“Sharing economy” is becoming increasingly profitable

Christian Peterson, CMT®    Investment Analyst
Christian Peterson, CMT®
Investment Analyst

As we parse the latest employment figures, looking for signs that the job market will recover to its pre-recession levels and lift more people into the middle-class, we’re forced to recognize how the nature of work has changed.  That manufacturing jobs of the kind that built the middle class in the mid-20th century are gone, with little hope of ever coming back, is something we’ve known for decades now. How we will replace those jobs remains an ongoing concern.  Technological advancements have had the greatest impact on both the kinds of jobs that are available and the way people approach the job market.  Economists use the term “information economy” to describe the current conditions in which computers, robotics and interconnectivity affect everything we do, from building airplanes to scheduling a doctor’s appointment.  Technological changes have not only affected the number and quality of jobs available, they also have changed the relationship between employers and employees.  The rapid changes brought about through technological innovations have caused companies to reinvent themselves on a continual basis, or face obsolescence. This constant change in the organizational structure of a company has frayed the traditional symbiotic relationship of employer and employee.  The rise of free-lance and “contract” workers is one result of this change.  Contract workers are indistinguishable from any other worker in the firm except in their employment “status.”  With contract workers, the company gets the same productivity benefits with fewer liability and “human resource” issues.

But, where technological innovations have reduced stability and security among the workforce of medium to large sized companies, it also has created opportunities outside of the traditional workplace.  Over the past few years we have seen the rise of what is being called the “sharing economy.”  The most well-known examples of the sharing economy are Uber, (a taxicab-like service that uses mobile phones to match people who are looking for a ride with private citizens who are willing to offer a ride for a fee), and Airbnb (a mobile service that matches people looking for lodging with private citizens who have space available.)  Another is TaskRabbit, which is a clearing house for people willing to do any number of chores, from cleaning and shopping to carpentry or computer repair.  Other mobile apps allow people to rent from private citizens everything from parking spaces to musical instruments.  The app handles all of the transaction details in one convenient and secure site.

While the sharing economy will not replace more traditional forms of work and business anytime soon, it is nevertheless an interesting and increasingly profitable way for people to participate in the economy while maintaining independence and flexibility.