The Consumer Choice Center has launched a new and improved version of its Sharing Economy Index, ranking 60 cities around the world by their openness to innovation in the sector.
The index is primarily a guide for consumers, pointing them toward the most (and least) innovation-friendly cities. This way, they can take advantage of the best the sharing economy has to offer.
At the same time, it teaches regulators an important lesson about the sharing economy. The sector is a 21st-century marvel, from the way the company is set up to workers’ personal schedules. By contrast, efforts to impose one-size-fits-all legislation on the industry are stuck in the past and will only leave everyone worse off.
For centuries now, the usual workplace was organized around a clear hierarchy, where some completed a set number of known chores and others watched over them to make sure the job got done.
The traditional factory, with its manual laborers and overseers, fits the same description. As tasks in the economy multiplied and the world became richer, factories often gave way to offices and worker overalls became shirts and ties. The underlying structure of the workplace, nonetheless, remained the same.
The sharing economy blows this old model out of the water. Gone is the hierarchy of the factory assembly line or office arrangement, replaced by a network designed to match independent buyers and sellers in ways that benefit both parties. Companies like Airbnb, Uber, and Fiverr are platforms for private individuals to supply goods or services to those in need, with no controlling manager or bureaucratic system getting in the way of exchanges.
Such decentralization doesn’t stop at the structure that companies take. It extends all the way to the everyday tasks of those working in the gig economy. As noted in the Consumer Choice Center’s report, around 79% of independent laborers in the US and 80% of those in the EU cited the ability to produce their own schedule as the primary reason why they chose the position in the first place.
Thanks to its open-ended nature, the sharing economy is able to bounce back from serious challenges. If one part of the network is disrupted, another can take its place, with the larger web always surviving. For instance, Uber has been able to remain active in Ukraine during the Russian invasion, having to move 60 tons of supplies from Romania into Ukraine.
Regulators do not share the same positive picture of the gig industry. Instead, they want workers to enjoy the legal protection and benefits of being a regular salaried worker in a standard company. The same policymakers believe an employee must be able to demand unionization, healthcare benefits, or compensation for negligence and that platform owners should be forced to comply with these demands.
Were regulators to have their way with the sharing economy, however, decentralization would be no more. Suggested legislation marks the return to the old model of factory and office. The US Protecting the Right to Organize Act and the European Commission’s 2021 platform work proposal relegates gig workers to the status of permanent employees and standard managers based on a number of familiar criteria: work and safety, collective bargaining, and a required number of working hours per week.
The consequences would be awful all around. Far from legal certainty, some gig workers would be left jobless altogether, as they are unable to work on a 9 to 5 schedule. This hits vulnerable groups the hardest since they are most reliant on flexible work environments.
Consumers will suffer too. With more and more regulations, services become costlier and harder to acquire. Once layoffs intensify and companies go bankrupt, the goods and services that customers have grown to rely on may not be available anymore.
It’s advisable for policymakers to look toward the future rather than the past. Recognize and foster the strengths of the sharing economy by getting out of the way and letting workers, consumers, and the firms themselves decide the fate of the sharing economy.
Originally published here