Friday, October 30, 2020
Oct. 30, 2020

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Strictly Business: Sharing economy has pros and cons

By , Columbian Business Editor

My wife and I spent last weekend in a fabulous country home in Parkdale, Ore., in the upper reaches of the fruit-filled Hood River Valley. We woke to spectacular views of Mount Hood’s north slope and signed off our two evenings under a bright moon that lit the silent valley and the wooded hillside that defined its boundary. We were in another world but less than two hours from home.

I’d found our weekend abode on airbnb, the online lodging rental marketplace that advertises 1.5 million listings worldwide, most of them in private homes. We’d stayed in other airbnb rentals in Amsterdam and Philadelphia and near the Oregon Coast. In every case, we had good experiences at far lower costs than a hotel room rental.

Such is the expanded universe offered through the new world of what’s commonly called the sharing economy. That label encompasses such person-to-person financial arrangements as the ride-sharing services Uber and Lyft, the home chore networking service TaskRabbit and the online crafts marketplace Etsy. The options are proliferating rapidly. Uber is launching Uber Eats, a lunch delivery service, in several Seattle neighborhoods. And  rolled out Amazon Flex, which uses independent drivers for package deliveries in some areas.

Losers and winners

Count me as a fan of many of the new services emerging in the sharing economy. They expand choice for consumers of hotel rooms, transportation, food and services. They create new possibilities for people young and old to pick up extra income by renting out rooms or offering rides.

But like any transformational change in our economy, the sharing economy creates losers as well as winners. Lingering disputes between airbnb and local governments over taxes are slowly being sorted out, and last week the company agreed to pay taxes in Washington state on behalf of those who rent their homes through the service. With Uber, the company’s aggressive expansion has put it head-to-head with regulated taxi services worldwide. Its defiance of local regulations has sparked violent protests by taxi drivers across Europe and legal pushback in France. Two Uber executives face the possibility of two-year jail terms in France for “deceptive commercial practices.”

But the list of losers could also include those who are fueling the growth of this huge new segment of the economy. Uber claims its drivers can make more than taxi drivers, but it offers no job security and leaves it to the contractor drivers to pay  for gas and vehicle maintenance as well as a commission to the company said to be 20 percent.

Uber faces a pending federal class-action lawsuit in its home state of California filed by thousands of Uber drivers who want to be declared employees rather than contractors. Many analysts say a ruling favoring the drivers could undermine the foundations of the sharing economy.

All workers, whether contractors or employees, deserve protection against unscrupulous practices. Uber, skirting near or over the edge of legality in some of its practices, is a worthy target for legal efforts to strike a balance between worker protections and nourishing the exciting entrepreneurial zeal of the sharing economy.