What is it exactly about the rising gig economy that makes businesses, workers and consumers alike so willing to fork over cash for the chance to partake?
New estimates show that the U.S. could hold between 54 million and 68 million “independent workers” — including short-term contract workers, service providers and renters. Another survey found that 24 percent of Americans reported earning income from the “platform economy” in some way — either by selling something online (18 percent) or finding gig work online (8 percent).
The sharing economy is used by many not just as a supplementary source but, increasingly, as a primary source of income.
Despite (or perhaps directly due to) its popularity, the sharing economy at large is developing its fair share of issues. And not just in the sense that it’s disruptive to the status quo. When it comes to issues of competition and regulation, the sharing economy may still have a long way to go.
Issues of competition in the sharing economy arise, for example, when established businesses begin to capitalize on sharing platforms. Think hotels sharing rooms on Airbnb to increase traffic or professional taxi services finding fares on Uber. When this occurs, it essentially pulls the sharing economy back toward a more traditional model.
This could create a barrier to entry for new or long-time users, as well as any sharing economy upstart businesses attempting to generate income — which sort of defeats the purpose. They wouldn’t be able to offer as many options as an established business.
It’s a serious issue that could arise, as many workers in the gig economy can’t find better jobs or pay elsewhere. The consequence of established brand infiltration could cut financial lifelines for millions.
There are also unanswered questions regarding regulation in the sharing economy — think the U.K.’s recent Uber ruling. Is there a way regulators can advocate for workers’ health and safety or consumer protection without negatively affecting entry into the sharing economy and business innovation?
Does the sharing economy’s central model require a different sort of government regulation than a traditional business? Likewise, does an as-of-now unregulated sharing economy infringe upon the continued success of a heavily regulated traditional economy?
It seems that regulations should be the same for all suppliers competing in a particular sector, regardless of whether a supplier is part of the sharing economy or a traditional supplier. This may slow the as-of-now rapid proliferation of sharing economy businesses, who have stood relatively unchallenged. But the benefits of regulation for competition and worker and consumer protection might just outweigh unchecked, explosive growth in the end.
These aspects of the sharing economy are undoubtedly problematic. And we’ve yet to see where this will go. Balancing the wide array of competing and conflicting interests will take ongoing effort and continuous reinvention on all sides.
But the short-term cash benefits the sharing economy offers to businesses and workers will continue to draw people in — despite some wrinkles along the way, a whole host of open questions and unsolved problems. Its consumer popularity is unquestionable. The sharing economy is booming and will continue to do so in the foreseeable future.
For more insight into the latest in the sharing economy, take a look at the PYMNTS.com Gig Economy Index, a Hyperwallet collaboration.