As the source of pilot programs and experimentation, cities are well positioned to leverage new technology and innovative business models to ensure that the sharing economy is truly inclusive.
This is a guest post by Serena Lei. The post originally appeared here.
The sharing economy holds promise for poor and disadvantaged communities — offering jobs with flexible hours, opportunities to earn extra cash, and access to bikes and cars without having to own them. But according to Solomon Greene and John McGinty of the Urban Institute, it has not yet lived up to that potential.
A recent Pew Research Center survey found that 41 percent of Americans with an annual household income of $100,000 or more have used four or more sharing-economy or on-demand services, while only 13 percent of households earning less than $30,000 a year have done the same.
Low-income communities are much less likely to use car- and bike-sharing programs. Sharing-economy workers operate, for the most part, without labor protections or employee benefits. The social aspect of sharing platforms may inadvertently enable racial discrimination. And home-sharing services can drive up housing costs, making it harder for low-income residents to find affordable places to live.
Cities can help tip the scales. “Many regulations that affect the sharing economy are determined locally,” McGinty said. “Cities are the source of pilots and experimentation. They are well positioned to leverage new technology and innovative business models to ensure that the sharing economy works for all residents.”
But many local leaders have instead been doubling down on outdated regulations and penalties, Greene and McGinty argue in “What if Cities Could Create a Truly Inclusive Local Sharing Economy?” Here are five things they recommend cities do to make the sharing economy work for everyone:
- Convene a roundtable to map out the local sharing-economy landscape and identify gaps and barriers to participation. Working together, city leaders, community groups, businesses, researchers, and sharing-economy firms could use this information to create a roadmap forward. For example, cities with high unemployment could focus on using sharing platforms to provide work supports and create paths to quality jobs. Highly segregated cities could use sharing services to support small businesses in economically distressed areas.
- Protect sharing-economy workers, who don’t get the same protections as full-time employees. Sharing-economy jobs offer greater flexibility and independence but shift economic risks on to workers. To help, cities could provide flexible and portable benefits, allow contract workers to unionize, and reclassify contractors as employees subject to minimum wages and basic worker protections. The Seattle City Council has approved a bill allowing car-sharing drivers to unionize. And Uber recently announced that New York drivers could form an association — though not a full-fledged union — that would provide some labor protections.
- Help sharing-economy entrepreneurs by providing seed capital and training, creating or subsidizing shared workspaces, and reducing licensing and permitting barriers. Seoul, Korea, through the mayor’s Sharing City initiative, has helped seed a clothes-sharing program for job seekers and a home-sharing platform.
- Require sharing-economy firms to expand their services into low-income neighborhoods or reduce prices for low-income consumers in exchange for government contracts or regulatory approvals. Some cities are already experimenting with ways to do this. Los Angeles introduced a pilot program to put 100 car-share vehicles in low-income neighborhoods. And in Minneapolis, the Nice Ride bike-share program offers subsidized memberships and conducts outreach in low-income communities.
- Support peer-to-peer lending to help people build credit and access more affordable loans, a barrier that may be keeping low-income households from becoming likely consumers of the sharing economy. Oakland and Richmond, California, offer municipal IDs that are also prepaid debit cards, which may help people without bank accounts.
Other barriers to participation — such as lack of Internet and smartphone access — still remain, but these actions could help cities harness the promise of the sharing economy and make it truly inclusive of all residents.
This post is part of an Urban Institute series funded by the Rockefeller Foundation that explores how city leaders can promote local economies that are inclusive of all their residents. The framing brief, “Open Cities: From Economic Exclusion to Urban Inclusion,” defines economic exclusion and discusses city-level trends across high-income countries. The four “What if?” essays suggest bold and innovative solutions, and they are intended to spark debate on how cities might harness new technologies, rising momentum, and new approaches to governance in order to overcome economic exclusion.
About the Author: Serena Lei is the senior writer and editor at the Urban Institute.