Sharing economy, a revolution of the social contract

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Sharing platforms allow an efficient use of resources, but create new challenges (and problems) for the employment market.

Imagine you own nothing: clear your house (and your garage) of all your goods and fill it with services. This is the principle at the basis of the sharing economy, which shifted from purchasing/selling goods to borrowing/lending them by providing a service. A revolution that is already taking over our lives, with a boom of apps that allow us to share pretty much anything, from cars to baby strollers. An extremely efficient use of resources, no doubt. But what is often ignored is that this revolution could rewrite the rules of the social contract: the American magazine Time dedicated a long reportage to this theme.

According to a poll conducted by Times, Burson-Marsteller and the Aspen Institute, 44% of U.S. adults have had at least one experience with the shared economy, participating as lenders or borrowers, drivers or riders, hosts or guests. The number this represents is impressive: 90 million people.

“This is a disruptive explosion that we’re seeing” – says Michael Solomon, a professor of marketing at Saint Joseph’s University – “Is it good or bad for workers? The real question is, What kind of worker are we talking about?” This question has made the object of several lawsuits about how sharing economy companies classify their workers. Another poll conducted by Time in November 2015 revealed that 22% of American adults have already offered some kind of good or service in this economy. This means they likely made a trade-off: according to the Time magazine, “the typical drivers and handymen using these platforms have operated as independent contractors, which means they enjoy the freedom of working without set hours but are not afforded the safety nets that traditional 9-to-5 employees have”. In return, companies like Uber – to mention just one of the most popular shared economy companies – made a fortune by saving on employee-related expenses, but at the same time have much less control over exactly how and where workers do their jobs.

Most people don’t really focus on their worker status when they rent out their pool house or get paid to run somebody’s errands. However, shared economy includes highly skilled jobs too. “There’s something nice about getting a regular paycheck – says Arun Sundararajan, a business professor at New York University – but we’ve got to get away from thinking that that is the only model.”

The new economy can make self employment more attractive, at least at the start. These new platforms make it extremely easy to start working, with a low barrier to entry and promise of making as much money as you’re willing to work for. Ads often promise the opportunity of making 25 dollars an hour, but sharing economy workers tend to be more optimistic than the average. The problem is that often, after considering all expenses, many workers make less than the minimum wage.

Policymakers are afraid that the erosion of the old social contract between employers and employees can have negative repercussions on the state welfare system if these jobs don’t last. Some were able to find a trade-off between these new realities and the existing norms. In December, the city of Seattle unanimously voted to allow Lyft and Uber drivers to unionize. States like Utah have passed laws that let certain sharing economy companies operate only after they register with the state and meet insurance standards. The common goal is to create an environment that welcomes innovation, but not at the expense of workers.

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