I was flat broke when I caught my first Uber in San Francisco in 2011, and I still remember how delicious it was to slide onto the chilly leather seats of that big black car. The uniformed driver was silent and obsequious. We played a complicated game of make-believe, that driver and I, because while he was pretending to be subservient and I was pretending to be lordly, we were both, in the end, the same animals: freelancers.
According to a survey by the Freelancers’ Union, nearly 54 million Americans were freelancers last year, up from 42.6 in 2006. The US Bureau of Labor Statistics estimates the civilian workforce to be roughly 157 million. More about the Freelancers’ Union later, but if they’re correct, that means 34 per cent of the US workforce are freelancers in some capacity.
The newest cog in the engine of America’s freelancing revolution is the “sharing economy”——a set of systems for creating and distributing resources-facilitated by peer-to-peer networks online. In one corner of the sharing economy, goes the prevailing wisdom, hippies use the internet to give away their home grown kale. In another corner, my Uber driver and I roll through the streets of Silicon Valley looking out at the world through dark tinted glass. A feel-good marketing ploy, “the sharing economy” glosses over the drastically different business practices of thousands of companies in a multi-billion-dollar economy; a whopping 24 companies have already blown breezily past a billion dollar valuation in the last decade.
In June this year, a landmark court case in the looming battle over the place of workers in the sharing economy will come before a California jury. Douglas O’Connor et al v. Uber Technologies—which expanded into a full class action in late 2015—pits drivers, who say they’re not freelancers but employees, against a company that claims it’s not in the business of cars, but tech.
The California jury’s decision over whose definition reigns supreme could determine the future of hundreds of thousands of workers’ lives and buckets of investor cash. The tech sector is floundering, with analysis by the Wall Street Journal showing that 35 of the 48 venture backed companies that went public two years ago are now trading below their IPO prices. Uber, on the other hand, is now valued at more than 60 billion dollars and turns a profit in 80 markets worldwide. Their business model, which relies on a freelance workforce, is proving to be the golden ticket.
The story of the sharing economy is one of conflation, misdirection, gurus, cultists, and hard workers. The upcoming Uber court case in California reminds us that language shapes the way we think, and how important it is to be careful with our definitions. The term “sharing economy” began to be bandied about in the early 2000s. The Yale academic proposing it as a model took inspiration from the free software movement. Peer-to-peer networking was starting to pop up online, and as the tech bubble imploded and the first round of Valley yahoos collapsed in a sniveling mess of failed delivery services, it looked like the open source software movement might have a shot at becoming the defining architecture of the internet.
In 2002, the “sharing economy” did not describe a system that already existed. It was an idealistic prescription: a way to avoid the looming tragedy of the commons, high capitalism, and environmental disaster that revived the 1970s concept of “collaborative consumption” developed by a couple of hippy sociologists from the University of Illinois. Its proponents hoped the networking power of the internet could help us get rid of the middle man and invent community resources and personal exchanges based on relationships of trust and transparency instead of hard cash.
Fast-forward a decade and the open source software movement has definitively lost the war for the internet’s soul. The internet is not free. Someone has to pay for it. Nearly all of our online services are provided by companies that monetize our usage in ways that are mostly invisible—and therefore acceptable—to us. As author Paul Mason describes it: land ownership fueled the agricultural revolution and resource extraction fueled the industrial revolution, today’s internet revolution is powered by our data.
In markets where we do pay up-front with hard cash, the idea of the sharing economy has shifted almost without notice from a prescription to a description. Hoards of marketers are busily trying to maintain and cultivate the feel-good seamlessness we’ve come to demand from our online interactions. Journalists from Venture Beat to the The New York Times and every publication in between lazily repeat that Uber, Lyft and a raft of other companies are part of the sharing economy. Leading the charge to persuade people to think more critically about the companies trying to crowd under the umbrella of the sharing economy is Rachel Botsman, who describes herself as “the global authority on the power of collaboration and sharing to change the way we live, work, bank and consume.” An Englishwoman with amazing eyebrows and a lot of TED talks, Botsman has written a book on the sharing economy, teaches at Oxford, and, as we’ll see later, deals definitions with her left hand and disappearing acts with her right.
Botsman breaks the businesses grouped under the sharing economy into four models. The “collaborative economy”, says Botsman, is a decentralized marketplace that “unlocks the value of underused assets by matching needs and haves in ways that bypass traditional middlemen.” Think Etsy, Kickstarter and Taskrabbit.
“Collaborative consumption” is the reinvention of traditional market behaviors mediated by technology, whether renting, lending, swapping, sharing, bartering, gifting. Think ZipCar and eBay.
AirBnB, RelayRides, SkillShare and any service that lets you lend your drill to the dude next door fall under the “sharing economy”—“an economic system based on sharing underused assets or services, for free or for a fee, directly from individuals.”
All of the above, says Botsman, can legitimately claim to be ‘sharing’ in some form. The final business model trying to shuffle its way into the sharing discussion, however, cannot. These businesses are the on-demand services: Botsman points to Uber, whose model “shares” nothing at all.
At first glance, Botsman’s passionate disambiguation—delivered at TED into a Madonna microphone in front of hundreds of hysterically clapping rich people in Australia—is refreshing after the decade of confusion and barbed goodwill that we’ve endured from businesses claiming to be in the sharing sector. But dive a little deeper, and Botsman’s definitions become downright weird. For example, Lyft is part of her sharing economy, if tangentially, but Uber is not. Despite the fact that Lyft is a ‘friendlier’ company, they share the exact same model: why does Botsman let one of Lyft creep under the sharing umbrella, but not Uber?
We won’t go through them all here, but let’s look at the category most relevant to the sharing discussion: the sharing economy, which is the category that AirBnb falls into. Botsman defines the sharing economy as “an economic system based on sharing underused assets or services, for free or for a fee, directly from individuals.” In one fell swoop, she elides two completely opposing actions.
Charging someone to use your things is “renting.” Nothing wrong with that. But let’s call the spade that I just charged you 20 bucks to use a spade.
For the record: charging someone to use your things is not “sharing.” Charging someone to use your things is “renting.” Nothing wrong with that. But let’s call the spade that I just charged you 20 bucks to use a spade. Botsman sits on the board of the Peers Foundation, whobelieve that “sharing is a smart, simple, scalable economic solution for the 21st Century.” The foundation has its roots in a non-profit, Peers.org, which was founded in 2013 and worked in partnership with Airbnb, Lyft—perhaps why Lyft gets a spot under the umbrella when Uber does not—and other companies in the sharing economy to “organize users.” FastCompany has pointed out that one of Peers.org’s biggest backers was the Omidyar Network, a “philanthropic investment firm” started by eBay and criticized for commercializing what were formerly organic grassroots sharing initiatives like couch-surfing. After organizing pro-Airbnb political lobbying in multiple cities, Peers.org was swiftly accused of being an astroturf organization—a fake grassroots organization created and supported by an industry or company in an attempt to make it look more credible. Not long afterwards, the aspirational wing of Peers.org broke off and became a foundation.
In contrast to the messy complications of the sharing economy in real life, the Peers Foundation’s manifesto displays the feel-goodery of the general marketing hype every “sharing” company wants you to swallow whole: “We believe in the power of people to write their own economic future. We can all be better off together. We are the people powered economy. Together, we are Peers.”
All of the above aspiration and obfuscation becomes suddenly clear when you realize that the Peers Foundation was co-founded by Douglas Atkin, the head of Community at Airbnb, and author of the 2005 instructional guide The Culting of Brands: Turn your Customers into True Believers.
“At first glance,” explains Atkin’s book, “companies like Apple and Nike have little in common with organizations like the Hells Angels and the Unification Church. But in reality, they all fulfill the main definition of a cult: They attract people who see themselves as different from the masses in some fundamental way. Contrary to stereotypes, most cult members aren’t emotionally unstable—they’re just normal folks searching for a sense of belonging.” The book promises to teach companies how to create cults around their brands, and manage a workforce of true believers. “Once a brand achieves cult status,” the cover notes, “it becomes almost impossible for a competitor to dethrone it.”
Turning consumers into cultists sounds creepy, because it is.
After the Peers Foundation broke away from it last year, Peers.org itself remained, morphing from a non-profit into a B Corps: a for-profit corporation that has social and environmental performance standards, and is certified by an independent nonprofit.
When I emailed the new CEO of Peers.org, Shelby Clark, he put me in touch with his AI robot assistant, Andrew, to set up an interview. I decided I probably liked Shelby because he’s a bloke and he’s chosen to have a male AI assistant—the other people I’ve heard of with AI assistants have all given them women’s names. I set up a meeting with Andrew, which felt strange—do you thank a robot assistant? I did. With labor heading in the direction it is, you never know when you’re going to need a robot on your side.
Shelby was leaving work when I called. It was Friday night in San Francisco. I could hear his exhaustion and the sound of the evening winds whipping through the financial district over the phone.
After Shelby took over at Peers.org at the end of 2014, he said, he turned to his members and asked what they wanted. The independent workers who make up Peers.org, said Shelby, told him they wanted benefits. But that didn’t necessarily mean being an employee. Flexibility is important. Workers in the sharing economy, Shelby says, took note when hours were restricted at Instacart to keep workers part-time after some people became employees in June 2015.
The new Peers.org waded out into the murky waters of the sharing economy, and began to try and push for something in between freelancing and employment: portable benefits, which follow the worker from job to job. This “middle ground” would provide both flexibility and security, with companies and the government contributing to employee benefits on a pro rata, hourly basis.
Many of the big companies are behind the idea of portable benefits, Shelby says; Lyft, Etsy and a whole raft of other “sharing economy” businesses have signed on to a public statement demanding portable benefits for independent workers. Shelby is in a bind, though. As it stands, he says, there’s just no precedent for something like portable benefits. What is needed is some sort of regulatory change—a space to experiment. If we wait around, he says, negotiating the status of every company’s workers in courts, going ad hoc from home cleaning, to driving, to Taskrabbiting and back again, it’s going to take a couple of years at least. “And in the meantime,” he says, “we’re going to have unprotected workers. And that’s an injustice.”
I genuinely believe that Shelby is worried. The wind whips across the phone line. While we talk, we both constantly muddle up the words “employee” and “worker.” Shelby keeps on repeating that what workers say they want is “flexibility,”, as if it’s the golden ticket to somehow understanding how, every year, the number of freelancers in the American economy just keeps ticking up.
Flexibility is Uber’s favourite word. It’s everyone’s favorite word in the sharing economy. Looking out over America’s 54 million freelancers, it’s hard not to imagine a vast crowd of happy, Lululemon-clad, Ayn-Rand spouting workers doing the tree pose. Here is one of the great conflations of the “freelancers” discussion. Who, and what, exactly, even constitutes a freelancer? If we call freelancers “independent contractors,”, does our crowd of Lululemon-clad yoga yummies suddenly morph into a sea of exhausted migrant workers, students struggling under huge debts, and single parents trying to fit a couple of house cleanings in whenever they can, unprotected and without basic benefits?
The Freelancer’s Union survey, which gave us the number stating that there are 54 million freelancers in the US in 2015, defines freelancers as anyone who has “engaged in temporary, supplemental, project or contract based work in the last 12 months.” This is a broad brush, so broad that it actually makes no sense. There might be a reason for that. The Freelancers Union, despite their name, is not a union, and their story might sound familiar: they began as a non-profit in the mid 0s to try and help freelancers. They then transitioned into a for-profit company, which now offers portable benefits, as a business. They do it from a genuine place of concern. But the survey was in part funded by UpWork—“the world's largest online workplace where savvy businesses and professional freelancers go to work!”
Twenty-five per cent of the freelancers addressed above—13.2 million—are moonlighters, professionals employed in primary jobs who sell feather earrings on Etsy at night, for example. Thirty-six per cent of America’s freelancers, however, are independent contractors who sign 1099 forms instead of employment contracts. Some workers genuinely elect to be independent contractors because they provide in-demand services and can charge high fees. But many more do not. For employers who want to exploit their workers, 1099s are cheap to hire: you don’t have to pay their benefits, provide them with over time or sick pay. Under federal law, you don’t have the right to unionize if you sign a 1099. You can’t sue the company for discrimination, and companies don’t have to make contributions to Social Security or Medicare.
Worker misclassification is growing to be a huge problem. This isn’t just a sharing economy issue. One-third of construction workers in North Carolina and Texas are estimated to have been misclassified. It drives the IRS crazy trying to chase everyone doing it, and they acknowledge on their website that they just don’t have the resources to catch and prosecute people. Instead, the IRS are relying on trying to ‘promote cultural norms’ to prevent misclassification. Meanwhile, worker misclassification spreads out from states with collapsing economies—Montana has routinely had one of the highest 1099 worker rates—into the LED-lit evenings of Silicon Valley, where tech companies are trying to turn the business practice the IRS wants to stomp out into the new normal.
Who really chooses to be an independent contractor and why? The IRS uses a mechanism called the “external realities test” to determine whether or not a worker is an employee or an independent contractor. The “external realities test” has six questions, but the first and the last are enough to give you an idea of what’s in it. The IRS looks at “the extent to which the work performed is an integral part of the employer’s business” and “the degree of control exercised or retained by the employer.”
The drivers are the losers in the great shift of power: not flexible, but over-determined, constantly tracked and monitored, unable to protect or defend themselves from the company’s arbitrary decisions, not sharing anything but their own need.
In a court order denying Uber a summary judgment in the Douglas et al v. Uber Technologies case, the court pointed out that the drivers do not feel like flexible contractors in charge of their own destinies. They quoted the French philosopher Michel Foucault, who spent his life analyzing the dynamics of power and knowledge: “A state of conscious and permanent visibility” quotes the court, “assures the automatic functioning of power.”
The drivers are the losers in the great shift of power: not flexible, but over-determined, constantly tracked and monitored, unable to protect or defend themselves from the company’s arbitrary decisions, not sharing anything but their own need.
Shannon “Sledgehammer” Liss-Riordan, the lawyer who is heading up the prosecution in Douglas O’Connor et al v. Uber Technologies in June, sees the current churn as nothing new. It would be one thing if the state took responsibility for instituting single payer health care, she says, but you don’t see the investors or founders of big companies pushing for that. It’s almost natural that they’ll try and exploit their workers.
“Obviously employers are trying to make money for their founders and investors,” she told the Boston Globe, “and they’re going to push the limits as far as the law lets them in most cases. It’s up to workers and workers’ advocates to press for the laws to be as protective as they can be. It all comes out as a balance.”
In the end, economies are always about the exchange and balance of power. There are genuinely wonderful things about companies that let you rent a room in someone’s house for a while, or their car, and not need to buy your own. It can build communities. It’s convenient to catch cars on demand. But just because you’ve sat on the chilly leather seat, just because you enjoy the bed the cult made for you, doesn’t mean you need to drink their Kool-Aid, too.
When the sharing economy has grown to include 24 multi-billion dollar companies, we have to keep on asking: what does it mean to share nicely?
FURTHER LISTENING
Benjamen Walker’s Theory of Everything podcast, one of our all-time favorites, dove deep into the labor realities behind the facade of the sharing economy in the three-part series “Instaserfs” in 2015.