Over the past weeks I have covered several aspects of the shared economy - shared mobility, goods, spaces, food, healthcare and money. They are similar in a sense that they involve sharing a certain product or service, however the ways to go about making the shared industry effective may differ.
In the aspect of shared mobility, from the government's point of view, the main goal is to reduce carbon emissions and traffic congestion. To attain such goals, we would have to reduce reliance on cars with internal combustion engines (by switching to electric cars), introducing efficient public transport models and even alternative modes of transport such as cycling. These solutions usually promote environmental-efficiency such that the total carbon emissions is reduced. Catered shared buses such as shuttle buses from bus or train stations to nearby malls can also increase traffic, spurring economic growth.
However, shared mobility in the eyes of consumers involve making our lives more convenient and at a cheaper price. Ride-sharing applications such as Uber, Grab and Lyft exist to provide a seamless process by allowing us to book rides directly from our mobile phones; no more standing at pavements and frantically hailing for cabs during peak hours. Increased competition results in stiff price wars, benefiting mostly the consumer. Employees and "self-employed" drivers feel the pinch from the cuts in salary, causing them to have to work longer hours for the same amount of pay. Workers in the shared economy are getting paid on a piecework basis, rather than on an hourly basis. Although it is can increase the incentive and motivation to work, having no base pay means that people's monthly incomes depend largely on the demand for their services. For workers who already have stable jobs and use Uber as a supplementary source of income, the piecework scheme would not matter as much. However, for people who work in the sharing economy full time, it might not be financially stable in the long run. Furthermore, these people are seen as "self-employed", meaning companies in the sharing economy are not obliged to provide them with employment benefits such as sick or paid leave. Hence, the main bulk of people benefiting are usually the company and the consumers.
In the aspect of shared goods, the model's main purpose is for users to make money out of the things that they already have at home. These goods are usually highly valued but under-utilised. The profit model usually includes either sharing or renting the goods out via an online platform. There are many components under the shared goods umbrella, thus some types of goods are more valuable profit models than others. It is easier to rent, or sell an electronic gadget compared to a clothing item. This system also largely depends on the durability of a product - if the lifespan of a product is likely to be long, naturally the more it can be rented or sold for. To promote people to get involved in sharing goods, there are initiatives such as flea markets, thrift stores and online peer-to-peer marketplaces for people to list their items for sale.
Shared food, although seems like a feasible way to reduce food wastage and promote social inclusiveness, has many limitations. Current regulations and laws in place do not allow for commercial retailed food to be made in a personal kitchen in someone's home. Other aspects of shared food include selling leftover food at a fraction of its original price to reduce food wastage, or giving away leftover meals to the needy and homeless. There are also more initiatives of purchasing a suspended meal and giving it to someone else in need. Such examples in Singapore include "Chope Food for the Needy" and "Rice Garden". These pay-it-forward initiatives can hopefully reduce the income inequality and overall quality of life in the country.
Shared healthcare can be seen as an opportunity to increase efficiency in hospitals. The common database that hospitals can access to rent non-emergency medical equipment can significantly reduce operation costs and increase utilisation rates. This also means that more resources can be diverted into other aspects such as research and development.
The sharing economy creates new jobs for people, however it also comes at the expense of a reduction in labour force in other sectors. To ensure that everyone in society benefits from the existence of shared companies, more has to be done to provide fair treatment and schemes such that no one is being made better off at the expense of another. The sharing economy's presence in society will only increase with time, and it has great potential to reduce inequality and promote efficiency. With more regulation and improvements being made, I do believe that the sharing economy can promote long term sustainability not only for users of the shared economy but society as a whole, not forgetting the environment.
Saturday, 19 November 2016
Friday, 18 November 2016
my personal experience with the sharing economy
Being financially independent at the mere age of twenty is difficult, especially in Singapore where the cost of living is so high. Back in 2014, I was made aware of a mobile lifestyle application Carousell. Carousell is a peer-to-peer online marketplace where practically anyone could sell their secondhand items.
Initially when I started out using the application, the things I bought were mostly brand new items. At that point in time I found the idea of purchasing something that was used by someone else to be quite uncomfortable. After I got the hang of it, the buying and selling process became almost addictive - everyday I would log in and check Carousell to see if there were any potential buyers interested in my product.
In the past two years, I have sold many items - from secondhand clothes, textbooks, watches, an air purifier and even my old fish tank! Through meeting up with buyers or sellers, you not only get to check the physical condition of the good (secondhand items especially), but it also gives you a chance to strike a conversation with someone of a common interest with you. This also allows the fostering of unconventional friendships, and also builds a community with people of similar interests and hobbies.
I have since leveled up from selling secondhand items - now I hold pre-orders and also supply items to buyers. Having such a platform allows me the flexibility to juggle between school work and having a part time 'business'. Many students especially are jumping onto the Carousell bandwagon as it is a good way to earn some pocket money. Students like myself often have busy schedules with projects and deadlines. Starting out a small business like an account on Carousell allows one to experience what it is like to potentially run your own business in the future.
To be successful in the sharing economy, it is essential to be backed up by positive reviews. This is especially so when competition is high. As the things I mostly sell are clothing items that are currently in trend, there are many other sellers selling similar or even identical items. As such, reputation and price becomes a determining factor during the buyer's decision-making process. Thus, sellers often go the extra mile to ensure that the transaction is smooth. For example, sellers may travel to the convenience of buyers, provide free mailing options and even give discounts for quick deals. These small actions can significantly help boost the reputation of a seller, and may even encourage past buyers to come back for more.
A downside to being an active member in Carousell would be that we can never predict what kind of buyers we meet. There are nasty sellers who sell secondhand items and claim that the condition is as good as new, but when buyers receive the item, it is almost unwearable. There are also people who arrive very late during meetups, or even worse do not turn up. Despite this, there are improvements that are being made to ensure a smooth transaction between the buyer and seller. Once a seller accepts an offer made by a buyer, both of them can now exchange feedback with each other. This acts as a measure to ensure both the buyer and seller make a successful transaction to prevent having a negative review being left on their profiles.
Carousell is a good platform to start selling as everyone is welcome. There are many categories from clothes, furniture, luxury items, cars and even homes for rent. It has groups and communities where people can join, and has many filters that can be tailored to the needs of users. I have greatly benefited from the invention of Carousell and other sharing companies like Airbnb and Uber. Although no company is perfect, it looks like companies in the sharing economy are here to stay, and we should do our best to ensure that the welfare or people and the environment is kept at a priority such that we can all benefit from a shared model in the long run.
Thursday, 17 November 2016
opportunities in the sharing system
Bike-sharing schemes are increasingly popular today, with cities investing more in bicycle systems as a primary form of public transportation. The availability of stations available makes it easy for commuters to simply activate a bike with a card and be on their way.
Citi Bike in New York City opened in 2013 with 332 bicycle stations and with 6000 bicycles. The amount of stations available in the city becomes a good alternative and a quick way for people to get from one place to another. However, safety issues include users not having a helmets available to them at these kiosks. Users are required to bring their own helmets with them when they ride with Citi Bike. As helmets take up quite a bit of space in backpacks and are usually forgettable, people often tend to travel without one. Thus, many users end up renting the bicycles without wearing proper head gear protection. This becomes a huge concern, since up to 58% of cyclists do not wear helmets when cycling.
On 17 November 2016, inventor Isis Shiffer won the 2016 International James Dyson Award for the invention of the EcoHelmet.
Made of paper, the device collapses and fits nicely in any bag. At first glance, one would not think that something made of paper could potentially save you from accidents. However, Shiffer pointed out that the radial honeycomb design makes the helmet "as solid as a traditional polycarbonate plastic helmet". The helmet has a biodegradable coating, making it resistant to light rain for up to three hours. Since it is made out of paper, the helmet is fully recyclable, so used helmets can be made again into a completely new one. The bendable material of the helmet allows it to fit a variety of heads, and its airy material allows for air ventilation. The helmets would be sold in vending machines nearby bike share stations at a very affordable rate of $5.
Such innovations suggests that there are many opportunities that companies and even entrepreneurs can make use of in the shared economy.
References:
Tuesday, 15 November 2016
do we share because we really care?
The sharing economy started out for people to make a quick buck out of the things that are under-utilised at home. In addition to achieving higher levels of efficiency, the sharing economy has transformed to making users more aware of the environmental benefits that comes from sharing. These two goals are vastly different - making extra money relies on the profit maximising economic structure, whereas being environmentally concerned has to do with the social welfare of the population and the environment around us. Is it then possible to strike a balance between the two, where the shared model can encompass both allowing users to earn money, yet being environmentally concerned at the same time?
Airbnb is increasingly popular today as it offers users with a different local experience with each trip. The variety and choice of home listings on Airbnb is almost endless, allowing users to choose the home they feel most interested in. In 2007, founders Joe Gebbia and Brian Chesky were struggling to pay their rent. Upon realising that they had three extra airbeds, the website airbedandbreakfast was born. They rented out the beds and cooked the guests breakfast, charging them $80 per night. The idea came about to make money out of the extra bed or extra room they had that was vacant. Fast forward 9 years later, Airbnb is now valued at $1.3 billion, with more than 10 million nights booked in more than 19,000 cities in 192 countries.
Today, more people are turning to investing in homes with the sole purpose of transforming them into lucrative Airbnb listings. This goes against the main reason why Airbnb started out in the first place. With people increasingly purchasing homes to rent them out, this puts a stress on the government as it would mean less homes available for first-time home buyers. Coupled with the growing population around the world, the high competition for homes can significantly drive up prices of homes. In this case, the social welfare of society is not being fully maximised.
Furthermore, people are increasingly revamping their homes to increase traffic on their Airbnb listings. The main reason why Airbnb is so popular among millennials especially is because of its unique and aesthetically-pleasing environment. Home owners are making their homes more fitted to users - having high speed wifi, air-conditioning, heaters,bathtubs, and even painting or renovating the place. When comparing Airbnb homes to traditional hotels, Airbnbs are generally seen as being more green. When we stay in homes, we tend to consume less water and take more public transport. However, such results are seen more of a coincidence - it was not Airbnb's primary goal to have such green effects. Hence, in this aspect, consumers of shared homes tend to share because it presents us with a cheaper and unique option, instead of sharing because of its environmental benefits.
References:
http://www.telegraph.co.uk/technology/news/9525267/Airbnb-The-story-behind-the-1.3bn-room-letting-website.html
Airbnb is increasingly popular today as it offers users with a different local experience with each trip. The variety and choice of home listings on Airbnb is almost endless, allowing users to choose the home they feel most interested in. In 2007, founders Joe Gebbia and Brian Chesky were struggling to pay their rent. Upon realising that they had three extra airbeds, the website airbedandbreakfast was born. They rented out the beds and cooked the guests breakfast, charging them $80 per night. The idea came about to make money out of the extra bed or extra room they had that was vacant. Fast forward 9 years later, Airbnb is now valued at $1.3 billion, with more than 10 million nights booked in more than 19,000 cities in 192 countries.
Today, more people are turning to investing in homes with the sole purpose of transforming them into lucrative Airbnb listings. This goes against the main reason why Airbnb started out in the first place. With people increasingly purchasing homes to rent them out, this puts a stress on the government as it would mean less homes available for first-time home buyers. Coupled with the growing population around the world, the high competition for homes can significantly drive up prices of homes. In this case, the social welfare of society is not being fully maximised.
Furthermore, people are increasingly revamping their homes to increase traffic on their Airbnb listings. The main reason why Airbnb is so popular among millennials especially is because of its unique and aesthetically-pleasing environment. Home owners are making their homes more fitted to users - having high speed wifi, air-conditioning, heaters,bathtubs, and even painting or renovating the place. When comparing Airbnb homes to traditional hotels, Airbnbs are generally seen as being more green. When we stay in homes, we tend to consume less water and take more public transport. However, such results are seen more of a coincidence - it was not Airbnb's primary goal to have such green effects. Hence, in this aspect, consumers of shared homes tend to share because it presents us with a cheaper and unique option, instead of sharing because of its environmental benefits.
References:
http://www.telegraph.co.uk/technology/news/9525267/Airbnb-The-story-behind-the-1.3bn-room-letting-website.html
Saturday, 12 November 2016
refugees seeking homes in the sharing economy
With the political unrest in the Middle East, more refugees are fleeing their home countries in search for new homes. More than 1.1 million migrants have arrived in Germany since the start of 2015, many of whom do not have proper places to live. Refugees who have made it into Europe were moved into overpopulated migrant camps that had little resources. Majority of people end up homeless, sleeping on the street and with almost no chance at finding proper jobs.
After seeing reports about refugees fleeing violence in the Middle East, Kuwait-born Amr Arafa decided to create a website to connect refugees and victims of domestic violence with people who are offering a safe place to stay until they get back on their feet. The website, EmergencyBnB, allows both hosts and guests to access the website to get in touch with each other. Like its name states, the provision of housing is not for a long period of time. These people or families are able to seek shelter in the homes of people until they are independent enough to leave.
Another platform that provides temporary housing for refugees is Refugees Welcome in Germany. The non-profit organisation has two primary goals - to match these refugees with homes, and to properly assimilate them into the host country's culture. Started in 2014, has since matched more than 800 asylum-seekers with hosts and helping them adapt to the new country. Under their program, refugees are expected to pay rent, but most are being subsidised by the government. Hosts can also charge a heavily discount rate such that refugees are able to afford the cost of living. The non-profit organisation encourages home owners to open up their flats to refugees, but there has been a declining rate in rooms being let out due to cases of refugee violence within the country.
Registration of rooms have fallen to about 70 per month, but refugee applications reached over 10,000. Despite the significantly less rooms available, matching refuges to hosts also incur a long processing time as these refugees have to be screened to determine whether they are suitable candidates. Questions include their background, origin country, age, spoken languages. Once a refugee passes the screening, the refugees and hosts must then meet in person first before the refugee moves in. In the eyes of hosts, an empty room provides them with an opportunity to help someone in need. In the eyes of these refugees, the empty room signifies a new beginning. Not only does the room provide these refugees with a shelter over their heads, but it also allows them an opportunity to start over. Living with a local roommate can significantly help refugees assimilate into the country as locals can teach them the culture and the system in this entirely foreign place.
The sharing economy has great potential in helping refugees seek better lives in their new found home. Although the number of asylum-seekers in Germany is said to increase from 600,000 in a year, shared homes is the first step to enable them to blend in and start their new lives here successfully.
References:
http://www.reuters.com/article/us-europe-migrants-germany-survey-idUSKBN13A22F
http://abcnews.go.com/Business/emergencybnb-aims-bring-sharing-economy-worlds-vulnerable/story?id=41569437
http://www.cnbc.com/2016/08/18/refugees-welcome-aims-to-use-sharing-economy-to-ease-europe-immigration-crisis.html
http://www.ibtimes.com/refugee-bnb-or-refugee-tinder-why-german-citizens-are-taking-asylum-seekers-their-2096685
After seeing reports about refugees fleeing violence in the Middle East, Kuwait-born Amr Arafa decided to create a website to connect refugees and victims of domestic violence with people who are offering a safe place to stay until they get back on their feet. The website, EmergencyBnB, allows both hosts and guests to access the website to get in touch with each other. Like its name states, the provision of housing is not for a long period of time. These people or families are able to seek shelter in the homes of people until they are independent enough to leave.
Another platform that provides temporary housing for refugees is Refugees Welcome in Germany. The non-profit organisation has two primary goals - to match these refugees with homes, and to properly assimilate them into the host country's culture. Started in 2014, has since matched more than 800 asylum-seekers with hosts and helping them adapt to the new country. Under their program, refugees are expected to pay rent, but most are being subsidised by the government. Hosts can also charge a heavily discount rate such that refugees are able to afford the cost of living. The non-profit organisation encourages home owners to open up their flats to refugees, but there has been a declining rate in rooms being let out due to cases of refugee violence within the country.
Registration of rooms have fallen to about 70 per month, but refugee applications reached over 10,000. Despite the significantly less rooms available, matching refuges to hosts also incur a long processing time as these refugees have to be screened to determine whether they are suitable candidates. Questions include their background, origin country, age, spoken languages. Once a refugee passes the screening, the refugees and hosts must then meet in person first before the refugee moves in. In the eyes of hosts, an empty room provides them with an opportunity to help someone in need. In the eyes of these refugees, the empty room signifies a new beginning. Not only does the room provide these refugees with a shelter over their heads, but it also allows them an opportunity to start over. Living with a local roommate can significantly help refugees assimilate into the country as locals can teach them the culture and the system in this entirely foreign place.
The sharing economy has great potential in helping refugees seek better lives in their new found home. Although the number of asylum-seekers in Germany is said to increase from 600,000 in a year, shared homes is the first step to enable them to blend in and start their new lives here successfully.
References:
http://www.reuters.com/article/us-europe-migrants-germany-survey-idUSKBN13A22F
http://abcnews.go.com/Business/emergencybnb-aims-bring-sharing-economy-worlds-vulnerable/story?id=41569437
http://www.cnbc.com/2016/08/18/refugees-welcome-aims-to-use-sharing-economy-to-ease-europe-immigration-crisis.html
http://www.ibtimes.com/refugee-bnb-or-refugee-tinder-why-german-citizens-are-taking-asylum-seekers-their-2096685
Wednesday, 9 November 2016
the sharing economy on inclusiveness
One main feature of the sharing economy is that it relies heavily on social media and the Internet. Since people are dealing with each other online rather than in person, it becomes imperative that our online profiles be reputable and approachable to build trust. In line with the old saying "don't trust whatever you see on the Internet", people are becoming more skepitcal toward the information that is being shown online. To maintain and even build trust, people would thus rely on reviews and recommendations that have been left by other users within the community.
People trust people, and people trust good reviews. Hence, having a reputable platform of quality reviews would correlate to having more revenue. In the example of renting out your home on Airbnb, or selling your preowned items on Amazon or eBay, the quality of reviews plays a significant role in the buyer decision-making process. It gives people a sense of comfort knowing that a product or service is legitimate and lives up to a certain standard. Thus, the more information you share, the more likely it is that people will trust you.
However, sharing too much information could potentially result in discrimination among different income and ethnic groups. To encourage people to be open within the shared economy, people are encouraged to upload pictures of themselves with basic information about them, and rate each other after every successful transaction. This creates a virtual personal connection and friendliness in the community. The sharing economy is supposed to encourage more people to connect with one another and bond over common ideas. But with recent studies on racial discrimination, such sharing economy countries are at risk.
Researches at MIT, Stanford and the University of Washington found that African American users often wait longer to get a ride on ride-hailing services such as Uber and Lyft. They are also far more likely than white Americans to get canceled on by drivers. African Americans not only face issues when it comes to transportation. They also have tougher times renting out rooms on Airbnb (white names have a 16% higher chance of booking on Airbnb than African American names) and selling goods on eBay. It is not only the pictures that create racial bias - people are also able to differentiate your race just by someone's name. An experiment was done in Seattle, where black-sounding names of people had to wait about 30% longer than someone of a white-sounding name. Through these studies, it can be seen that despite efforts being made to have a more inclusive society, some form of racial bias and stereotypical judgement still lingers in this day and age.
With such racial discrimination still very present in society today, these companies have adopted measures to curb the issue. Now, before accepting a trip, Uber drivers can only see a passenger's location and star rating. Airbnb has also experimented with reducing the visibility of photos on booking pages and relied more on the reviews of the home. Success of the new proposed solution is also hindered, since photos as well as real names are necessary in creating trust and safety on a platform where everyone are essentially strangers to each other. In Uber's new proposed strategy where the driver can only see the location and star rating of a user, it becomes impractical if the driver is not able to identify the user on a crowded street at location.
Under a new policy, Airbnb has since implemented better measures to prevent discrimination of any form. Once a host rejects a potential guest when the space has been booked by someone else, Airbnb will automatically block these dates out, disallowing someone else from seeing it as available. This would prevent hosts from denying a user based on their race, only to offer the same dates to someone of a more preferred race. The company also explicitly reminds hosts that they cannot decline guests based on their skin colour, ethnicity, nationality nor sexual orientation. Both users and guests are also required to agree to a clause stating that they would treat all members within the community equally with respect and without judgement or bias.
Such racial issues remain as a challenge to society. In order for society to progress, it is important to start changing our mindsets into becoming more accepting individuals and to welcome people who are 'different' from us, rather than shunning them away. In my next post, I will discuss the success of opening up homes to the less privileged and offering refugees a place to stay.
References:
https://medium.com/the-sharing-economy/why-you-should-expose-yourself-online-more-b47e6f7d32ef#.s1c4gmzdp
https://www.washingtonpost.com/news/wonk/wp/2016/11/02/the-sharing-economy-has-a-serious-racism-problem-but-there-may-be-a-way-to-fix-it/
https://www.washingtonpost.com/news/wonk/wp/2016/09/08/how-airbnb-plans-to-fix-its-racial-bias-problem/
http://www.citylab.com/housing/2016/05/brown-v-board-v-airbnb/483725/
People trust people, and people trust good reviews. Hence, having a reputable platform of quality reviews would correlate to having more revenue. In the example of renting out your home on Airbnb, or selling your preowned items on Amazon or eBay, the quality of reviews plays a significant role in the buyer decision-making process. It gives people a sense of comfort knowing that a product or service is legitimate and lives up to a certain standard. Thus, the more information you share, the more likely it is that people will trust you.
However, sharing too much information could potentially result in discrimination among different income and ethnic groups. To encourage people to be open within the shared economy, people are encouraged to upload pictures of themselves with basic information about them, and rate each other after every successful transaction. This creates a virtual personal connection and friendliness in the community. The sharing economy is supposed to encourage more people to connect with one another and bond over common ideas. But with recent studies on racial discrimination, such sharing economy countries are at risk.
Researches at MIT, Stanford and the University of Washington found that African American users often wait longer to get a ride on ride-hailing services such as Uber and Lyft. They are also far more likely than white Americans to get canceled on by drivers. African Americans not only face issues when it comes to transportation. They also have tougher times renting out rooms on Airbnb (white names have a 16% higher chance of booking on Airbnb than African American names) and selling goods on eBay. It is not only the pictures that create racial bias - people are also able to differentiate your race just by someone's name. An experiment was done in Seattle, where black-sounding names of people had to wait about 30% longer than someone of a white-sounding name. Through these studies, it can be seen that despite efforts being made to have a more inclusive society, some form of racial bias and stereotypical judgement still lingers in this day and age.
With such racial discrimination still very present in society today, these companies have adopted measures to curb the issue. Now, before accepting a trip, Uber drivers can only see a passenger's location and star rating. Airbnb has also experimented with reducing the visibility of photos on booking pages and relied more on the reviews of the home. Success of the new proposed solution is also hindered, since photos as well as real names are necessary in creating trust and safety on a platform where everyone are essentially strangers to each other. In Uber's new proposed strategy where the driver can only see the location and star rating of a user, it becomes impractical if the driver is not able to identify the user on a crowded street at location.
Under a new policy, Airbnb has since implemented better measures to prevent discrimination of any form. Once a host rejects a potential guest when the space has been booked by someone else, Airbnb will automatically block these dates out, disallowing someone else from seeing it as available. This would prevent hosts from denying a user based on their race, only to offer the same dates to someone of a more preferred race. The company also explicitly reminds hosts that they cannot decline guests based on their skin colour, ethnicity, nationality nor sexual orientation. Both users and guests are also required to agree to a clause stating that they would treat all members within the community equally with respect and without judgement or bias.
Such racial issues remain as a challenge to society. In order for society to progress, it is important to start changing our mindsets into becoming more accepting individuals and to welcome people who are 'different' from us, rather than shunning them away. In my next post, I will discuss the success of opening up homes to the less privileged and offering refugees a place to stay.
References:
https://medium.com/the-sharing-economy/why-you-should-expose-yourself-online-more-b47e6f7d32ef#.s1c4gmzdp
https://www.washingtonpost.com/news/wonk/wp/2016/11/02/the-sharing-economy-has-a-serious-racism-problem-but-there-may-be-a-way-to-fix-it/
https://www.washingtonpost.com/news/wonk/wp/2016/09/08/how-airbnb-plans-to-fix-its-racial-bias-problem/
http://www.citylab.com/housing/2016/05/brown-v-board-v-airbnb/483725/
Sunday, 6 November 2016
does the sharing economy benefit workers or only the company?
The sharing economy breeds an inclusive and welcoming society. It increases productivity by using resources more efficiently, and allows the public to benefit from the shared model. However, there are still certain social, ethnic and income groups that are at the bottom of the sharing economy's receiving end.
The act of sharing implies equality such that people in lower income brackets can also benefit from this emerging shared model. However, it is said that the sharing economy mostly benefits those who are already doing well. Majority of lower income groups who rely on these sharing platforms for thei primary incomes would be most affected when economic times are tough. Jobs in the sharing economy are usually temporary, part time jobs (e.g. Uber drivers or food delivery riders). People are able to be contributors to more than one sharing company - an Uber driver can also be renting his house on Airbnb. As such, income levels may be difficult to verify when applying for mortgage, credit cards and other loans. Furthermore, since these jobs are likely to be contracted, people typically do not receive employment benefits such as health insurance or paid leave.
The issue is less of a concern for people who already have full time jobs outside of the shared economy. These people have a stable day job, and may turn to jobs in the shared economy for some extra cash. However, when people's primary jobs are within the shared economy, profit margins are squeezed, leaving them with little salary to enjoy a comfortable life.
With the increasing number of competition within the shared economy, companies are increasingly cutting costs and pushing profit margins lower such that they are able to offer consumers lower priced options compared to their competitors. Although consumers benefit from the lower price charged, workers in the shared economy are faced with constant cuts in their salaries.
British online food delivery company Deliveroo has been accused of exploiting their riders by altering the pay structure. The current £7 per hour and £1 per delivery is getting squeezed to a mere £3.75 per delivery with no base hourly rate. This means that Deliveroo is changing their structure to move from time wages to piecework. Riders are paid based on the amount of deliveries they do, rather than the amount of time they spend working. The change in structure caused massive uproar within the community, and riders went on strike against the threat of this new system replacing the current model.
These companies do not pay their workers any form of employment benefits on the grounds that these workers are "self-employed". Since they are independent contractors, the company is not obliged to provide them with benefits that regular employees get. By forcing the cost of doing business onto their workers, such companies get increasingly richer, while their workers remain stagnant and earn only the bare minimum.
In addition, many companies in the sharing economy are choosing to remain as private companies so that they can have maximum flexibility. By postponing their initial public offerings, these companies do not have to please their shareholders, they need not report their annual reports, nor do they require third party auditing. In the government's point of view, keeping a company private may not be ideal as this gives them room to tweak statistics, and even falsify records. By remaining private, this allows them to keep business plans to themselves such that no insider information is being leaked out to competitors, which can be a huge concern especially in technology sectors.
References:
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