The Rise of the Sharing Economy

The Rise of the Sharing Economy

Brian J. Ferry, Esq.
Ferry Joseph, P.A.

With just a few clicks on a smartphone, we are now able to summon a driver to the front door, find our loveable pup a pet-sitter, and secure housing for our next sojourn out of town, without having to so much as pause the Netflix show in the meantime.  Whereas this may have once sounded like a far-fetched scenario straight out of The Jetsons, it is now a crucial part of many people’s daily lives.  Welcome to the brave new world of the sharing economy in 2016.

Most economists define a sharing economy as a system that allows for its members to rent or borrow services or goods as opposed to owning them.  Unlike traditional economic systems where the individuals purchase items to largely claim as their own, the sharing economy basically says, “what’s mine is yours – at a price…for a specified length of time.”  At a glance, this appears to be a sound economic principle that most people can employ without issue.  Why, for instance, own a car and use it just for yourself when you can drive enough people around in your free time so that the car theoretically pays for itself?

Where the faces of the sharing economy run into the most difficulty is in both accommodating and adjusting to the old guard of taxi services and hotels.  Of particular concern amidst this conflict is government regulation and whom it directly affects.  Because companies like Uber and AirBNB act as peer-to-peer companies, their service providers are not viewed as formal employees in the same way a taxi driver or hotel concierge is in the eyes of the law.  More succinctly, sharing economy players are free to operate within different parameters than their more traditional competitors.  Not only does the old guard mostly view this as unfair, but they also argue that it places sharing economy participants’ at greater risk for their own safety.  Whereas most employees in the regulated sector have to undergo strenuous background and safety checks, members of the new system may dictate their own means of accomplishing the same goal.

Legislators, largely under pressure from unions and various consumer groups, are attempting to resolve this discrepancy as a means to level the playing field while keeping citizens safe.  When and where they’ll arrive at such a compromise is still a matter up for debate.  Regardless though, the future and the ways the sharing economy shapes it continues to march forward.