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Oct. 13, 2017

Sharing economy creates new opportunities

Evidence confirms that the sharing economy is a net positive for participating "microenterpreneurs."

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By Michael Beckerman

Internet Association's membership includes more than 40 of the world's most innovative companies, including sharing economy platforms such as Airbnb, Doordash, Handy, HomeAway, Lyft, Thumbtack, Turo, Uber and Upwork.

As an advocate for these companies at the local, state, and federal level, Internet Association has witnessed firsthand how the tremendous economic opportunity of the sharing economy has been embraced by individuals and communities across the country. We have also seen how regulations implemented at a state and local level has the potential to stifle the rapid growth of jobs in these same communities.

In some communities, policymakers and regulators have embraced new technology, the modern workforce and flexible income, and recognized the consumer benefit from increased competition. In these communities, which span across all 50 states, local economies have seen massive increases in income opportunities directly as a result of sharing economy platforms. IA research using member company data and economic modeling shows that these positions correlate with overall job creation and growth. Local economies are stronger where the sharing economy is also strong.

Unfortunately in some other communities, policymakers and regulators have put up roadblocks to consumer choice and competition. In these areas, the community is worse off when arbitrary barriers are placed on new entrants. Opportunities are lost, competition is stamped out, and growth is stifled.

The diversity of platforms today make it nearly impossible to concisely define the sharing economy, sometimes also referred to as the gig, on-demand or flexible economy. At its foundation, the sharing economy is about removing barriers and allowing individuals to more efficiently utilize their time, earn income from their passions and hobbies, and better utilize assets or liabilities as a source of income. At their most basic, sharing economy companies are platforms that connect supply and demand.

Based on our advocacy for the internet industry generally and for the sharing economy specifically, Internet Association suggests the following principles:

• First, it's critically important to recognize that the sharing economy is diverse, rapidly growing, and creating new economic opportunities at the local, state, and national level.
• Second, data demonstrates clear benefits to workers and other individuals. These benefits include flexible income, more opportunities, and an overall increase in marketplace access.
• Third, in listening to grievances against sharing economy platforms and considering proposed legislative and regulatory actions, it is critically important to dispassionately assess whether these complaints capture genuine concerns about worker protection and safety, rather than simply being complaints from incumbent industries against increased competition.

The sharing economy is increasingly diverse and bolstering economic opportunity.

The sharing economy - also called the gig, on-demand, or flexible economy is - difficult to define and is rapidly developing to encompass new and innovative approaches to connecting workers and consumers.

For example, for the years between 2012 and 2016, research from groups like JPMorgan and academics like Alan Krueger, estimated the sharing economy to number between approximately 1 to 3 million positions or opportunities.

Today in 2017, new data collected and analyzed by IA shows that number to be approximately 24 million.

Workers benefit from the flexible economy.

Evidence is mounting that participation in the sharing economy is a net positive for the "microenterpreneurs" who participate in it.

Any small business, freelancer, contractor, cleaning service or handyman who has been able to expand their market, find new clients, build their businesses, or just use their skills to earn some extra money through platforms like Upwork, Thumbtack, or Handy can speak to the economic opportunities for them that didn't exist just a few short years ago.

Anyone who has helped pay their mortgage by hosting on Airbnb or listing on HomeAway, or helped make their car payments by listing their car on Turo can speak to the life-changing flexibility and opportunity enabled by sharing economy platforms. Anyone who has used their smartphone to summon a ride or driven their car for a few hours of their choosing each week to help pay their bills can speak to the user first experience of ridesharing with platforms like Lyft and Uber.

Anyone who has been able to share their creativity with a global marketplace from the comfort of their own home through platforms Etsy, Amazon or eBay, or has made a little extra money during their free time delivering restaurant quality food through a platform like Doordash can speak to the transformational nature of this new economy.

These benefits are particularly important in today's economy - a time when we see decreasing dynamism among 'traditional' businesses and increasing prevalence of economic distress in communities across the country as shown by numerous studies from groups such as Economic Innovation Group.

The sharing economy is more geographically dispersed and serving as a vital tool for millions of Americans.

The sharing economy offers workers a high level of autonomy and flexibility to choose when, how and where people can earn income. Only 11 percent of workers stated that inability to find employment caused them to seek work through on-demand platforms.

Research from Paul Oyer at Stanford University shows that individuals are craving a different type of work arrangement, one in which they work fewer hours with more time for their families, friends, and life.

Sharing economy participants are motivated to seek opportunity through on-demand platforms to build greater financial stability, supplement other income, and build their businesses. On an hourly basis, sharing economy workers averaged approximately $34 per hour of work, compared to $26 for payroll workers.

Regulation and legislation should only capture genuine concerns.

In listening to complaints about the sharing economy from incumbent players and entrenched interests, IA encourages lawmakers to think about whether those arguments truly reflect a genuine concern for worker protection and safety, or whether they are, in fact, complaints against increased competition as a result of a the growing sharing economy.

Although creative destruction can and does benefit consumers in the form of lower prices and increased quality, it also creates anxiety on the part of market incumbents.

The internet has, since its inception, lowered entry barriers for new entrants, search and transaction costs for consumers, and generally corrected information asymmetries in many markets, from contact lenses to wine. As with the early Internet, today's sharing economy platforms are spurring increased competition and worker/consumer choice in our economy.

Technology is redefining our traditional understanding of the workforce. It is no longer likely that an individual will obtain and remain at a single place of employment for their entire careers. Workers want and seek varied opportunities that maximize both flexibility and choice in earning income and bolstering entrepreneurial activity.

Michael Beckerman is President and CEO of Internet Association. His remarks are excerpted from recent testimony to the U.S. House of Representatives Committee on Education and the Workforce.

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