Are they what they seem?

Exuberance reigns during times of innovation, evolving business models, and economic reinvention, creating new vectors of growth, but the resulting changes often come with unintended consequences and a misunderstanding of what drives new behaviors. Take, for instance, two of the more recent highly rated sectors of the economy—the Freelance, Flexible Work Economy (evidenced by companies such as oDesk and Elance, now owned by the same company) and the Sharing Economy (evidenced by companies such as Uber, Lyft, and AirBnB). These business models are often celebrated for their business economics and the freedom they afford workers. Yet, are they all their cracked up to be? Are there only positives, or are there downsides to these new economic and workplace models?

Several articles over the last few months bring a more critical view to these sectors, perhaps bursting the bubble and suggesting areas for improvement:

• In this article by Derek Thompson published in The Atlantic, he raises the question about the Uber Economy and whether or not these part-time, freelance workplaces are really liberating or if instead they contribute to further inequities.
• Follow this up with Rebecca Rosen’s article, “The Hidden Cost of a Flexible Job,” also in The Atlantic, where she points out that many who work flexible jobs end up putting in more hours—not because they need to, but out of an unconscious desire to demonstrate commitment to their work.
• Esther Kaplan’s article, “The Spy Who Fired Me: The human costs of workplace monitoring,” in Harper’s Magazine, brings light to the downsides of workplace monitoring. Where many advertise the benefits of efficiency and safety, Kaplan’s investigative reporting highlights the many costs, such as: injuries from employees working too quickly (think the UPS driver monitored by what’s called “telematics” trying to get all his deliveries into his allotted shift); retail workers not being paid for all the hours they work in order for managers to not go over payroll budgets; full-time retail jobs being replaced with part-time shifts to reduce costs, but result in unstable income for workers; freelancers forgoing income because the type of work they need to do can’t be tracked via computer (like on oDesk with its Work Diary system); and, on the consumer end, declining customer service because of these pressures. It’s a well-reported article that suggests a need for a new worker rights movement.
• Finally, there’s Giana Eckhardt and Fleura Bardh’s article, “The Sharing Economy Isn’t About Sharing at All,” in Harvard Business Review in which they argue that “sharing” isn’t the consumer purchase motivator, but rather more traditional decision factors such as convenience and price. Based on their research on Zipcar, Eckhardt and Bardh believe that consumers are using such sharing services for access—because they are convenient and cost effective, not because they have a desire to truly “share” or be connected with others or with the organization providing the service. The authors suggest that Uber is winning in the market over Lyft, because of its positioning focused more of these relevant factors as opposed to Lyft’s focus on social interaction. They even provide words of warning towards AirBnb’s new marketing approach emphasizing this social interaction.

While there have been countless shifts in our economy over the centuries, there’s also a period of adjustment—time to push back against the unintended consequences of progress. It seems we are at another such moment in history.

The Industry Forecast: Help the new economy work for the betterment of workers and business.

Sources:

Eckhardt, Giana M. and Bardhi, Fleura. “The Sharing Economy Isn’t About Sharing at All,” Harvard Business Review, January 28, 2015. https://hbr.org/2015/01/the-sharing-economy-isnt-about-sharing-at-all

Kaplan, Esther. “The Spy Who Fired Me: The human costs of workplace monitoring,” Harper’s Magazine, March 2015. http://harpers.org/archive/2015/03/the-spy-who-fired-me/

Rosen, Rebecca J. “The Hidden Cost of a Flexible Job,” The Atlantic, February 5, 2015. http://www.theatlantic.com/business/archive/2015/02/the-hidden-cost-of-a-flexible-job/385170/

Thompson, Derek. “The Uber Economy,” The Atlantic, January 23, 2015. http://www.theatlantic.com/business/archive/2015/01/is-uber-a-middle-class-job-creator-or-not/384763/