Will the Sharing Economy Give Us Greater Economic Mobility?

Last night the R Street Institute sponsored a fascinating policy panel here in Washington, D.C., “Boost or Barrier? Upward mobility in the on-demand economy.” Panelists discussed the impact of app-driven services like Uber, Airbnb, and TaskRabbit on employment and income trends, and what sort of public policy response, if any, that impact calls for.

R Street president Eli Lehrer opened with some observations from his recent National Affairs article, “The Future of Work.” He pushed back against conventional wisdom that the economic impact of app-based services and their employment model was effecting a sweeping transformation of the U.S. economy. As he explains:

 Since 1985, the percentage of the workforce working part time has ranged from a hair under 15.8 percent in the boom year of 2000 to 18.5 percent in 2010, as the country struggled to emerge from the Great Recession. From 2014 to 2015, as Uber and Airbnb racked up multibillion-dollar valuations, the percentage of people working part time fell from 17.8 percent to 16.5 percent. The percentage of part-time workers who would rather work full time is also decreasing as the economy improves. Most of the variation closely tracks the economic cycle: Full-time employment increases during economic booms, and part-time employment goes up during recessions. As of January 2016, the percentage of the workforce doing a job part time was 16.4 percent, almost exactly the average of the past 30 years. The percentage of workers working part time who want full-time work tracks the economic cycle as well and is also now near historical norms.

While he countered some of the hype about the current impact of sharing economy platforms, he suggested that the greater flexibility and range of employment options that they make possible offer great promise for low-skill, transitional, and disabled workers who would otherwise be unable to find employment opportunities of any kind. In other words, the sharing economy might not be revolutionizing employment yet, but it could and should.

Moderator Tamar Jacoby of Opportunity America started the panel discussion with a round of definitions, soliciting from the panelists their choices from a crowded field of competing terms. Do the companies we’re talking about constitute a “sharing economy,” an “app economy,” a “gig economy,” or something else entirely? Each speaker nominated their preferred term, but panelist Chris Koopman of the Mercatus Center summed up the discussion best when he suggested that the various terms each emphasize a different aspect of the phenomena, with each observer tending to gravitate toward the term that highlights their favorite (or for the naysayers, least favorite) aspect.

The biggest critic in the group turned out to be New America Foundation senior fellow Steven Hill, who worried that a trend toward more “on demand” employment means that fewer workers will have traditional employment benefits like health insurance and paid sick leave. He seemed less worried about the regulatory battles over particular app-based services than overall trends away from long-term, union-style employment in general.

Fiona Greig of the JPMorgan Chase Institute offered some of the most interesting research insights when she described the recent study she co-authored, “Paychecks, Paydays, and the Online Platform Economy: Big Data on Income Volatility.” Those finding divide participants in the “online platform economy” into two subsets – those who derived income from labor platforms, like Uber and Lyft, and those who derived income from capital platforms, like Airbnb. The labor participants, for example, generally used their earnings to supplement temporary dips and gaps in their regular income, while capital platform participants were adding, on average, 7% to their generally stable incomes.

The event generated a range of disagreements, but was cordial, and featured some frequently encountered elements of Washington, D.C. get-togethers. Steven Hill mentioned his new book on multiple occasions, Eli Lehrer (who I ran into in the Metro on the way to the event) referred a questioner to his photocopied article in the back of the room for a fuller answer, and Chris Koopman assured us that an unexpectedly apropos  conversation with his Uber driver on the way to the event had, in fact, taken place (I believe him).  Tamar Jacoby concluded, as many panel moderators have before her, that the event had posed more interesting questions that it had presented answers, but that was more than enough for a single evening.