(100) WALLSTEN, supra note 99, at 19.
(101) See supra notes 41-45 and accompanying text.
(102) See supra note 24 and accompanying text.
(103) See Airi Lampinen & Coye Cheshire, Hosting via Airbnb: Motivations and Financial Assurances in Monetized Network Hospitality, CHI '16: PROCS. OF THE 2016 CHI CONF. ON HUM. FACTORS IN COMPUTING SYS., May 2016, 1669, at 1673 (quoting an Airbnb host as remarking upon the convenience provided by the Airbnb infrastructure: "I guess the payment would just happen. I think it was just taken care of automatically by Airbnb").
(104) See Marianna Sigala, Market Formation in the Sharing Economy: Findings and Implications From the Sub-Economies of Airbnb, in SOCIAL DYNAMICS IN A SYSTEMS PERSPECTIVE 159, 160 (Sergio Barile et al. eds., 2018) (noting that the subeconomy of Airbnb is made up primarily of businesses that "basically support Airbnb hosts by outsourcing them (accommodation) management services that are primarily found in the traditional hospitality industry").
(105) See Melissa Berry, How Many Uber Drivers Are There?, RIDESHARE GUY (Nov. 3, 2017), https://therideshareguy.com/how-many-uber-drivers-are-there/.
(106) See Niall McCarthy, Fare Deal? How the Hourly Earnings of Uber and Taxi Drivers Measure Up, FORBES (Nov. 28, 2016), https://www.forbes.com/sites/niallmccarthy/2016/11/28/fare-deal-how-the-hourly-earnings-of-uber-and-taxi-drivers-measure-up-infographic/#6aa69dc6689a.
(107) See infra notes 108-11 and accompanying text.
(108) M. Keith Chen et al., The Value of Flexible Work: Evidence From Uber Drivers 45 (Nat'l Bureau of Econ. Research, Working Paper No. 23296, 2017), http://www.nber.org/papers/w23296.
(109) Id. Taxicab drivers never have hours as flexible as Uber drivers, because while some may be able to decide whether to rent a cab for a particular day, they cannot decide to stop and start continuously, thus preventing them from making continuous decisions about what is worth more to them--work or leisure.
(110) See MATTHEW FEENEY, CATO INST., IS RIDESHARING SAFE? 1 (2015) ("[T]he ridesharing business model offers big safety advantages as far as drivers are concerned.... [Clashfree transactions and self-identified customers substantially mitigate one of the worst risks associated with traditional taxis: the risk of violent crime.").
(111) See, e.g., BUREAU OF LABOR STATISTICS, U.S. DEP'T OF LABOR, 2014 CENSUS OF FATAL OCCUPATIONAL INJURIES (FINAL DATA) 19, https://www.bls.gov/iif/oshwc/cfoi/cftb0291.pdf (last visited Jan. 25, 2018).
(112) See FEENEY, supra note 110, at 3-4.
(113) See id. at 3.
(114) See id. at 4 (noting how Uber and Lyft drivers have a safety advantage over taxi drivers because they "know[ ] the identity of their passengers").
(115) See GETAROUND, https://www.getaround.com/ (last visited Feb. 19,2018).
(116) Samuel Fraiberger & Arun Sundararajan, Peer-to-Peer Rental Markets in the Sharing Economy 2 (Sept. 10,2017) (unpublished manuscript), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2574337.
(117) Id. at 4.
(121) See Lehman, supra note 62, at 265 ("Fear of job loss attributed to increased technology in the workplace has recently reached a high point perhaps not seen since the Luddite uprisings and property destruction in British textile factories more than two hundred years ago.").
(122) See id. (noting that economists "should be naturally skeptical of Luddite fallacies").
(123) Paul Krugman, Lumps of Labor, N.Y. TIMES (Oct. 7, 2003), https://www.nytimes.com/2003/10/07/opinion/lumps-of-labor.html.
(124) See id.
(125) See Erik Brynjolfsson & Andrew McAfee, Will Humans Go the Way of Horses?, FOREIGN AFF., July-Aug. 2015, at 8, 8 ("[R]eal wages and the number of jobs have increased relatively steadily throughout the industrialized world since the middle of the nineteenth century, even as technology advanced like never before.").
(126) See David Hamilton, What Has Evolutionary Economics to Contribute to Consumption Theory f, 7 J. ECON. ISSUES 197, 205 (1973) (noting how the proliferation of technology indicates "the human animal seems able to create the necessary demand and the necessary means of satisfying this demand").
(127) See generally Brynjolfsson & McAfee, supra note 125.
(128) See Farronato & Fradkin, supra note 90, at 1 (noting how most Airbnb "bookings would not have resulted in hotel bookings had Airbnb not been available").
(129) See Kia Kokalitcheva, Airbnb Lets Trusted Hosts Manage Others' Home-Rental Listings, FORTUNE (Sept. 16, 2016), http://fortune.com/2016/09/15/airbnb-co-hosting/.
(130) See Host an Experience on Airbnb, supra note 55.
(131) See Modest Growth to Continue for U.S. Hotels, HOTEL NEWS RESOURCE (Aug. 10, 2017), https://www.hotelnewsresource.com/article95851.html.
(132) See Thor Berger et al., Drivers of Disruption? Estimating the Uber Effect 2 (Oxford Martin Programme on Tech. & Emp't, Working Paper No. 2387, 2017) https://www.oxfordmartin.ox.ac.uk/publications/view/2387 ("ur point estimates consistently suggest that the labor supply of traditional taxi drivers increased in cities where Uber was introduced relative to cities where it was not....").
(133) See id. at 8 ("[W]age-employed taxi drivers saw relative income declines after Uber's introduction....").
(134) See id. at 7 ("Uber's introduction [has] led to a relative increase in self employment among taxi drivers.").
(135) See WALLSTEN, supra note 99, at 4 ("By 2015... the price of a medallion [in New York City] had fallen by about 25 percent in response to competition from ride-sharing services.").
(136) See Daniel Wiessner, 3rd Circuit Rejects Philly Cab Companies' Antitrust Claims Against Uber, REUTERS (Mar. 27, 2018), https://www.reuters.com/article/antitrust-uber/3rd-circuit-rejects-philly-cab-companies-antitrust-claims-against-uber-idUSL1N1R91YQ.
(137) Phila. Taxi Ass'n v. Uber Techs., Inc., 886 F.3d 332, 340 (3d Cir. 2018), cert, denied, No. 18-32, 2018 WL 3306879 (Oct. 1, 2018).
(139) Forbes 400, FORBES, https://www.forbes.com/forbes-400/list/ (last updated Oct. 3, 2018).
(140) Bob Zider, How Venture Capital Works, HARV. BUS. REV., Nov.-Dec. 1998, at 131, https://hbr.org/1998/11/how-venture-capital-works.
(141) See Johanna Interian, Note, Up in the Air: Harmonizing the Sharing Economy Through Airbnb Regulations, 39 B.C. INT'L & COMP. L. REV. 129, 132 (2016) (citing Scott Austin et al., The Billion Dollar Startup Club: All Companies as of October 2015, WALL ST. J. (Feb. 18, 2015), http://graphics.wsj.com/billion-dollar-club/).
(142) See supra note 93 and accompanying text.
(143) See Neil Charness & Walter R. Boot, Aging and Information Technology Use: Potential and Barriers, 18 CURRENT DIRECTIONS PSYCHOL. SCI. 253, 253 (2009) (noting that the "digital divide" caused by an aging population in a society of rapid technological progress "favor[s] younger adopters").
(144) JACOB GALLEY, U.S. BUREAU OF LABOR STATISTICS, AWARENESS AND USAGE OF THE SHARING ECONOMY 1 (2016), https://www.bls.gov/opub/mlr/2016/beyond-bls/pdf/awareness-and-usage-of-the-sharing-economy.pdf.
(146) Cf. Charness & Boot, supra note 143, at 255 (noting that new technologies are often "not designed with [the aging population's] capabilities in mind").
(147) Cf. id. (establishing how older adults' lack of comfort with new technologies makes adoption less likely).
(148) RICHARD FRY ET AL., PEW RESEARCH CTR., THE OLD PROSPER RELATIVE TO THE YOUNG: THE RISING AGE GAP IN ECONOMIC WELL-BEING (2011), http://www.pewresearch.org/wp-content/uploads/sites/3/2011/11/WealthReportFINAL.pdf.
(149) See Marco Iansiti & Karim R. Lakhani, The Truth About Blockchain, HARV. BUS. REV., Jan.-Feb. 2017, at 118, https://hbr.org/2017/01/the-truth-about-blockchain.
(150) See Primavera De Filippi, What Blockchain Means for the Sharing Economy, HARV. BUS. REV. (Mar. 15, 2017), https://hbr.org/2017/03/what-blockchain-means-for-the-sharing-economy.
(152) See Sinclair Davidson et al., Economics of Blockchain 8 (March 8, 2016) (unpublished manuscript), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2744751.
(153) See De Filippi, supra note 150.
(154) What is Swarm City?, SWARM CITY, https://thisis.swarm.city/ (last visited Aug. 26, 2018).
(155) See generally Ilya Shapiro & David McDonald, Regulation Uber Alles: How Governments Hurt Workers and Consumers in the New New Economy, 2017 U. CHI. LEGAL F. 461.
(156) Id. at 475 ("According to a report by Mothers Against Drunk Driving, Uber's entry into Seattle was associated with a ten percent decrease in DUIs, and a Benenson Strategy Group survey found that '88% of respondents over the age of 21 agree with the statement that 'Uber has made it easier for me to avoid driving home when I've had too much to drink,' and 70-80 percent said Uber has made it less likely that their friends drive after drinking." (footnote omitted) (quoting BENENSON STRATEGY GRP., STUDY: DRIVING CHOICE AND TRANSPORTATION OPTIONS (2015), https://www.bsgco.com/insights/study-drinking-driving-and-transportation-options)).
(157) Id. at 480.
(158) See, e.g., Daniel E. Ranch & David Schleicher, Like Uber, but for Local Government Law: The Future of Local Regulation of the Sharing Economy, 76 OHIO ST. L.J. 901 (2015).
(159) See Benjamin G. Edelman & Damien Geradin, Efficiencies and Regulatory Shortcuts: How Should We Regulate Companies Like Airbnb and Uber?, 19 STAN. TECH. L. REV. 293, 307 (2016) (noting that much of the regulation of the sharing economy "seems to be designed to block the development of software platforms (or other new entrants) in order to protect incumbents").
(160) See id. at 306 ("[R]egulators may become closely linked to the firms they regulate, often through extended discussions, career trajectories, or a desire to maintain the status quo." (citing Jean-Jacques Laffont & Jerome Pouyet, The Subsidiarity Bias in Regulation, 88 J. PUB. ECON. 255, 255 (2003)).
(161) See id. at 307 ("[L]icensing also invites license-holders to pressure public authorities to exclude new entrants from the market, as such market entry would create new competition and reduce the value of their licenses."); see also id. (noting how Uber's presence in France brought violent protests causing the French Parliament to pass a law designed to hinder the sharing economy).
(162) Joe Sanfelippo Cabs, Inc. v. City of Milwaukee, 839 F.3d 613, 614 (7th Cir. 2016).
(163) Id. at 616.
(165) Phila. Taxi Ass'n v. Uber Techs., Inc., 886 F.3d 332, 340 (3d Cir. 2018), cert, denied, No. 18-32, 2018 WL 3306879 (Oct. 1, 2018).
(167) See, e.g., Calo & Rosenblat, supra note 5, at 1645-46 (noting how critics of the sharing economy argue that the skirting of traditional regulations makes the sharing economy "underinsured, less safe, [and] less sanitary" than their traditional counterparts (first citing Adrienne LaFrance & Rose Eveleth, Are Taxis Safer than Uber?, ATLANTIC (Mar. 3, 2015), http://www.theatlantic.com/technology/archive/2015/03/are-taxis-safer-than-uber/386207/; then citing Amanda MacMillan, 6 Health Risks of Slaying in Someone Else's Home, HUFFINGTON POST (Nov. 13, 2014), https://www.huffingtonpost.com/2014/11/13/health-risks-staying-over_n_6146974.html)).
(168) See Edelman & Geradin, supra note 159, at 297 (noting that a defining characteristic of sharing economy platforms is how they "place[ ] the entire transaction (including search, pricing, payment, and evaluation) onto the platform").
(169) See Michael C. Munger, Tomorrow 3.0: The Sharing Economy, 20 INDEP. REV. 391, 394 (2016) (noting how the information provided by sharing economy platforms--in the form of "ratings and reputation"--serve as a form of vetting for security purposes, while the platforms' processing of the financial transaction "removfes] most of the risk of robbery or reneging").
(170) See Edelman & Geradin, supra note 159, at 300.
(171) See Eliana Dockterman & Time, Uber and Lyft Are Leaving Austin After Losing Background Check Vote, FORTUNE (May 8, 2016), http://fortune.com/2016/05/08/uber-lyft-leaving-austin/ (noting that fingerprinting hurts part-time drivers, "the heart of Lyft's peer-to-peer model").
(172) See Speta, supra note 81, at 123.
(173) Id. at 124.
(174) See, e.g., O'Connor v. Uber Techs., Inc., 82 F. Supp. 3d 1133, 1135 (N.D. Cal. 2015).
(175) See id. at 1137 ("Uber is deeply involved in... qualifying and selecting drivers, regulating and monitoring their performance, disciplining (or terminating) those who fail to meet standards, and setting prices.").
(176) See Seth D. Harris & Alan B. Krueger, A Proposal for Modernizing Labor Laius for Twenty-First-Century Work: The "Independent Worker" 8 (Brookings Inst., The Hamilton Project Discussion Paper 2015-10, 2015), http://www.hamiltonproject.org/assets/files/modernizing_labor_laws_for_twenty_first_century_work_krueger_harris.pdf ("Forcing these new forms of work into a traditional employment relationship could be an existential threat to the emergence of online-intermediated work, with adverse consequences for workers, consumers, businesses, and the economy."); see cdso id. at 14 ("[Such an employment classification] should be efficient in the sense that it enables workers and intermediaries to maximize the joint surplus that their relationship produces.").
(177) See id. at 9.
(178) See id. (noting that in this situation, "[i]f anything, Uber and Lyft are competitors for the driver's services, not co-employers").
(179) Dynamex Operations W., Inc. v. Superior Court, 416 P.3d 1 (Cal. 2018).
(180) Klint Finley, A California Ruling Threatens the Gig Economy, WIRED (May 2, 2018), https://www.wired.com/story/a-california-ruling-threatens-the-gig-economy/.
(182) Ian Adams & Brian Jencunas, Economic Costs and Policy Alternatives to California's Dynamex Decision 1, 3 (R Street Policy Study No. 145, 2018), https://www.rstreet.org/2018/06/13/economic-costs-and-policy-alternatives-to-californias-dynamex-decision/.
(183) Finley, supra note 180; see also Adams & Jencunas, supra note 182, at 3 ("[I]ndependent contractors cost only 66 cents on the dollar for every hour worked by a full-time employee."); Andrei Hagiu & Julian Wright, The Status of Workers and Platforms in the Sharing Economy (June 20, 2018) (unpublished manuscript), www.andreihagiu.com/wp-content/uploads/2018/07/Liquidity-constraint-06202018.pdf.
(184) Professor Arun Sundararajan of New York University Stern School of Business, said: "[P]rices will be higher, at least in California.... [N]ewer, smaller companies will have a much harder time than well-funded companies like Uber and Lyft, which will be better able to absorb costs and have established large labor forces." Finley, supra note 180.
(185) See Adams & Jencunas, supra note 182, at 4; Helen Floersh, Business Groups Appeal to State on Dynamex Decision, SAN FERNANDO VALLEY Bus. J. (June 27, 2018), www.sfvbj.com/news/2018/jun/27/business-groups-appeal-state-dynamex-decision/.
(186) See Valerio De Stefano, The Rise of the "Just-in-Time Workforce": On-Demand Work, Crowdwork, and Labor Protection in the "Gig Economy, "37 COMP. LAB. L. & POL'Y J. 471, 476 (2016); see also Marina Lao, Workers in the "Gig" Economy: The Case for Extending the Antitrust Labor Exemption, 51 U.C. DAVIS L. REV. 1543 (2018).
(187) See Andre Andoyan, Comment, Independent Contractor or Employee: I'm Uber Confused! Why California Should Create an Exception for Uber Drivers and the "On-Demand Economy, " 47 GOLDEN GATE. U. L. REV. 153, 172 (2017) (discussing danger that classifying Uber drivers as employees would result in much more hierarchical relation between drivers and owners); see also Harris & Krueger, supra note 176, at 10 (proposing "a new legal and economic category of independent workers").
(188) Andoyan, supra note 188, at 168.
(189) Laura Saunders, The Blind Spot in a Sharing Economy: Tax Collection, WALL ST. J. (May 19, 2017), https://www.wsj.com/articles/the-blind-spot-in-a-sharing-economy-tax-collection-1495186206.
(191) See Kathleen DeLaney Thomas, Taxing the Gig Economy, 166 U. PA. L. REV. 1415 (2018).
(192) Alison Griswold, Why Airbnb Desperately Wants to Pay Hotel Taxes, SLATE (Feb. 13, 2015), http://www.slate.com/articles/business/moneybox/2015/02/airbnb_hotel_taxes_why_does_the_sharing_economy_startup_want_to_pay_them.html.
(193) See Calo & Rosenblat, supra note 5, at 1623.
(194) Id. at 1661.
(195) See Speta, supra note 81, at 109.
(196) Calo & Rosenblat, supra note 5, at 1658.
(197) Id. at 1684.
(198) Id. at 1687-88.
(199) Calo and Rosenblat argue that this move will not have bad effects, because it will just involve "line-drawing," but they do not offer any substantial lines to make concrete the rather opaque standard of a prohibition against "using information about a consumer against her or introducing other material or structural disadvantages." Id. And line drawing is particularly unlikely to give future guidance in an industry which is likely to change quickly because of technology.
(200) See Edelman 8c Geradin, supra note 159, at 309 ("An important set of legal interventions seeks to address circumstances in which companies impact noncustomers and the public at large.").
(201) Jared Meyer, Uber's New York Win, FORBES (Jan. 19, 2016), https://www.forbes.com/sites/jaredmeyer/2016/01/19/uber-deblasio-new-york-study/#190f80983924.
(202) See id.
(203) Cf. Stephen R. Miller, Decentralized, Disruptive, and On Demand: Opportunities for Local Government in the Sharing Economy, 77 OHIO ST. L.J. FURTHERMORE 47, 49 (2016) (noting that the adoption of uberPOOL could "assist with environmental emissions compliance").
(204) Emma G. Fitzsimmons & Noam Scheiber, New York City Considers New Pay Rules for Uber Drivers, N.Y. TIMES (July 2, 2018), htps://www.nytimes.com/2018/07/02/nyregion/uber-drivers-pay-nyc.html.
(205) Sarah Griffiths, Where Home Meets Hotel: Regulating Tourist Accommodations in the Age of Airbnb 23, 44 (March 10, 2017) (unpublished MPP thesis, Simon Fraser University), http://summit.sfu.ca/item/17183.
(206) See id. at 1-2 (noting how some concerns over short-term rentals are "complaints over quality of life impacts brought by the increased presence of transient communities in residential neighbourhoods").
(207) See id. at 1.
(208) See Alexander W. Cloonan, Comment, The New American Home: A Look at the Legal Issues Surrounding Airbnb and Short-Term Rentals, 42 U. DAYTON L. REV. 27, 43 (2017) (citing Ngai Pindell, Home Sweet Home? The Efficacy of Rental Restrictions to Promote Neighborhood Stability, 29 ST. LOUIS U. PUB. L. REV. 41, 55 (2009)).
(209) See Pindell, supra note 208, at 55 ("In striking down [short-term rental] regulations, courts have encouraged municipalities to use other measures--such as definitions of family or increased enforcement of nuisance codes--to mitigate the impact of potentially disruptive, short-term renters on a community.").
(210) See Interian, supra note 141, at 146.
(211) See Roberta A. Kaplan & Michael L. Nadler, Airbnb: A Case Study in Occupancy Regulation and Taxation, 82 U. CHI. L. REV. DIALOGUE 103, 107-08 (2015).
(212) See Interian, supra note 141, at 149 ("The situation in New York is unique, however, because the city has a high number of strict co-ops... in areas of high rent." (citing Press Release, Liz Krueger, Senator, N.Y. State Senate, Statement on Airbnb Subpoena Agreement (May 21, 2014), http://www.nysenate.gov/press-release/statement-airbnb-subpoena-agreement)).
(213) See Kevin Davis, Guest Wrong, A.B.A. J., Apr. 2014, at 19-20 (noting that Airbnb "is careful to inform its users that they're responsible for... conferring with condo and co-op boards" before renting through Airbnb).
(214) Cf. Pindell, supra note 208, at 59 ("Developers, in turn, can design a community without conforming to standardized requirements ill-suited to a planned community. Moreover, future residents of these communities benefit because negotiation often results in more thoughtful inclusion and placement of amenities than does the application of a rigid standardized zoning and development code.").
(215) PILLOW, https://www.pillow.com/ (last visited Feb. 19, 2018).
(216) Id.; see also Ryan Lawler, With $13.5M in New Funds, Pillow Partners with Building Owners to Make Rentals Airbnb-Friendly, TECHCRUNCH (June 21, 2017), https://techcrunch.com/2017/06/21/pillow-residential-13-5-million/ (describing this new focus on Pillow Residential).
(218) See Lisa Ward, This Is How Much Airbnb Is Driving Up Home Prices and Rents, WALL ST. J.: MARKETWATCH (Oct. 31, 2017), https://www.marketwatch.com/story/this-is-how-much-airbnb-is-driving-up-home-prices-and-rents-2017-10-31 (describing new research into the effect of Airbnb on housing prices).
(220) See, e.g., Edward L. Glaeser & Joseph Gyourko, The Impact of Zoning on Housing Affordability (Nat'l Bureau of Econ. Research, Working Paper No. 8835, 2002), http://www.nber.org/papers/w8835.
(221) See supra notes 190-92 and accompanying text.
(222) See supra notes 110-14 and accompanying text.
(223) Edward E. Potter, Telecommuting: The Future of Work, Corporate Culture, and American Society, 24 J. LAB. RES. 73, 79 (2003).
(224) James B. Stewart, Facebook Has 50 Minutes of Your Time Each Day. It Wants More., N.Y. TIMES (May 5, 2016), https://www.nytimes.com/2016/05/06/business/facebook-bends-the-rules-of-audience-engagement-to-its-advantage.html.
(225) Cf. Tim Worstall, Facebook Doesn 't Waste Trillions in Time: That's the Value Facebook Adds for Us, FORBES (Feb. 4, 2016), https://www.forbes.com/sites/timworstall/2016/02/04/facebook-doesnt-waste-trillions-in-time-thats-the-value-facebook-adds-for-us/#3657d4a06d57 (suggesting that total consumption value of Facebook is $900 billion); see also Austan Goolsbee & Peter J. Klenow, Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet (Nat'l Bureau of Econ. Research, Working Paper No. 11995, 2006), http://www.nber.org/papers/w11995 (using wage to calculate value of time spent on internet).
(226) Gianclaudio Malgieri & Bart Custers, Pricing Privacy--The Right to Know the Value of Your Personal Data, 34 COMPUTER L. & SECURITY REV. 289, 291 (2018).
i. Re-Crafting the Enterprise for the Gig-Economy, Sarina, Troy - Author, Riley, Joellen, New Zealand Journal of Employment Relations, Volume: 43. Issue: 2 Publication date: May 1, 2018. Page number: 27
ii. Social Transformation Led by Gig Economy, Bhattacharya, Subhendu, Raghuvanshi, Sona, International Journal of Education and Management Studies. Volume: 8. Issue: 3 Publication date: September 2018. Page number: 354
iii. Employee–employer Relationships in the Gig Economy: Harmonizing and Consolidating Labor Regulations and Safety Nets, Ljungholm, Doina Popescu, Contemporary Readings in Law and Social Justice. Volume: 10. Issue: 1, January 1, 2018. Page number: 144
iv. Gig-Based Working Arrangements: Business Patterns, Labor-Management Practices, and Regulations, Nica, Elvira, Economics, Management and Financial Markets. Volume: 13. Issue: 1 Publication date: March 2018. Page number: 100
v. Examining the Market Power of On-Demand Labor Platforms in the Gig Economy, Works, Richard, Monthly Labor Review. Publication date: July 2018. Page number: 1B
vi. The Sharing Economy as an Equalizing Economy, McGinnis, John O., Notre Dame Law Review. Volume: 94. Issue: 1 Publication date: November 2018. Page number: 329
It is important to note that while perhaps no longer a legal stipulation, in principle, it is business' primary obligation, particularly publicly listed corporations, to maximize profits. Existing methodologies have been regulated by centralized entities, such as the government and corresponding labour or legal legislation. Following the reclassification of labour roles, it is worthwhile to question whether this regulatory structure does today equally apply in a sharing or gig economy
Mitigation or bypassing centralized employment protection frameworks, as through contract-worker's mass gig participation, may require user's ownership distribution and controls be likewise restructured
In a perfectly competitive and globally connected marketplace, the control of profitable sustainability within the gig economy could pass primarily to the organizing or hosting business entity itself, which itself is furthermore now unburdened by employment regulations with seemingly no adjusted operational hindrance of tangible productivity. In other words, it is possible that the centralized gig coordination service itself reaps eclectic commissions irrespective of their users or 'workers' location, schedules or individual ongoing profitability
A shift to gig engagements operating under the existing centralized framework structure allows hosting or facilitating businesses to reap the competitive advantages with cost saving benefits, absent adjusted accountability. With identical establishment and operational requirements, business entities in the gig world may continue long sanctioned for-profit practices. Concurrently, former employees now and perhaps unwittingly sacrifice security alongside a plethora of centralized framework protections, potentially only gaining unpredictable freedom in selectivity and working hour flexibility
The scales do not yet appear balanced. Yet we appreciate that when correctly implemented publicly anonymized blockchain, the RWSC® and various bespoke decentralized ledger technologies hold the solution. A decentralization and private control of trusted engagement or exchange is possible
During first phase implementation TOF® focuses on the existing direct services whom have long operated under an offline gig booking structure, e.g. tattoo artists or performance artists. Member's activities and controls are further bolstered by direct copyright ownership of documentation as well as multimedia. TOF® Biosphere just removes the middlemen and agents whilst guaranteeing direct full payments under protected terms of engagement
Here, each member sets their own prices, receives 100% payment and the only additional cost for the entire process arises when a booking client makes a nominal one-time platform purchase of encrypted blockchain registration so as to protect both sides throughout their own end-to-end encrypted collaboration. No sales algorithms. No advertisements. No commissions