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Does the Sharing Economy Increase Inequality Within the Eighty Percent?: Findings from a Qualitative Study of Platform Providers

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Does the Sharing Economy Increase Inequality Within the Eighty Percent?: Findings from a Qualitative Study of Platform Providers Cambridge Journal of Regions, Economy and Society 2 0 1 7, 10, 263–279 doi:10.1093/cjres/rsw047 Advance Access publication 10 February, 2017 Does the sharing economy increase inequality within the eighty percent?: findings from a qualitative study of platform providers Juliet B. Schor Department of Sociology, Boston College, 531 McGuinn Hall, 140 Commonwealth Avenue, Chestnut Hill, MA 02467, USA, [email protected] Received on November 15, 2015; editorial decision on August 8, 2016; accepted on December 19, 2016 The sharing economy has generated controversy for its effects on labour conditions, wages and the distributions of income and wealth. In this article, we present evidence for a previ- ously unrecognized effect: increased income inequality among the bottom 80% of the distri- bution. On the basis of interviews with US providers on three for-profit platforms (Airbnb, RelayRides and TaskRabbit), we find that providers are highly educated and many have well- paying full-time jobs. They use the platforms to augment their incomes. Furthermore, many are engaging in manual labour, including cleaning, moving and other tasks that are tradition- ally done by workers with low educational attainment, suggesting a crowding-out effect. Keywords: sharing economy, income inequality, platform economy, Airbnb, TaskRabbit JEL Classification:J01, J46, Z13 Introduction costs for person-to-person exchange, in part The ‘sharing economy’ comprises a diverse set by crowdsourcing information from users but of platforms and organisations, including non- also via their sophisticated logistics software profits such as time banks, food swaps and mak- (Sundararajan, 2016). Some observers have erspaces, as well as for-profit platforms that offer gone so far to predict a “zero marginal cost income-earning opportunities, such as home society” (Rifkin, 2014), in which highly produc- and car rental and the sale of goods and labour tive technologies combine with users to remake (Schor and Fitzmaurice, 2015). The for-profits, economic relations. Investors are also optimis- which are often quite large, have attracted a tic about the sector, as recent valuations of for- great deal of popular attention, in part because profit companies in this sector have been high. they have the potential to yield economic The ride-sourcing platform Uber, which is the benefits by replacing conventional economic largest of all sharing economy companies, was activity with new technologies and innovative valued at US$50 billion in 2015, which at the business models. Proponents argue that tech- time made it more valuable than 80% of all nologically based disruptions will enhance eco- companies on the Standard and Poors index nomic efficiency, flexibility and autonomy for (Myers, 2015). Rapid growth in the two largest providers. Sharing platforms reduce transaction companies—Uber and Airbnb—also reveals © The Author 2017. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved. For permissions, please email: [email protected] Downloaded from https://academic.oup.com/cjres/article-abstract/10/2/263/2982086 by Curtin University Library user on 06 March 2018 Schor the attractions of these services to consumers, Despite its common-good rhetoric, the sec- who, we find, appreciate the low costs, conveni- tor is seen as part of an anti-labour offensive ence and branding of many of the platforms. from business which is expanding the precariat However, sharing economy platforms have and facilitating a larger risk shift onto workers also become objects of heated controversy (Hacker 2006; Standing, 2011). The for-profit around the world. To some extent this is because platforms are described as super-exploiters of many of them launched with a rhetoric of com- labour, as in Trebor Scholz’s evocatively titled mon-good claims (Schor, 2014). Most of the large book Uberworked and Underpaid (Scholz, companies in the sector have taken credit for 2016; Slee, 2015; Ravenelle, 2017). This is partly reducing ecological and carbon footprints, pro- due to their practice of classifying providers as viding opportunity for people who are struggling independent contractors rather than employ- economically, building social connections and, in ees, which absolves them of responsibility for the case of Airbnb, fostering cultural exchange. expenses, benefits and employment security. The Airbnb conducts local impact studies to show its sharing economy is seen as an ultra-free mar- positive effects on local communities, looking at ket which is resulting in a race to the bottom, or both economic and ecological outcomes (http:// what political economist Robert Reich termed a blog.airbnb.com/economic-impact-airbnb_ and “share the scraps” economy (Reich, 2015). http://blog.airbnb.com/environmental-impacts- While the sharing economy is frequently of-home-sharing/). Founders, consultants and conceptualised as sui generis, it is more use- many users argue that the sharing economy is a ful to consider it within its broader context force for social and ecological good, an alterna- and ask whether it strengthens or undermines tive to a dysfunctional and inefficient conven- larger economic trends. For example, in recent tional economy (Botsman and Rogers, 2010). As decades inequality has increased sharply in the companies grew, observers assessed these many countries. Most attention has been paid claims and found that many of the platforms to the concentration of income at the very top, were coming up short (Schor, 2014). including among the 1% (Piketty, 2014). Within Critics have assailed the sharing economy on the sharing sector, there has been attention a number of fronts. One issue is terminology and to the large fortunes being made by founders whether renting or providing labour services is and venture capitalists (Schneider, 2014; Schor, properly considered ‘sharing’. Anthony Kalamar 2014), which raises the question of whether (2013) has argued that these exchanges crowd the sharing economy is contributing to the out genuine sharing and that for-profit compa- increase in extreme inequality. Alternatively, nies are ‘sharewashing’, i.e., using the positive some argue that it is reducing inequality by associations of sharing to hide their self-inter- spreading opportunity and providing incomes ested activities. Ravenelle (2017) reports that to people at the bottom of the distribution the New York City providers she studied reject (Fraiberg and Sundarajan, 2015). However, the sharing designation, seeing themselves more these debates have had relatively little empiri- like workers. A related critique is that selling cal data to inform them. The platforms have slivers of one’s life (room, car, time, attention) is been largely unwilling to share their data, par- a commodification of daily life that will under- ticularly to independent researchers, and much mine genuine social connection and solidarity of this activity is not captured in government (Henwood, 2015; Morozov, 2013). surveys. As such, it is not possible to give defini- A second line of argument asserts that the tive answers to these questions. Furthermore, sharing economy is exacerbating neo-liberal the debate is not just about current practices, economic trends and policies which favour but also what the effects of the sector will be business and undermine the power of labour. as it grows. 264 Downloaded from https://academic.oup.com/cjres/article-abstract/10/2/263/2982086 by Curtin University Library user on 06 March 2018 Does the sharing economy increase inequality within the eighty percent? In this article, we explore a potential impact on interviews with 43 earners on three plat- of the sharing economy, which, to our knowl- forms (Airbnb, RelayRides and TaskRabbit). edge, has not yet been raised in the popular Interviews are semi-structured, range from press or the academic literature: how sharing 45 to 90 minutes and cover a range of topics, economy activity is affecting the distribution including participants’ life narratives, how they of income and opportunity within the bottom got involved in the platform, motives, attitudes 80% of the population. To answer this ques- toward risk and experiences. Interviews are con- tion, we use a sample of 43 providers on three centrated among people aged 18–34 because the platforms. To anticipate our results, we find innovators and early users of the sharing econ- that most providers are highly educated, with omy come from this age group. Almost all of the other sources of income. We also find that they interviews were conducted in 2013; however, in are engaging in activities that have tradition- 2015 we conducted follow-up interviews with 9 ally been blue and pink collar tasks. Our data TaskRabbit and Airbnb providers. is collected at the individual level, however, if Recruitment differed slightly by platform. our findings are generalisable, platform activ- In all three cases, we first eliminated users ity is likely exacerbating inequality within the who were obviously outside our age range. 80%, shifting more income and opportunity to Then we randomly sent communications via better-off households and providers. the platform. If we inadvertently contacted a We begin with a short description of our person outside the age range, we declined to methods and the platforms we are discussing in set up an interview. We also required that the this article. We then turn to definitions, because person had done at least five trades to be eli- there is considerable confusion about terminol- gible for the study. On TaskRabbit, we posted ogy and exactly what the ‘sharing economy’ is. the interview as a task, which readily yielded Next, we address the context of rising inequality informants. On Airbnb and RelayRides, we and the ongoing impacts of the 2008 financial queried providers via the platform, and once crash. We then discuss findings from interviews we made contact we let them know we were with providers on three for-profit platforms— interested in interviewing them. This method Airbnb, RelayRides (now renamed Turo) and yielded enough informants on RelayRides, TaskRabbit.
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