The Sharing Economy is Cannibalizing the Middle Class
Four months ago I called out the so-called 'Sharing Economy' for what it was: it's never been anything more than either 1) a moonlighting job or 2) scabs undermining working people trying to make a decent living.
This week two news articles proved my statement in no uncertain terms.
So every Monday morning, Tugas leaves at 4 a.m., says goodbye to his wife and four daughters, drives 90 miles to the city, and lugs around passengers until he earns $300 or gets too tired to keep going. (Most days he nets $230 after expenses like gas.) Then, he and at least a half dozen other Uber drivers gathered in the Social Safeway parking lot to sleep in their cars before another long day of driving.
Uber drivers across the country swap tips for finding sleeping spots, like: which stores have the most forgiving security guards and where to find free Wi-Fi. In Chicago, drivers call the 7-11 at the intersection of Wrightwood & North Lincoln Avenues the “Uber Terminal.” In Columbus, Ohio, drivers prefer the Walmart off the Jack Nicklaus Freeway. In Queens, New York, drivers are known to frequent the 7-Eleven off JFK Expressway. Drivers on the online forum Uberpeople.net joke that there is money to be made in a motel chain serving the large number of Uber drivers sleeping in their cars in New Jersey.
In Chicago, Walter Laquian Howard sleeps most nights at the "Uber Terminal." “I left my job thinking this would work, and it’s getting harder and harder,” Howard said. “They have to understand that some of us have decided to make this a full-time career.”
There's a term for on-call workers in a parking lot: day labor.
Except day laborers generally have a bed to sleep in. Uber drivers don't even have that.
On the other side of the equation are the formally lower, middle-class jobs that these day laborers are underpricing.
And according to the latest, just released report (in which COF incidentally missed both the top and the bottom line, reported EPS and revenue of $1.45 and $6.60 billion, both below expectations), the US taxicab industry must be on the verge of collapse, because in COF's Q4 report, the company reported that while the size of its runoff Medallion "held for investment" loans tumbled by $83 million from $773MM to $690MM, it was the surge in the nonperforming loan rate that was the stunner: surging from 38.8% in Q3 to a whopping 51.5% in Q4, it suggests that legacy cab drivers in the US are not only barely making money, but are in financial dire straits.
Uber and Lyft are simply lowering the bar for worker pay in a low-skilled job sector and lying about it while scamming its own employees.
So if you leased a vehicle through Uber, started working full-time, and realized a year later that you’d been scammed, you’d owe $6,000 for the privilege of quitting a job you were offered in profound bad faith.
That’s a staggering sum, and leaked documents suggest that Uber’s losses have grown in scale along with the company — rather than shrinking in a way that suggests a clear path to profitability.
Meanwhile, Lyft lost $600 million on just $700 million in revenue.
This proves that the sharing economy can both hurt workers and lose immense amounts of money in the process.
Let's not forget to mention Airbnb.
Airbnb people don't have to pay a lodgers tax, which gives them an unfair edge over hoteliers, and cheats cities and states of hundreds of millions of dollars in tax revenue.
Like Uber, Airbnb undercuts hoteliers, which in turn costs thousands of jobs. Once again, unionized workers are getting hit first.
But Mike Casey, the longtime president of the hotel workers’ union UNITE HERE Local 2, sees something very different when he looks at Airbnb and comparable websites: an existential threat.
“There’s probably several hundred jobs a year that are lost as a result of people selecting Airbnb over a unionized hotel,” he said. “But probably of even greater impact than that is the impact it’s having on affordable housing.”
Casey cited a March 2015 report from left-leaning advocacy group the Los Angeles Alliance for a New Economy (LAANE), which says the prevalence of Airbnb units in Los Angeles gives landlords and homeowners an opportunity to seek tourism dollars where they would have otherwise rented housing to city residents. As a result, the report’s authors say, Airbnb is helping constrict housing supply and drive up rental costs. LAANE also alleges the growing popularity of Airbnb could kill hotel jobs and replace them with a handful of lower-paying domestic worker gigs.
To put this in a way that investors will understand.
That threat, says Morgan Stanley Research, is greatest for hotels because “Airbnb usage has increased more than we thought it would and cannibalization of traditional hotels has also been higher.”...
Not only does Morgan Stanley believe the number of Airbnb users and room nights will continue to grow, but it also estimates that Airbnb will have a direct negative impact on hotels’ ability to maintain the same levels of occupancy and nightly rates that they have in the past year.
It's important to use the term 'investor', because that is what Airbnb is really about - not 'Mom-and-Pop' but professional real estate investors.
According to the report , 94% of Airbnb hosts in New York city rented out 2 units or fewer. This supports the Airbnb company line that the majority of users are average joes renting out their homes. The other 6% of hosts, however, listed from 3 to 272 units. They earned a collective $168 million and were responsible for over a third of all bookings and revenue in the city.