If there’s one thing we’ve learned from the rise of the Internet, it’s that it can quickly make the big world feel a lot smaller. With a few clicks, we can order handmade products from another country on Etsy or simply hail a ride to the other side of town using a platform like Uber or Lyft. If you’re traveling to a new city for business or just to spend a weekend away from home, Airbnb has quickly become an affordable and more personal option compared to a standard hotel room.
As more options become available, it is largely believed that the burgeoning sharing economy will continue to impact how we do business and who we are able to do business with. A homeowner with a spare room can make money off their idle space by renting it out on Airbnb for the weekend. Someone with specialized design skills may share their expertise on Fiverr, while a handyman with some spare time can make a few extra dollars assembling or moving furniture.
At its core, the sharing economy is built on the idea of monetizing idle space, time, or items. Empty office space can be rented out to an upstart business. Cars spend a majority of their usable life parked, so why not spend a couple hours on the weekend driving for a ride-sharing company? In most cases, the additional money helps sellers boost their bottom line, build a savings account, or pay down student debt. Very few people are able to parlay the sharing economy into a full-time job, but the small monthly benefits do eventually add up.
Dollars and Sense
Recent data compiled by Earnest suggests there is money to be made by participating in the sharing economy, even on a small scale. For example, those choosing to rent their spare rooms or empty homes on Airbnb are likely to earn an average of $924 each month. The median amount earned is $440 and is much smaller than average, but still a sizable amount compared to allowing the space to sit unused.
The same can be said for ride-sharing platforms like Lyft and Uber. For decades, taxicab companies have acted like local monopolies in cities like New York City and Chicago, but the rise of the car sharing industry has left those companies, and their drivers, scrambling to find ways to make ends meet. In the meantime, drivers for car service platforms often offer similar services as a taxi for a fraction of what a regular yellow cab would cost. In addition, drivers can set their own hours, choose who they want to pick up, and can even rate the people who use their service. For the most part, these drivers earn an average of roughly $370 monthly, though the median amount earned is much lower for both services.
In a majority of cases, sharing economy workers earn less than $500 each month. True to the “gig economy” or “on-demand economy” names, most jobs worked by sharing economy employees are done as needed. While some people may be able to make a sufficient and livable wage by driving for Uber, renting out their home, or providing consulting to services to businesses, for the most part, this money is meant to supplement a regular income. Though there are outliers in the data (for example, Earnest’s data showed several Airbnb hosts who made more than $10,000 a month using the platform), it’s rare for people to break the $500 plateau.
With that said, the sharing economy still has a lot of growing up to do, and with that growth will come more trust and, inevitably, more dollars. As each of these disruptors develops into more established brand names, traditional businesses will have to adapt to match the services they provide. We’re already beginning to see the winds of change impact the travel and hotel industries. Large-scale hoteliers are beginning to offer updated amenities to attract younger travelers and tech-savvy consumers, revamping rewards programs, and even branching out into bed and breakfast-type accommodations.
Getting a Piece of the Pie
It’s safe to say the sharing economy is here for the long run and is poised to experience explosive growth over the next decade. According to estimates from the Brookings Institute, these companies are projected to grow from roughly $14 billion a few years ago to about $335 billion in 2025, largely based off of the quick rise of services like Airbnb and Uber.
Part of the allure of these platforms is their ease of use and on-demand service structure, but another piece of the puzzle is how these apps and companies allow users to have control over their own workflow, as opposed to a standard job or an hourly part-time side hustle.
While many supporters of the sharing economy will point to the additional side income someone can make from sharing their home, car, or knowledge with a stranger, others will point to the high level of trust someone has to have in order to actually perform those tasks. Allowing someone access to your house for the week through Airbnb is a tough pill to swallow for some people and there is always the risk of coming back to a mess or damages. But to help mitigate those concerns, companies like Airbnb and Lyft provide liability insurance to protect the owner from any undue damages that may result. For users of these platforms, trust goes both ways. Service providers are often paid, and rated, based on their performance. In that respect, the work providers do tends to be high-quality for the benefit of the user, while also allowing providers to maintain high user ratings and earn the most for the jobs they decide to take on.
For some platforms, service providers’ employee classification and benefits have come into question. In the case of ride-sharing apps like Uber, it’s debated whether drivers are actually qualified as independent contractors or employees of Uber. If qualified as employees, drivers would be eligible for vacation time, overtime pay and other benefits. The courts have gone back and forth on the issue and Uber has always contended that it’s simply a platform for driver’s to essentially work for themselves, but there are concerns the company actually does assert some type of employer control over the drivers who sign up. In a recent decision in Europe, Uber was determined to be a taxi service as opposed to the technology platform it claims to be. Similar battles have been taking place in the United States as well, and the issue is far from resolved at this point.
The Community At Large
It’s no surprise that people are taking notice of the sharing economy’s benefits. In many cases, the services provided is high-quality and performed at a lower cost than traditional options. As more disruptor companies join the market and more options become available, it will continue allowing people to make money sharing their skills and give users of the platforms more affordable options to get work done.
Whether it’s a small business owner looking for a little help with copywriting and web design or someone selling their handmade goods online, there’s more opportunities to make use of their skills and time. There are still plenty of kinks that still need to be worked out and the traditional industries still have plenty of time to revamp their offerings to compete. What we do know is that the end user stands to benefit either way, and will likely be treated to better experiences and added value as companies, and users, compete for their time and dollars.
