Can the sharing economy fix broken cities?

The sharing economy promises to transform urban living and cities for the better, but who will lead the way, and what role should firms that define themselves as 'sharing companies' play?
Can the sharing economy fix broken cities?

Around the world, as urbanization increases, inequality rises, and city logistics and services are strained to breaking point, the notion that companies and consumers can transform city living into something smarter, more efficient, and yes, kinder and gentler, is the tantalizing promise of the sharing economy.

The way in which cities operate today is broken.

In London alone, plenty of stats abound on the trials of urban life:

- Congestion costs the London economy around £4 billion every year. - Londoners waste 170 million hours a year sitting in traffic. - Over 3,300 deaths in London are partly attributable to air pollution; in some areas of the capital air pollution can account for as many as one in 12 deaths - The average house price in London is £458,283; average pay is £35,000. - Inequality in London is the widest in the UK and rising.The richest 10% by financial asset wealth have 60% of all assets. The poorest 80% of the population share 20% of all asset wealth.

It’s a situation that can only get worse; London’s population of 8.6 million people is expected to grow another 1.4 million by 2030. As Alex Stephany, CEO of JustPark, the app that connects drivers with parking spaces, said, “We’re pretty screwed if we can’t make work.”

On paper, cities and the sharing economy appear a natural partnership. With dense living, city dwellers have been the first to embrace collaborative services such as car and home sharing. Sharing companies are keen to tout their benefits: job creation, reduced congestion and pollution, reduced consumption, less waste, closer community ties, raising trust amongst strangers and so on.

But at the Financial Times’ Sharing Economy Summit in London last week — at which Stephany was speaking on a late afternoon panel, “The Future of the City” — it became abundantly clear that considerable hurdles remain to creating more shareable cities, especially if shareable also means more equitable.

The discussion itself — which included Rohan Silva, ex-Downing Street special adviser and co-founder of shared office space Second Home; the affable stat-quoting Zipcar UK general manager Mark Walker; and the Institute of Directors’ Deputy Head of Policy Jimmy McLoughlin — centered mainly on the current examples of how individual companies were making a difference. Croydon Council, for example, manages to save £500,000 a year and cut employee driving by 42% after adopting Zipcar. With 32 councils across London, the cost savings — and reduction in pollution — could be considerable.

The bigger picture, however, of how and should sharing economy companies lead the way in reshaping the future of cities was a harder one to imagine.

Whilst their services and products may help toward a sustainable future, collaborative consumption starts ups — and especially those backed with VC bucks — are first and foremost building a business. There may be an expectation that sharing economy companies should somehow “behave better,” but they are no more likely to than a company creating customer service software.

Regulation and the Right to Innovate

Indeed, one of the consistent themes throughout the day was the need for startups to defend their “right to innovate,” a phrase coined by Martin Bailey, the head of the European Commission’s DG CONNECT unit, trying to assure the room that the EC were looking to create regulation that ensured level playing fields but didn’t stifle innovation.

But at a time when some sharing economy companies are rustling up VC investment in the billions, and all manner of startups are clamoring to be the “Uber” of a particular service or asset, there was a palpable impatience in the room when the discussion turned toward fair treatment of incumbents and startups, workers’ rights, and the implications for local housing markets.

On a panel looking at how the sharing economy should be regulated, Airbnb’s Head of Policy of Europe and Canada, Patrick Robinson, conceded that companies should all be regulated equally, but at the same time dismissed the numbers in a New York State Attorney General’s report that found 6 percent of hosts were generating 37 percent of Airbnb’s revenues from New York City rentals. The majority of Airbnb hosts, Robinson insisted, are not professional landlords.

And just who are the workers of the sharing economy? Are they micro-entrepreneurs as Love Home Swap CEO Debbie Wosskow likes to call them? Are they people looking to make a bit of “extra money”? Are they the traditionally low paid looking to cobble together a paycheck? If the sharing economy really is about job creation, rather than about some welcome “pin money”, do these workers deserve some employment benefits? Or, in the brave new world of the micro-entrepreneur should these workers whose labor collaborative companies are benefitting from be sensible enough to set aside something for pension plans, maternity leave, sick pay and holiday time?

Of course, it depends on the service itself. Lower-skilled platforms will attract lower-skilled workers, and will pay less. Still, there are certainly highly motivated workers who make the most of even these lower-paid jobs. CEO Alex Depledge told the story of one cleaner who works 50 hours a week. From the living wage, Depledge says Hassle pays (up to £8.50 / hour, according to the site), the cleaner has managed to build his father a house in Sierra Leone and is grateful to be able to afford Arsenal season tickets to boot. That cleaner, however, was an exception. Most, said Depledge, are on Hassle because they want the flexibility of working around their own schedules - usually mothers with family commitments or students juggling cleaning between courses.

But one person’s flexibility is another worker’s instability - again, the most in danger are low skilled, low-income workers using the sharing economy to patch together a living. On the regulation panel, Jackie Grech, the British Hospitality Association’s Legal and Policy Director & General Counsel, questioned whether women might be more excluded than men from the sharing economy because of a lack of benefits like maternity leave. Of course, with a flexible schedule a woman can always take the time off to care for her infant, she just won’t be paid for it.

Helen Goulden, NESTA’s Executive Director of its Innovation Lab, reminded the audience too, that in order to share and profit from assets such as cars and houses you had to have them in the first place - something the urban poor struggle to obtain.

Two-Tier Sharing

Could a two-tier sharing economy market emerge? The danger of one sharing economy for the middle and upper classes and one of the lower classes doesn’t seem such a far-fetched story when you consider the growing trend of the collaborative economy to move away from “sharing and caring” to the cool efficiency of the on-demand economy. On-demand services are still staffed by “everyday” people, often putting up their own assets to get the job done, but now the expectation is they can be summoned as quickly as a customer can access them on an app, or be bypassed for the next ready and willing worker.

Sharing and caring used to be a value-add, now it’s friction.

But then, the sharing economy has always been a bit of a misnomer, and a bit of a paradox. People act selfishly by seeking out the less expensive, easier option in order to behave more altruistically, or more sustainably.

Said JustPark CEO Stephany, “Environmentalism should be the biggest driver to action , but it’s actually the smallest. use JustPark because it’s cheaper and more convenient.”

Featured image credit: AC Manley / Shutterstock

Follow the developments in the technology world. What would you like us to deliver to you?
Your subscription registration has been successfully created.