
How Much Are People Making from the Sharing Economy? - katiey
https://priceonomics.com/how-much-are-people-making-from-the-sharing/
======
KaiserPro
In the UK at least, the "sharing" economy is basically a way of paying
employees less.

There are two types of employment, contracted employees (that is employees
that are directly employed by a company) and "self employed" (where the
employee creates a single person company, which the employer then contracts)

the reason why "self employed" is popular amongst the gig employers is not
because its "flexible" its because its cheap.

There is a side effect that employees have less rights(no holiday pay,
maternity cover, sick pay) However the simple fact is that employers pay less
national insurance (social care and health tax, effectively)

The lack of holiday means 10% less wage, no sick pay means 100% efficiency,
which important for cycle courier companies like uber eats, deliveroo.

Basically the sharing economy in the UK (with the exception of airBnB) is a
way of undermining works rights to save money.

~~~
bko
Employers can't be forced to hire workers, so I don't think "worker's rights"
is the right term. What restrictions to employment such as holidays, sick pay
and maternity care actually mean is that workers are unable to negotiate on
those grounds. For instance, if a single female in her early 30s is
interviewing for a position, she is unable to tell waive her right to
maternity care by telling her employer that she does not intend to have
children. If she were to have children, her employer would not be able to
legally deny her maternity benefits, making her promise unenforceable.
Employers can get around paying some benefits by preferring to hire men, who
are statistically less likely to take the full extent of their mandated
paternity benefits.

So I think in some sense "worker's rights" is more a restriction on worker's
right to negotiate. It's fine if people think that a regulatory body has a
role in restricting the types of things that can be negotiated, but let's not
talk about it as "worker's rights"

~~~
sattoshi
Okay what should we call fundemental and federally enforced privileges granted
to individuals by the state that cannot be disregarded by anybody?

Ah.. rights.. that's basically what they are.

Nobody is forced to listen to you, yet you cannot waive you rights to free
press or whatever.

------
WheelsAtLarge
I think people are missing the point of the article. I summarize that the
sharing economy is not a good way to make a living. In search for the lowest
price we have people that can't make enough to get an apartment and raise a
family. Raising a family has become a luxury for some people. Try to raise 2
kids and you fall into poverty status.

The scary part is that it's possible to see a future where a big chunk of the
economy is powered by gigs. The uberizing of the economy is just starting.

People say that all these workers will eventually get better jobs but that's
not the case. We are hundreds of years into the industrial revolution yet
low/unskilled work is still something society needs. For whatever reason, some
people just can't get enough skills to move up the food chain.

I wish the new tech entrepreneurs would find a better way to fix the low skill
problem rather than find a way to reduce services/costs to the bone.

~~~
robotresearcher
> I wish the new tech entrepreneurs would find a better way to fix the low
> skill problem rather than find a way to reduce services/costs to the bone.

Just a few years ago there was a big push in this direction. MOOCs reduced the
price of access to college level material close to zero [1].

There is more to it than access, of course.

[1] edit: following others, notably MIT, who have been releasing great stuff
for free for a long time, and the Open University who have had great distance
ed with online content for 48 years and counting. ('Online' started out as
radio and TV shows). MOOCs were a fresh push, not a wholly original idea.

~~~
cbhl
It turns out that course material is only one of the things you learn in
college. And it's not the one that is necessarily a predictor of being
gainfully employed.

~~~
WheelsAtLarge
Very true, some of the classes have very little value. I can go to any
auditorium based class and sit in the class and the professor would likely not
know. The TA's might but mostly I can be there and learn. There are no
security guards. What people pay for is that final grade and the degree you
are working to get. You can even hang out on campus. When I was getting my
degree there were always former students that would hang out.That was there
base of operation.

Strange how it works.

------
jvm
I usually enjoy priceonomics posts, but this analysis is disappointing. The
sharing economy is a way of deploying labor and capital. So the operating
question is, is it a good way of doing so on net?

In some sense the market is spoken in that many people are willing to sell in
these marketplaces. However, an argument could be made that services like Uber
actually exploit the hidden costs associated with selling through the service.
How many Uber drivers have done a fully netted anlaysis of their cost basis
when driving on the service, including capital cost and depreciation of the
vehicle?

Rather than attempting to dig into the financial viability of these services
for sellers, this article focuses on the most superficial metric: monthly
revenue. $500/mo on average would be consistent with $50/hour fully netted
earnings, which would be amazing, or even a negative income if true costs tend
to exceed earnings.

~~~
bpodgursky
I think it's pretty patronizing to suggest that people spending 40+ hours a
week driving for Uber / Lyft are too incompetent to calculate out their own
finances.

I've talked to a lot of drivers who understand in-depth cost per mile they are
able to deduct from depreciation for tax purposes, the impact of buying a new
car on Uber black, the cost savings per mile of buying a Prius, etc etc.

~~~
ceejayoz
> I think it's pretty patronizing to suggest that people spending 40+ hours a
> week driving for Uber / Lyft are too incompetent to calculate out their own
> finances.

Your average _person_ isn't great at calculating out their own finances. I
don't see any reason to assert Uber/Lyft drivers are better than average in
this regard.

I'd suspect this is one of the reasons 96% of Uber drivers don't last a year.
[http://www.cnbc.com/2017/04/20/only-4-percent-of-uber-
driver...](http://www.cnbc.com/2017/04/20/only-4-percent-of-uber-drivers-
remain-after-a-year-says-report.html)

~~~
rch
You could use that same number to support the proposition that they _are_
accurately calculating their returns.

~~~
yorwba
Yes, but only in hindsight, when they realize they have been losing money or
didn't make as much as they expected.

------
aantix
For larger income Lyft/Uber drivers (probably those in SF/NYC), is it common
to setup an S-Corp? Or you could setup an LLC with S-Corp accounting..

With such a low average earning, they could basically pay FICA on the first
20%, but take the rest as a dividend distribution and avoid those taxes. Would
save them about an extra 18(?)% on taxes for the cost of a CPA & S-Corp filing
(probably about $1800/yr).

EDIT: Looks like it would be fairly easy..

1) Create a corporation through LegalZoom (~ $400)
[https://www.legalzoom.com/business/business-formation/inc-
ov...](https://www.legalzoom.com/business/business-formation/inc-
overview.html)

2) It'll take a couple of weeks, but they'll receive an EIN (employer
identification number). Submit the "EIN" to Lyft or Uber.
[http://www.ridesharingdriver.com/driving-with-an-llc-or-
corp...](http://www.ridesharingdriver.com/driving-with-an-llc-or-corp-how-to-
send-your-ein-to-uber-or-lyft/)

~~~
myroon5
Can dividends be issued at-will? Or are they restricted to being quarterly /
pre-planned / etc.?

~~~
aantix
Since you'd be the only owner of the S-Corp, according to my CPA, they can be
issued at-will (you don't need to hold a meeting with yourself).

I just transfer from the business account to the personal account and mark the
transaction as a "DIVIDEND". My CPA takes care of the rest.

------
neilwilson
Anybody who studied how British dock workers were hired in the late 19th
Century could have told you this.

Those who fail to study history are doomed to repeat it.

Never believe the hype about extreme individualism. You will always certainly
make far more money if you team up with others and make your case politically.

~~~
_yosefk
You mean if everyone teams up and makes their case politically, we'll all make
far more, in real terms? So teaming up increases overall productivity? (Not
impossible but would need more evidence than teaming up increasing bargaining
power, though of course the latter needs evidence, too as a junior unionized
worker doesn't have bargaining power against senior workers whom union
arrangements incidentally tend to benefit.)

~~~
MichaelMoser123
productivity changes are only part of the picture, for example real wages for
most people didn't change much over the last decades, despite fabulous
increases in productivity.

[http://www.pewresearch.org/fact-tank/2014/10/09/for-most-
wor...](http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-
wages-have-barely-budged-for-decades/)

(Still don't know how they measure real wages and purchasing power, thirty
years ago you couldn't get a smartphone )

------
Hnrobert42
A good example of why the rich get richer. It would be interesting to see this
on a per hour worked basis. Of course, the Airbnb host (maybe) had to work to
acquire the capital to purchase the residence, and the drivers to purchase the
cars, but it's still interesting to see how wealth begets wealth.

All that said, I am not saying whether such a system is good or bad, just that
it's interesting to see it here.

------
thomzi12
Without earnings per hour metric, it's hard to make much of this post.

~~~
byoung2
Also, the upfront or ongoing costs of using some of these platforms, like
AirBnB or Uber where you might have a mortgage or car payment that far exceeds
your earnings. A $1000 a month mortgage to make $924 a month isn't profitable.

~~~
jclulow
At least the partially covered mortgage on a domicile might lead to increased
equity in an asset with some long term retained, or even increasing, value.
The car financing case seems much more dubious.

~~~
csmark
Partially covered mortgage means the bank will eventually foreclose. They take
the house and, zero out the equity the owner may have, and take any asset
value increase and pocket it all.

~~~
jclulow
I meant partially covered by the rent you are able to charge. When I moved
away from the house I had bought, I rented it out for a number of years. The
rent I was able to charge covered about 90% of the payments, and I put the
rest in from my salary. I sold the house a few years later after it had
appreciated somewhat, and it was overall a good deal.

I could imagine a similar situation with Airbnb instead of traditional lease
arrangements, assuming the numbers line up. My point was more that I can't see
it working out that way with an asset like a car.

------
Finnucane
If you're charging money, that's not really sharing.

It's not really surprising that airbnb hosts make more money, since some
people are buying houses just to rent out the rooms like a flophouse. Can you
do that with Uber (one user manage a fleet of cars? It would seem not worth
the effort.)

~~~
mrisoli
I'm pretty sure it's possible and being done(especially in developing
countries).

If I'm not mistaken Uber itself was cutting deals with dealerships in some
markets to help drivers finance cars loans and insurance, so Uber itself would
be managing the fleet of cars in some way.

------
jaclaz
I cannot understand the putting all together in a basket.

AirBnB revenue is essentially "return on investment" and very little "labour"
(you have paid the house/apartment/room you are offering, the maintenance,
cleaning and laundry work is connected to just a trifling part of the income).

Uber, Lyft, and similar is half and half (you have to buy a car AND put hours
of work in the service)

Fiver and similar is ONLY work.

~~~
mrisoli
I think they observed the wrong people.

AirBnB's supply comes from property owners, not hospitality employees(i.e.
hotel workers).

Uber, Lyft, Postmates and similar supply comes from driver and courier time
spent on the platform, not cars, cars/bikes are suppliers tools, unlike Airbnb
renters, the suppliers of cars are not necessarily the Uber drivers here, the
comparison would be fairer if they compared fleet managers revenue to Airbnb
property owners'.

------
Simon_says
Their data comes from loan applications. Talk about selection bias ...

~~~
sidlls
Not that I disagree with the more general point that a loan provider's data
isn't necessarily the best, but in what way do you suggest there is selection
bias here?

~~~
Simon_says
My thinking is that the population of people who are applying for loans in any
given month is going to be drastically different than the population who are
not applying for loans in exactly the metric, personal finances, that
Pricenomics wants to look at. Kudos on Pricenomics for being so upfront about
their data, but I wouldn't have titled it "How Much Are People Making from the
Sharing Economy?", because it's not. It's more like "How Much Are Loan
Applicants Making from the Sharing Economy?"

~~~
sidlls
Different in what way? Just for example, during the housing bubble of the
2000s, people in any given slice of "personal finances" one cared to measure
were applying for loans (purchases and lines of credit).

I suspect the people who are in the gig economy are more likely to be in a
class that has lower education, income, and assets. In that sense I'm not sure
"personal finances" as a selection bias would apply (that is, it seems likely
as a rule gig economy loan applicants might resemble gig economy workers to a
high degree).

~~~
nostrademons
There's a strong inverse correlation between how much you make and how much
you borrow. People who are making enough to cover their daily expenses don't
need to borrow, by definition, and so they tend to be underrepresented in loan
origination statistics. Similarly, people who are making very little money
tend to need cash, which makes them more likely to seek out loans, because the
very product a loan is selling is cash (today, in exchange for more cash
tomorrow).

While its true that during the housing bubble, people who took out loans
included people from all different slices of the income distribution, the
borrowers were disproportionately drawn from poorer income segments. That's
why they called it a "subprime" crisis; the percentage of the mortgage market
lent to people who wouldn't otherwise qualify for prime loans was much higher
than normal, and predictably, these loans ended up defaulting at a higher
rate.

------
SirLJ
The sharing economy is evil. The only making money are the big corporations,
the little guy is slaving for bellow minimum wage and taking all the risk on
top of that...

~~~
jsemrau
Well good and evil is a pretty binary description. You will only have a market
if seller (the driver) and buyer (the service operator) are meeting. If the
driver do not want to operate under those conditions there is no "invisible
hand" forcing them to do so. Of course in lack of alternatives it is a small
but easily accessible form of immediate income.

~~~
SirLJ
The alternative is to get educated and get thinking about starting a real
business instead of this part time addictive pitty of income... it's like
saying to the addict it is his fault he is spending all his money on drugs...

~~~
vinaybn
Is the addict not even partly at fault for spending all his money on drugs??!

~~~
eecc
Let's not get started with the moralistic stance will we? Poverty is most
often due to - especially in societies with precious little social safety nets
- accidents of life, hereditarity. Very few fall deservedly, most are thrown
or kept down

