For hundreds of years, our economy has primarily been an ownership economy: individuals buy products for themselves, use them, and then sell, throw away, or donate their items when they are done. This type of consumption has been a cornerstone of capitalism, and contributes to the billions that consumers spend each year on things like cars, clothing, and household goods.
However, a new economic model is emerging, and it has the potential to have a significant impact on our economy, as well as how we work.
The Sharing Economy Defined
Imagine that it’s time for your 20th high school reunion. You want to impress our former classmates, but your 10-year-old minivan and simple, but functional, handbag isn’t quite going to achieve the image you are hoping for. So, you log on to Rent the Runway and score a killer designer dress and bag for the weekend at a fraction of the cost of buying it, and then check out the local car sharing service to borrow a luxury car to drive to the party. All told, you spend a few hundred dollars, but you impress your former classmates, all without tanking your family budget.
Although this might be an extreme case, it captures the spirit of the sharing economy, which most financial experts define as an economic model based on peer-to-peer based sharing of goods and services via an online platform. In other words, it’s the model in which one individual acquires or offers a resource, such as a car or a vacation home, and then rents it out to other individuals. The sharing economy has taken hold in everything from fashion (with sites like Rent the Runway and Poshmark, which allow users to rent or sell clothing and accessories); travel (Airbnb); transportation (with ridesharing services like Uber or car sharing services like RideCell, where individuals rent their unused vehicles to members); and even lending, with sites like Kickstarter offering individuals the opportunity to invest in startup businesses. In fact, the sharing economy itself is a boon to startups: In 2014, there were more than 200 startups with a combined $2 billion in funding dedicated to developing shareconomy services.
Proponents of the sharing economy note that it’s a way to make money from otherwise unused or underused assets. For example, the Brookings Institute revealed that most cars go unused for about 95 percent of their lifetime — and by sharing just one vehicle, it’s possible to take between nine and 13 others off the road. Sharing also helps consumers save money; renting a room via Airbnb can cost up to 60 percent less, and sharing a car on the rare occasions that you need one eliminates thousands of dollars in expenses.
There are some who aren’t fans of this model, though. Among the criticisms of the sharing economy include concerns about regulatory compliance, the security of personal information, and whether providing items for rent creates an unfair competitive advantage. Despite these concerns, though, the sharing economy is expanding — into the workplace.
The Sharing Economy at Work
The idea of job sharing isn’t really anything new, as companies have employed two individuals to share one role for decades now. However, with the rise of the “gig economy” and freelancing platforms has made it possible for individuals to pick and choose the work they do — and for companies to hire people for specific projects, only when they need them.
What makes the sharing economy different, however, is that it isn’t run like a traditional freelancing relationship. In the past, freelancing often meant pounding the pavement in search of opportunities. With the new sharing platforms, data and algorithms match workers to companies looking for them. The platforms themselves aren’t providing the services, but rather acting as a facilitator between parties. This typically means that the transactions are safer and easier for everyone. It also means that it’s easier than ever before to start a side hustle, or even become a full-time business owner.
Chances are, the sharing economy is never going to completely take the place of the traditional employer-employee relationship entirely, but it’s possible that at some point a majority of work will be done by freelancers. Businesses will share employees much like city-dwellers share cars, completely changing the way everyone works and does business.
