People (em)power

The sharing economy has upended the traditional rules of business, but retained some of its worst qualities. An employee-centric approach is the need of the hour.

- ALEXANDREA J RAVENELLE, AUTHOR, HUSTLE AND GIG

The sharing economy markets entrepreneurship to the masses, telling workers that a flexible schedule, limitless paycheck, and the opportunity to be their own boss is easily accessible to any worker with a smartphone. For entrepreneurs and employers, hiring workers, without assuming any of the liabilities associated with employees, appears to offer necessary flexibility in terms of scheduling, staffing, and costs. But this new economic movement— while it seems like an easy solution—causes numerous challenges for start-ups and established companies alike.

The sharing economy is a catch-all term for peer-to-peer services that connect people for sharing, renting, or selling services, often on-demand. The concept includes such internationally-known platforms as Uber, Airbnb, and eBay, as also smaller services such as TaskRabbit, a personal assistant site; Rent the Runway and Stage3, clothing rental services; and even local food swaps and childcare cooperatives. The sharing economy is often used interchangeably with on-demand or gig economy, where the focus is on workers making money as opposed to simply sharing items or bartering services.

While the sharing economy includes a variety of platforms, most of the focus on potential profits and large IPOs often ignores the shortcomings of this employment model. For many sharing economy services, such as Uber and Airbnb, workers are classified as independent contractors. Instead of receiving a set salary or wage like an employee, workers are paid in a piecemeal fashion for each ride or task or stay they accomplish. Independent contractors do not receive employee state insurance or pensions, workman’s compensation, maternity leave benefits, paid leaves, or holidays. Classifying workers as independent contractors can generate large cost savings for companies, but generates considerable costs and risks for workers.