Ride-sharing apps like Uber and Lyft don’t just move people physically. They also change minds, winning people over to the Gig Economy. After a ride in a stranger’s car, it seems more natural that an app might connect you with a stranger who offers a place to stay, looks after your dog, or hosts you for a home cooked meal.
The architects of these new platforms tend to fit a demographic mold — white and Asian guys in their 20s and 30s who stare at screens all day. Hackers in San Francisco wanted fresh groceries, convenient dry cleaning, and all the rest, and made apps to solve their own problems.
But these new systems are growing exponentially by signing up a more varied clientele. They work well for older people, women, minorities, and really just about anyone with a credit card, at least on the buy side. And while the idea of being a stranger’s house guest might at first seem crazy to those outside of Silicon Valley, the simpler and safer proposition of a ride across town is an easy place to start.
Why is the consumer experience of these new services so great? Efficiency is one reason — GPS sends the driver straight to you, shows you his approach, and, once you’re on board, gives turn-by-turn directions to your destination. Free money is another factor: many Gig Economy firms are burning through venture capital to subsidize artificially low prices (that is, they spend more delivering the service than they collect in revenue).
But that’s not the whole story. Another key reason these platforms are thriving is because they enable and encourage all of us — workers and customers alike — to save money by breaking rules.
Uber and Lyft drivers often operate without commercial insurance, putting their own and their passengers’ welfare at risk. In New York City, much of Airbnb’s revenue (possibly the majority) comes from hosts who book out whole apartments for less than 30 days in violation of state law.
As users of gig economy platforms, we are often complicit in small-seeming transgressions like these. Staying in an apartment on Airbnb, you’re told to tell the neighbors you’re a “friend from out of town,” and certainly not to volunteer your true status as a paying guest, because that might violate your host’s lease, or get him in trouble with the condo association (let alone city inspectors or the state). Visiting someone’s home as the electronic buyer of a home-cooked meal, one knows better than to ask whether the host has permission to run a restaurant.
The architects of our new favorite apps have gotten very good at making us feel comfortable with these small compromises.
We, the customers, are encouraged to think that we are skirting the protectionist, outmoded, and inefficient regulations that protect Big Taxi, or that we are part of an enlightened effort to counter a shortage of hotel rooms. Indeed, the greater efficiencies of sharing may reduce environmental damage by letting everyone do more with less. These systems can stimulate local economies, help people find more income, and have other benefits. And platform operators’ public statements often indicate that they favor compliance with local law. All the same, the final responsibility for compliance rests not with the platform, nor surely with customers, but with the workers.
Tom Slee has had enough of such happy talk. He sees an industry that owes much of its growth to companies’ “ability to circumvent or change regulations,” and he thinks our positive feelings are too often rationalizations that mask real harms. He’d be glad for you to join him at the barricades.
His new book, What’s Yours Is Mine: Against the Sharing Economy, explains that he’s motivated by “a sense of betrayal: that what started as an appeal to community, person-to-person connections, sustainability, and sharing, has become the playground of billionaires.” Good people who wrongly see the Internet as inherently egalitarian, he writes, have “unwittingly aided and abetted the accumulation of private fortune” by giving these new apps an unearned patina of public-spiritedness.
Even the term “Sharing Economy” is itself a concession to the sector’s leading companies, whose executives eagerly blur the line between community benefit and private gain. (Slee keeps the phrase because of its popularity; I prefer to the more neutral if less common phrase “Gig Economy.”) Slee charts this rhetoric in detail, never more strikingly than when he quotes Airbnb executive Doug Atkin’s zealous speech in support of Peers, a political group claiming to represent Gig Economy workers (but funded, largely, by the companies that pay those workers). Atkin calls for a “movement for the sharing economy” made of “huge numbers of people, with a shared identity, mobilized to take action . . . to grow the peer sharing economy, and to fight for their collective interests against unfair and unreasonable obstacles.”
Slee, having none of this, offers a tart retort:
The Sharing Economy is a movement: it is a movement for deregulation. Major financial institutions and influential venture capital funds are seizing an opportunity to challenge rules made by democratic city governments around the world, and to reshape cities in their own interests. It’s not about building an alternative to a corporate-driven market economy, it’s about extending the deregulated free market into new areas of our lives.
Progressive readers may share in Slee’s sense of righteous indignation, but his message is really directed to the rest of the world — people using these apps to get groceries or make a trip to the airport, without much thought to ideology. He points out several effects that are, at the least, unlovely:
Ride sharing may challenge investments in core public infrastructure. Uber, where it can, wantonly disregards city licensing rules, such as a requirement for handicapped accessibility. Its services threaten to undermine investments in more egalitarian (and badly needed) public transit systems whose consistent pricing and scheduling allow those with low or moderate incomes to get relatively reliably to work, school or a doctor’s appointment at a price they can afford. Surge pricing that’s a modest inconvenience for the young urban professional has starker consequences for someone trying to get to a low-wage hourly job. What is an upgrade for some can—by reducing shared support for public systems— become a new burden for others.
Airbnb’s platform converts some residential beds into short-term lodging, driving up the cost of housing for people who live in destination cities. For example, in New York, it’s generally illegal to rent out a whole apartment (as opposed to a spare room) in a multiple dwelling building for a term of less than 30 days. Based on his own survey of 150,000 Airbnb listings in New York City (gathered from the company’s web site), Slee concludes that “it seems likely that a majority of Airbnb listings, and over two-thirds of its income, came from Entire Home rentals that were breaking New York’s short-term rental law.” Some of the “hosts” for these stays are finding extra money by renting out their own homes (perhaps while staying with a friend). But many of the bookings, and a substantial part of the revenue, that Airbnb collects in New York come from apartments that are perpetually available to guests, no longer in use as housing stock. You don’t have to be a progressive to see a big problem here: Nicole Gelinas, a Senior Fellow at the conservative-leaning Manhattan Institute, offered a crisp critique in the New York Times:
[W]hen you have a limited supply of apartments, and unlimited demand for those apartments, turning some apartments into hotels makes the remaining ones even more expensive. Sure, the city should build more apartments. But absent effective law enforcement, there’s no guarantee that Airbnb users won’t turn those into hotel rooms, too. . . . [Beyond that,] New Yorkers and residents of other cities have the right to live in buildings with neighbors, not Dutch tourists with wheelie bags.
On the positive side, Airbnb — under pressure from regulators — is increasingly collecting hotel taxes in places where it operates — a step that allows cities to recoup the revenue they would otherwise lose in the shift away from hotels. It’s a powerful illustration of how platforms’ active involvement can be necessary to make sure that rules are followed. Extracting an unenforced pledge of tax or licensing compliance from Gig Economy workers (who don’t have the same incentives as more established businesses do to meet these requirements) is a often a wink-and-nod recipe for rule-breaking.
Reputation systems give each consumer dramatic power over workers’ lives. Have you noticed the urgency with which restauranteurs and shop owners now respond to even unreasonable or marginally reasonable consumer complaints? The threat of a one-star Yelp review is powerful — and on Gig Economy platforms, analogous effects are even more severe, as someone with a low rating may be kicked off the platform entirely. Consumers, entrusted with this almost managerial power over workers’ fates, have little incentive beyond their own sense of decency to wield that power responsibly.
As Slee puts it, such systems “provide a disciplinary mechanism that keeps service providers smiling and efficient by virtue of erratic and inconsistent ratings. For service providers, reputation systems are a form of surveillance, mainly enacted by the most entitled and demanding consumers on the platform.” Lyft’s original slogan was “your friend with a car.” But when anything less than a five star rating can get someone booted off the platform, we end up, as Cathy O’Neill has written, in an “inequitable faux-friendship” with someone we barely know.
Formerly non-market transactions are becoming commercial and, in the process, more mercenary. “If my neighbor and I help push your car out of a snowbank without payment then we’re just doing the right thing,” Slee writes, “but if my neighbor is being paid and I’m doing it for free, then I’m just being a mug.” Thanks to plummeting transaction costs, the logic of commerce is working into an ever-growing number of the facets of daily life.
Ultimately, I read Slee’s book as a call to conscious consumption. At their best, these new apps can give consumers affordable, convenient, and in some cases more interesting or rewarding experiences, all while providing flexible, incremental work to people who badly need it. But as consumers, we should not judge these apps solely in terms of the immediate experience they offer each of us. Instead, we need to recognize that some old rules are being newly and widely ignored, and some new ones may yet need to be written.
What will this look like in practice? When, and how, might it make sense for consumers in the Gig Economy to allow for factors other than their immediate interests to guide their buying choices? I don’t have answers ready, and the question is essentially personal: different consumers will reach different answers. There may be a role for intermediary organizations to “crowdsource” the process of conscious consumerism itself, just as organizations today help consumers figure out how and where to support sustainable agriculture, or to avoid products manufactured by child labor.
In any event, even recognizing that these questions are worth asking feels like a key first step.