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.

Despite cheating its own employees and destroying living wage jobs, Uber and Lyft are still losing money hand-over-fist.
Uber has lost a staggering $2.2 Billion in just 9 months.

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.
Share
up
64 users have voted.

Comments

Bluesee's picture

Ultimately, the system must fail because it is based on growth, and its main constraint is finite planet. Now, the idea of a perpetual capitalist society is only possible under conditions of war, perpetual war.

We are stuck politically. The Internet won't save us. It can even enslave us, if we allow it.

The truth is that we need a new economic model, and/but our current political model has not provided us that. So eight guys = half the planets population. To eight people, that's not a bad thing.

But we have an objective model that that is a very, very bad thing.

To me the objective ultimate performance measure of our civilization is: do we colonize another planet or not? It's kind of the opposite of the doomsday clock.

Based on the fact that no other civilization has visited us in our lifetime, I think the odds that we successfully colonize another planet were always small... God's petri dish we are in, to paraphrase Yoda!

I know this is a rant, and peripheral to your article, but yeah, the times they are a changin gjohnsit.

up
33 users have voted.

Bernie is a win-win.

@Bluesee planet doesn't actually represent a "solution" to any human problem that needs solving.

up
32 users have voted.

The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.

@Bluesee that stymies me.

The other question is, if we had an alternative economic model how would we install it in the face of the capitalists?

One begins to think that absolute economic collapse is the only way we can start anew. Even then, how do we start a new economic system without awareness and a plan?

No one invented capitalism. It evolved out of chaos as the world became "civilized". It was the most natural system because the greediest became the wealthiest and most powerful. A new economic model must find a way to eliminate greed as a marker for success.

I hope some young, visionary economist is out there working on this.

up
12 users have voted.
Oldest Son Of A Sailor's picture

@gustogirl

"A new economic model must find a way to eliminate greed as a marker for success."

Is to penalize greed as an unacceptable behavior and take the profit out of it...

Oh you want to jack the price on that inexpensive generic medicine you you purchased the rights to manufacturing? Thanks for repaving I-95...

up
12 users have voted.
"Do you realize the responsibility I carry?
I'm the only person standing between Richard Nixon and the White House."

~John F. Kennedy~
Economic: -9.13, Social: -7.28,
PriceRip's picture

@Oldest Son Of A Sailor
          Starting with the tax code make it impossible to accumulate too much wealth, et cetera. On the banking side make it impossible to hide wealth in tax havens, et cetera.

          The truth is, the economic system is easy to fix. We just have to have the will to do the job. It ain't rocket science, as some would say.

up
11 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

Oldest Son Of A Sailor's picture

@PriceRip Has done this with their tax code...

up
7 users have voted.
"Do you realize the responsibility I carry?
I'm the only person standing between Richard Nixon and the White House."

~John F. Kennedy~
Economic: -9.13, Social: -7.28,
PriceRip's picture

@Oldest Son Of A Sailor
          With an emphasis on the word "progress", unlike the good ol' USofA.

up
6 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

@gustogirl other than it does represent some kind of a world-wide alternative to what we got now.

up
0 users have voted.

Beware the bullshit factories.

Oldest Son Of A Sailor's picture

We are going to be a nation of low wage workers serving the profiting investor class...
No more regulation for services such as carrying passengers for hire...
Or hotel workers in unions...

Imagine this, a lower training requirement for airline pilots...
Or no CDL required for driving an 80,000 lb tractor trailer...
No regulations in food service...

up
32 users have voted.
"Do you realize the responsibility I carry?
I'm the only person standing between Richard Nixon and the White House."

~John F. Kennedy~
Economic: -9.13, Social: -7.28,

It's mot designed to fail, it's designed to destroy. Like Amazon and Wall-Mart, they don't care how much money they lose, or how long they continue to lose money, as long as they destroy everyone else fist.

up
23 users have voted.

A PROUD Hillary hater since 1993

dervish's picture

"Inequality for All" tonight, it's free on Amazon, and a real eye-opener. On a related note, check out Nick Hanauer:

up
16 users have voted.

"Obama promised transparency, but Assange is the one who brought it."

PriceRip's picture

@dervish
          starts understanding Modern Monetary Theory, I will start taking Robert Reich seriously. If you have some information indicating Robert Reich understands Modern Monetary Theory, please enlighten us, for I am unable to find same.

up
2 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

dervish's picture

@PriceRip but the point is that income inequality is getting worse, and sooner or later will have consequences.

up
3 users have voted.

"Obama promised transparency, but Assange is the one who brought it."

MsGrin's picture

City Council has big plans w/ that revenue.

up
19 users have voted.

'What we are left with is an agency mandated to ensure transparency and disclosure that is actually working to keep the public in the dark' - Ann M. Ravel, former FEC member

divineorder's picture

@MsGrin Austin ran off Uber.

up
18 users have voted.

A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.

MsGrin's picture

@divineorder What we did was stop Uber from writing it's own rules about public safety, so they got miffed and threatened to leave permanently. They spent a couple mil to defeat the measure - Austinites were offended about a corp throwing around its weight as if the City can be ignored. I thought they'd slinked back to town. Others have filled the void.

up
0 users have voted.

'What we are left with is an agency mandated to ensure transparency and disclosure that is actually working to keep the public in the dark' - Ann M. Ravel, former FEC member

ovals49's picture

but clearly he is missing the larger picture. He can see the "pitchforks" waiting around the corner to skewer he and his plutocrat friends, and posits that "investing in the middle class" will avert that threat. He can also see that what is needed to keep capitalism from becoming a rapacious monster is the sensible restraint of good governance, something which has been in short supply since Eleanor and Franklin.

The larger picture, which he carefully ignores, is the biosphere of Earth's limited ability to have it's resources made into more and better consumer items, threatening the balance and sustainability of the complicated web of life and environment that we actually depend on to continue to survive. We can't avert that larger threat by continuing with more of the same rampant consumerism, as if making our consumerism more equal will somehow make it less harmful to the planet.

No, our capitalistic socio-economic system is itself at the root of the problem and is unlikely to be our salvation, no matter how well regulated and egalitarian it becomes.

up
24 users have voted.

“Unthinking respect for authority is the greatest enemy of truth.” Albert Einstein

“And an uncomfortable truth is always superior to a comfortable fantasy.” Caitlin Johnstone

@ovals49
endless geometric growth is trivially shown to be inconceivable.
capitalism will implode at some point -- it is mathematically inevitable. the only questions are, how badly will the rest of us get hurt when it does, and will we choose its replacement? because if we don't, what we will get is neofeudalism: a system of political economy in which the size of the pie is effectively fixed, "progress" is a foreign concept, and, just as their predecessors in the 13th century, the 0.001% feudal lords have only one means of increasing their wealth: seizing it from other feudal lords. the implication of that is going to be: death and horror and misery for the 99.999% peasantry who will be both the instruments and the recipients of the ensuing violence.

up
17 users have voted.

The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.

dervish's picture

@ovals49 they're saying that Bill Gates may become the world's first trillionaire in years to come. What's more important, a functioning eco-system, or Bill's bank account? If you answered the former, you might be a pinko.

up
11 users have voted.

"Obama promised transparency, but Assange is the one who brought it."

boriscleto's picture

Is trying to make Uber legal in upstate NY.

But we are getting a $13 million Gondola to move people from the amphitheater, that's built on a toxic waste bed, to the the State Fair. This is part of a second round of upgrades, total cost ~70 million, to make the fair more attractive to a private operator. It's always about the public/private partnership with neoliberals. Public expense/risk and private profit...

up
21 users have voted.

" In the beginning, the universe was created. This has made a lot of people very angry, and is generally considered to have been a bad move. -- Douglas Adams, The Hitch Hiker's Guide to the Galaxy "

@boriscleto throwing the money around everywhere, isn't he. That SOB is running in 2020 and I'll do all i can to stop him. Surely, his unpopularity in NY will transfer to the rest of the country, no? I'd like to think we have another Giuliani on our hands. People fretted that he could win nationally; I never feared the little tyrant.

up
3 users have voted.
boriscleto's picture

@orestes @orestes @orestes @orestes

About the "Independent Democrats" who caucus with the Republicans in the state Senate. Seems they think it would be a great idea to get rid of all property taxes for manufacturers...

They love to run stories about the "Independent Democrats" because one of them, Dave Velesky (I-D NY 53), is the senator for most of Syracuse...

His district is just as gerrymandered as the other district held by John DeFrancisco (R NY 50)...

up
3 users have voted.

" In the beginning, the universe was created. This has made a lot of people very angry, and is generally considered to have been a bad move. -- Douglas Adams, The Hitch Hiker's Guide to the Galaxy "

@boriscleto is the most naked expression of the game that is US politics. The Dems don't want control because they have no intention of doing the people's bidding. In fact, they are in place to serve as an obstacle to that happening. For some reason, I had not connected this outrageous conduct with Cuomo's bid. I hope and expect this deceit will come up in a campaign if he tries to run and hopefully would destroy his chances: Why would you elect him when, given the chance to control state government, he threw it away to ensure the people were stuck with gridlock and bad policies? Yes, there's a line of attack that he cannot evade.

up
2 users have voted.
Lookout's picture

is just another way to screw over working people. We've made profit the God and thrown the planet and its people under the Uber bus.

We need a national jobs program. Technology continues to replace people with robots, self driving cars, and machines. We need a 25 or 30 hour work week and tons more public sector positions - teachers, rangers, environment cleaners, nurses, etc...

All we have to do is redirect all the money spent by the MIC. First thing I'll do when I'm king.

up
29 users have voted.

“Until justice rolls down like water and righteousness like a mighty stream.”

@Lookout I agree. Profit before people and privatization over the commons.

As an example of how global capitalism has subverted the political economy to its advantage, consider the Swedish central bank, the Riksbank, and its fake Nobel economics prize begun in 1969. (There are 5 Nobel prizes established over 100 years ago and economics isn't one of them.) The prize is only given to apologists for capitalism and this year the winners were a couple of academics who came up with an "analysis" of CEO compensation and gave the thumbs-up to the outrageous wealth given them at the expense of the workers and the earth. Isn't just reported that one of Trump's cabinet secretaries is getting a goodbye kiss to the tune of $284 Million?
The for-profit press always refers to this award as a Nobel prize because it reinforces the claim that capitalism is the greatest thing for the greatest good. BS.

up
23 users have voted.

"The justness of individual land right is not justifiable to those to whom the land by right of first claim collectively belonged"

@duckpin The subject of the movie "A Beautiful mind", who won the economics nobel for game theory or something. I think he cared a lot more about math than capitalism.

up
1 user has voted.

Beware the bullshit factories.

blazinAZ's picture

@Lookout

I'll vote for you. Or coronate you. Or whatever . . .

up
11 users have voted.

There is no justice in America, but it is the fight for justice that sustains you.
--Amiri Baraka

solublefish's picture

@Lookout Yes, dump the robots and employ people. "Economics as if people mattered."

up
3 users have voted.
jwa13's picture

... with the National Razor". (h/t to C. Dickens -- A Tale of Two Cities)

https://en.wikipedia.org/wiki/Guillotine

up
13 users have voted.

When Cicero had finished speaking, the people said “How well he spoke”.
When Demosthenes had finished speaking, the people said “Let us march”.

Phoebe Loosinhouse's picture

turning their homes into boarding houses because that is their heart's desire - they are doing it because of the dearth of other employment options and/or to make extra money to keep a roof over their heads and food in the fridge.

I don't see a good financial outcome for Uber because they are violating the central tenet of their initial concept - leveraging the assets of others, i.e. their cars, as they attempt to integrate owning and leasing cars to their drivers, which pretty much turns them into a traditional cab company. Which also means they will have to increase their fees until they no longer are a viable option for transport, but sadly, all the traditional cab companies will be gone by then. I think the biggest threat to Uber is some recent court decisions which threaten their entire concept of drivers having "independent contractor" status. I think the former taxi concept of municipalities awarding a limited number of medallions to a very few companies served no purpose other than to restrict competition. IMO, if someone wants to go to the expense of buying a fleet of cars and hiring commercially licensed drivers and dispatchers and paying for all the other costs of doing business, why shouldn't anyone be allowed to open up a driving service, whether it be large or small?

I've researched Uber previously - it works well in some areas for some people who manage to make a living at it on their own terms. If drivers do their taxes correctly, they should be able to deduct many if not most of their car outlay as business expenses incurred as an independent contractor. I don't really care if someone chooses to become an Uber driver or chooses to utilize Uber - obviously there was a services gap in the marketplace that coincided with an employment gap and a company and a concept rose to address it.

As to Airbnb, I don't think there's any question but that hosts should pay the same lodging taxes that a hotel or motel does and many cities and towns are moving in that direction. I agree that the large-scale commercial hosts pose a threat to the amount of affordable housing stock in some locations and perhaps there are ways to curtail or limit theses purchases that should be investigated. I don't have any concerns at all about individual owners of owner occupied homes who choose to rent out a bedroom on a temporary basis any time they choose to as long as they declare the income and pay both income and lodging tax or if they want to rent out their house when they're away or on vacation. If someone wants to buy an additional income property to be used as an investment property, whether long or short term, I still don't care - it's their property, why shouldn't they be able to rent it as they want? I think there are valid concerns in some areas about available parking and airbnb landlords creating nuisance "party houses" that disrupt neighborhoods, but it seems like these issues could be addressed with noise and parking ordinances, the lease agreement, and fines or surcharges.

Bottom line, I don't think anyone would be renting out their house or driving their car for money unless they felt it was the best or only alternative.

up
15 users have voted.

" “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR "

@Phoebe Loosinhouse

I don't really care if someone chooses to become an Uber driver or chooses to utilize Uber - obviously there was a services gap in the marketplace that coincided with an employment gap and a company and a concept rose to address it.

this statement is in perfect sync with the philosophy that The Market Chooses Wisely, which underpins our entire fucked-up system. the market does not choose wisely. To the extent that such a thing existed, the "services gap" to which you refer arose from the reality that if the people who drive cabs are going to be able to make a living driving cabs, then people who take cabs are going to have to:

A. wait a little longer than they want
B. pay a little more than they want

This reality has historically been addressed by municipal regulation of the taxi industry, which limits the supply of taxis and thus ensures sufficient income for drivers. Unfortunately, of course, this being a nation obsessed with private property, the coveted medallions are treated as a commodity that can be sold by the holder. Such a scheme introduces a "rent" that drives the price of taxi service up higher than it ought to be -- but that's a separate problem.

up
14 users have voted.

The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.

Phoebe Loosinhouse's picture

@UntimelyRippd is not the basis for either my comment or my philosophy of life or economics. I imagine that sometimes it does and sometimes it doesn't, and even if the "unseen hand" occasionally does make the right choice, TPTB will eventually find a way to screw it up, because "free markets" are mostly designed to be monopolized and controlled by a selected few. Ironically, there are people who look at Uber as a disruptive element that put the established medallion taxi industry on its head and put the power of the transport contract directly in the control of the drivers and the passengers.

If there were sufficient cabs and sufficient drivers in most locations, Uber would have never gotten off the ground, it would have died in its cradle. But apparently, there weren't sufficient drivers and cabs and there were also people looking to earn money who threw their cards in with Uber.

I do understand the viewpoint of people who think Uber is exploitative, but I personally think much if not most of our industries and corporations are exploitative, channeling almost all the money to the few at the top and declining to pay living wages with decent benefits to their employees.

The concept that I personally find more troubling than Uber is the whole Task Rabbit thing, where people seek to underbid each other in performing mostly unskilled tasks - "I will pick up your dry cleaning for $10" "I will pick up your dry cleaning for $5.00" "I will pay you $2.00 to allow me to pick up your dry cleaning", etc.

The bottom line is that if we had a vibrant economy with high paying jobs that valued workers we wouldn't be having these discussions.

up
13 users have voted.

" “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR "

@Phoebe Loosinhouse

If there were sufficient cabs and sufficient drivers in most locations, Uber would have never gotten off the ground, it would have died in its cradle. But apparently, there weren't sufficient drivers and cabs and there were also people looking to earn money who threw their cards in with Uber.

There is no magical supply of taxi service that is "sufficient". Uber's success derives exactly from the fact that, as Adam Smith pointedly observed in the work that has subsequently served as a bible for millions of capitalist apologists (most of whom have never read it), in a free labor market wages will fall to subsistence. People choose Uber because it is (often) faster and (always) cheaper than a "real" taxi. Well, the reason it's (often) faster and (always) cheaper is because it represents a spectacular, unregulated oversupply of taxi service. In particular, it's (often) faster because it is divvying up the limited demand for taxi service across an enormous pool of drivers -- far too large a pool for those drivers to get enough work to survive; and it's (always) cheaper because as independent contractors, the wages of those drivers are protected by nothing but their individual sense of dignity. Generally speaking, in such a context, dignity will lose out to desperation.

up
9 users have voted.

The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.

@UntimelyRippd
but otherwise your comment is spot on.

According to Lassalle, wages cannot fall below subsistence wage level because without subsistence, laborers will be unable to work. However, competition among laborers for employment will drive wages down to this minimal level. This follows from Malthus' demographic theory, according to which population rises when wages are above the "subsistence wage" and falls when wages are below subsistence. Assuming the demand for labor to be a given monotonically decreasing function[clarification needed] of the real wage rate, the theory then predicted that, in the long-run equilibrium of the system, labor supply (i.e. population) will rise or fall to the number of workers needed at the subsistence wage.
up
7 users have voted.

@gjohnsit
Don't have an immediate cite for it, though.
As I recall (no promises as to accuracy there), his subsequent, somewhat peculiar, observation is that the only real hope for an improvement in the physical wellbeing of the ordinary person is a cultural shift in the perception of what "subsistence" means.
Of course, that is precisely what the various social "safety nets" so despised by Smith's semi-informed pseudo-acolytes are intended to do: establish a cultural standard of "subsistence" that isn't a horror show.

up
5 users have voted.

The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.

solublefish's picture

@UntimelyRippd

Adam Smith pointedly observed in the work that has subsequently served as a bible for millions of capitalist apologists (most of whom have never read it), in a free labor market wages will fall to subsistence

You can read it in the opening 15 paragraphs of WoN Book 1, Ch 8, "Of the Wages of Labor".

up
2 users have voted.
riverlover's picture

@Phoebe Loosinhouse On rental of rooms, bagels for breakfast, sheets and towels changed. That is WORK. My bnb friend has a second mini-house on her lakefront property. Bought or financed by her parents. All tenants have to tolerate is a property-cat. And at 40 y/o, still in grad school for her.

I fear that many see it as easy money; the IRS may disagree. Punitively. With interest at CC rates.

We are or have been trained to be fearful. Time somehow to cut that cord.

up
7 users have voted.

Hey! my dear friends or soon-to-be's, JtC could use the donations to keep this site functioning for those of us who can still see the life preserver or flotsam in the water.

@Phoebe Loosinhouse
that this is the same rationalization used to justify scabbing, right?
"It's OK for me to put another guy out of work because I need the money and I'll work for less."

As for "obviously there was a services gap in the marketplace", when did Americans stop thinking of themselves as "workers" instead of "consumers"?

up
10 users have voted.
gulfgal98's picture

@Phoebe Loosinhouse these are not being done by people who are starving and looking to eke out a living renting out their homes. Most of these rentals are held by people who can afford to own two or more properties. Every smaller and affordable residential structure in my small western NC town is being snapped up before it hits the public market and is being converted into a short term rental.

It is devastating to the residential character of established in town neighborhoods, which is where it is happening predominately. It removes permanent residents from the neighborhood, regardless if they are home owners or renters. It also removes affordable housing from the stock.

And why do people convert residential structures in good neighborhoods to short term rentals? It is because the amount of money made from one week of short term rental is often greater than one month of long term rents.

up
10 users have voted.

"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West

"Those who make peaceful revolution impossible will make violent revolution inevitable." John F Kennedy

Phoebe Loosinhouse's picture

@gulfgal98 The last real estate boom was fueled by a whole crew of new "real estate investors" getting into the market because they hoped to replace and/or supplement their stagnant wages by getting into "flipping" real estate which was based on market pressure constantly driving prices higher combined with some some often minimal make-overs, rehabs. These folks were into the concept of the fast turnover and quick cash on each transaction. We all know how that turned out - it was musical chairs and rehabbing and flipping turned out to be a lot harder than the TV shows and infomercials painted it out to be.

Now it's happening all over again and because wages are STILL stagnant, and people are looking to buy that investment property which instead of flipping,they plan to hold the property for the long term and it's STILL mostly a sham. I have a friend who inherited a house free and clear and even WITHOUT a mortgage, after taxes, insurance, ongoing maintenance and repairs and property manager fees there is very little at the end of the day to put in the "profit" category. They are, as we speak, thinking of going the Airbnb route even though they really don't want to. They know it involves a lot more work, and a lot more risk but they don't feel like they have much of a choice. Now imagine if the property was mortgaged. Their experience has been quite an eye-opener.

But again, it all goes back to the basic reality of people's basic needs and desires and goals not being met with their basic salary and the need for them to find supplemental income through whatever means they can

I am well aware of what this current real estate investment mania is doing to rents (blowing them sky high)and depleting the housing stock for owner occupants. There are some solutions I can think of just off-hand which mostly involve adding conditions to federally insured mortgages, for example, if the original mortgage was issued for an owner-occupant, that at resale if the mortgage still exists, the house must be sold to same, or suffer some kind of financial penalty at sale. That alone would put investor buyers at a disadvantage. When federal foreclosures are sold, there is commonly a period of time when they are offered first to owner occupants only, before they are opened to the investor market.

IMO, it's a dirty little secret that TPTB no longer foster the American Dream of home ownership as being an ideal. They prefer a transient workforce and I think they hate the idea of the plebes owning property and gaining wealth through equity, which has long been the biggest slice of middle-class wealth - their homes. There was a whitepaper put out jointly by Treasury and HUD during the Obama administration outlining long term goals of getting the government out of the loan guarantee business and letting it all go private which would mean things like very high credit scores and 20% down payments, which would make home ownership the Impossible Dream. Your Dems at work.

In my area, there is an astronomical amount of huge apartment complexes being built. This is symptomatic of Big Money cornering more and more of the housing market. Have you looked at the Rentals Wanted part of Craig's List recently? There are numerous ads of people looking for a rental from a "private owner". Why would that be? It's because there are lots of those who are deemed unqualified to rent a corporately managed property because of a previous bankruptcy or credit dings even if they have more than adequate provable current income to meet the rent and agree to a direct deposit.

up
8 users have voted.

" “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR "

gulfgal98's picture

@Phoebe Loosinhouse In my area of western NC, only a short 35 miles southwest of Asheville, these houses are being bought up by folks who do not need to have a mortgage. They are almost always the smaller homes in the neighborhoods. And yes, we have mixed neighborhoods with small less than 1000 sq ft cottages next to larger homes. The problem is that many of these smaller homes were used as long term rentals which meant the occupants were part of the residential fabric of the neighborhood. Now, these homes are being sold to investors who have an inside track to up coming listings before they hit the market. The next thing that happens is they are cutesied up and turned into short term rentals.

The in town residents have asked the local government to regulate these things, either by limiting the total number or by making them scattered about so as not to adversely affect certain neighborhoods. The elected officials have sat on the issue because they contend that these short term rentals meet a need for rooms that is not being met by hotels or motels or regular bed and breakfast establishments. Further, they like the idea that many of these are happening close in so that visitors can walk to down town.

The problem is that when you lose your full time in town residents, the downtown often declines. I worked for over thirty years in the planning field and one of the keys to maintaining a healthy downtown is to keep a strong residential component. In addition, conversion of these smaller residences to short term rentals depletes the affordable housing stock in the community. You will never see these short term rentals in areas of poverty, but they remove affordable units from safer and more desirable neighborhoods.

Asheville, only 35 miles away, has banned short term rentals in town. Enforcing the ban has been difficult, but they can fine a property owner up to $500 per day if they are caught.

up
6 users have voted.

"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West

"Those who make peaceful revolution impossible will make violent revolution inevitable." John F Kennedy

Phoebe Loosinhouse's picture

@gulfgal98

when the cost of housing becomes more than the average worker/resident can afford. What happens next is a lot of "house sharing" arrangements. Here's another trend - I have seen a surge in landlords renting bedrooms in houses as opposed to the houses themselves. I'm not talking owner occupant landlords renting out unused bedrooms, I'm talking about an absentee landlord renting a three bedroom house to three different tenants and referring to the living room, kitchen and bathrooms as "common areas". I guess they get more money but this strikes me as a recipe for disaster.

up
4 users have voted.

" “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR "

gulfgal98's picture

@Phoebe Loosinhouse with places like Asheville where the old downtown areas have become gentrified. My town is not Asheville and is very far from Aspen like. It is a small town with a lot of older people in it, many of whom rent rather than own. Market values have held consistent, but when you start having conversions of residential areas to short term rentals, it is bound to drive prices higher.

The bottom line for me is maintaining healthy in town residential neighborhoods. Close in neighborhoods help keep your down towns viable and prevent sprawl. Speculation and conversion to a commercial use, which is exactly what these short term rentals are, is not healthy for in town neighborhoods and drives full time residents further out.

The issues you cite are due to factors such as wage suppression which I have written about here and speculation that is driving up the cost of housing, both for buyers and renters.

up
6 users have voted.

"I don't want to run the empire, I want to bring it down!" ~Dr. Cornel West

"Those who make peaceful revolution impossible will make violent revolution inevitable." John F Kennedy

Phoebe Loosinhouse's picture

@Phoebe Loosinhouse

I don't see how advocating for the maintenance of medallion cab company monopolies,who are not known for high wages and great working conditions in the first place, as far as I am aware, as a pro-worker stance. Maybe some competition will make more of them the better employers they weren't motivated to become on their own when they controlled the field.

They were a stagnant industry who let an internet upstart ap completely supplant them in the blink of an eye. I could be wrong, but I thought the lure of Uber to drivers was the potential of earning more, not less, money and on the schedule that one chose for themselves. If those promises turn out to be untrue, then Uber will go under as they will deserve to. They'll be just one more failed business on the ash heap of commerce.

Whose job anywhere is protected from competition from new constructs? Did we prohibit the automobile on behalf of the buggy-makers? I am reminded of people who actually tell us we can't have single payer National Health because of the insurance industry people who will lose their jobs. Right, as if those jobs are worth sacrificing the health and well-being of the entire nation for.

I'll re-iterate my basic point which is that the "sharing economy" arose because people desperate for economic opportunities and basic survival will take whatever opportunities they can find where they can find them.

up
2 users have voted.

" “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR "

@Phoebe Loosinhouse

Did we prohibit the automobile on behalf of the buggy-makers?

This is a false comparison.
Uber was never a technological breakthrough. It was always about the business model.

A much better comparison would be Walmart v. neighborhood stores.
Consumers win. Workers lose.

up
4 users have voted.
PriceRip's picture

          by, Dr. Robert I. Price, University of Nebraska at Kearney, 1980s.

          Yep, gave that presentation. A few people liked the presentation. Some, hated it and me and never spoke to me again. How is this even a topic of conversation at this point in time?

          Is anyone surprised by this result ? Really ?

up
14 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

PriceRip's picture

@PriceRip
          Unfettered Capitalism is the problem. We all understand the "free market" economies are destined to fail. We all understand the rush to the top drives the majority to the bottom. This we know. Splitting hairs parsing the obvious seems to lead nowhere, and has for several decades. I am getting old, and very tired of running on this hamster wheel.

          Obviously the first step to getting the insanity under control is more and bigger government, not less and smaller government. This is clear, the challenge is: How do we facilitate the process? How do we institute regulations? Now do we install appropriate government bureaucrats to inforce said regulations and prosecute violators.?

          Capitalism, per se, is not the problem. As implemented in the USofA and many other places, it is the cause of much ill. This system can be fixed, we just have to have the will to fix the system.

up
11 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

@PriceRip "financialism", rather than capitalism per se. The principle that any outstanding debt (including such debt as represented by one's retirement savings) ought rightfully to be rewarded by geometric increase is bizarre and unsustainable.

up
5 users have voted.

The earth is a multibillion-year-old sphere.
The Nazis killed millions of Jews.
On 9/11/01 a Boeing 757 (AA77) flew into the Pentagon.
AGCC is happening.
If you cannot accept these facts, I cannot fake an interest in any of your opinions.

PriceRip's picture

@UntimelyRippd
          And yet again I say the only realistic path to a solution is government regulation. First you have to set up a bureaucracy with competent bureaucrats to do a competent job.

          Using a term like "financialism", rather than "capitalism" doesn't make a damn bit of difference at this point. Perhaps when we get to the point of tweaking the system to fine tune the process these questions of vocabulary might be warranted. But as long as Unfettered Capitalism (or whatever word you prefer) is the law of the land, we are screwed.

up
7 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

Using OPM (other people's money, capital goods, property, resources) plus labor with "contractor" status, equals the gig economy. All the risk and labor "volunteered" by us, all the profit and zero risk goes to Uber and Airbnb. But wait, this is just a holding pattern until the robots take over. There will be more carnage than even Donald Trump can imagine. BTW, there's talk of Sheryl Sandburg running for prez in 2020. Thinks her TED talks, book Leaning In, and stint at Treasury under Obama qualifies her. She's got a new book out on coping with grief (her husband's death by treadmill) for Hillarybots. Move over Donald, Hillary ll is gunning for you. Not to mention Kanye West, Andrew Cuomo, and Corey Booker.

up
9 users have voted.

We are a rural town far removed from any cities. Air B&B has allowed us to actually provide lodging for what is an international tourist destination. We are hemmed in by a national forest with no room or desire to add hotel space. It allows us to rent our cabins, or rooms and make ends meet. Tourists get a place to stay they may not have to book a year in advance. The only hotel is still booked solid.

We have 1 guy who used to drive for Uber in the nearest city 1 1/2 hours away but most recently he has discovered the need for this service is greater right here. He makes an income we have taxi service Uber is history we just call him. It pretty much requires a reservation and sharing the ride.

up
5 users have voted.
PriceRip's picture

@pswaterspirit

up
4 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

Require a good number of people to keep them running.

up
1 user has voted.
PriceRip's picture

@pswaterspirit

up
3 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

@pswaterspirit

up
3 users have voted.
PriceRip's picture

@gjohnsit
          I am thinking we should organize a trip for these "create new jobs in the new market" people to see a high tech factory where workers tend robots that are now doing the jobs the tenders used to do. Just a rough guess from looking at vintage photos compared to recent videos the ratio is more than 25 to 1.

up
4 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

@PriceRip

up
0 users have voted.

Beware the bullshit factories.

is that for the most part it illustrates the poor serving the poor. The demand pool for Uber and Airbnb are primarily people who need to save money as best they can, while the service providers are primarily desperate for income or supplemental income. While this isn't always true, vis-a-vis the examples given above - this is the truth for the majority of cases.

So gjohnsit's point, if I am reading correctly, is that these two examples illustrate both the downward slide of our economy and how that slide is being used for further exploitation by the few.

up
12 users have voted.

In so many respects this is true. And in this respect, especially.

up
9 users have voted.
PriceRip's picture

@BayAreaLefty
          For anyone with half a brain and a willingness to be discerning the truth is obvious. And, until we decide to correct the system the situation will continue to deteriorate.

up
8 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

Bisbonian's picture

@UntimelyRippd

Well, I dreamed I saw the silver spaceships flyin'
In the yellow haze of the sun
There were children cryin' and colors flyin'
All around the chosen ones
All in a dream, all in a dream the loadin' had begun
Flyin' mother nature's silver seed to a new home in the sun
Flyin' mother nature's silver seed to a new home...

-- Neil Young, "After the Gold Rush".

up
7 users have voted.

"I’m a human being, first and foremost, and as such I’m for whoever and whatever benefits humanity as a whole.” —Malcolm X

Greyhound's picture

People go into business with these thieves and sooner or later they learn that the thieves are the only party making money, so they go into business for themselves. Next they learn that they can't afford the insurance and running costs on rates set by uber, so they become gypsies.

The fundamental failing of all these so-called businesses is that they allow the principle to evade any liabilities that running a business entails. They slough off the expenses and keep all of an enormous cut of every transaction. Inevitably, those costs catch up to the operators and they go down the tubes, while Uber & Co. are busy shearing the next flock.

up
9 users have voted.

but the reason that the taxi industry died is that they flooded the market, not any bogus "shortage". When there are too many taxis the drivers do the obvious, though suicidal, thing - they abandon the low volume areas and ignore the low paying fares.
You want to go for 6 blocks from a supermarket to your home by the beach? You want me to load (and unload and haul up a flight of stairs) a dozen bags for a $3.50 fare? You want me to wait 4 hours for you to call? Homey don't do that. (twice) So you think there's a "shortage" and you complain. And the city issues more medallions, and the taxi companies makes more money, because they're not in the business of providing a taxi service, they are in the business of renting taxis to drivers, and they make more money renting 100 taxis to drivers making $100 a day than they make renting 50 taxis to drivers making $300 a day.

up
4 users have voted.

A PROUD Hillary hater since 1993

PriceRip's picture

@doh1304
          The reason they got away with defecting rather than cooperating is because of the failure to regulate. The disintegration of our economic system was not an inevitability, it is the direct result of some really stupid policies.

up
7 users have voted.

"I know you believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
Robert J. McCloskey, U.S. State Department spokesman. From a press briefing during the Vietnam war.

blazinAZ's picture

@PriceRip

the direct result of some really stupid policies

Every time I talk with anyone about wages, redlining, restricted access to education, healthcare, or even a supermarket, I insist that these are the result of policies, crafted and enacted by the gov't.

The tax code is one of the primary influencers of where people spend money and which people benefit (for example, deductions for interest on mortgages but not for rental payments). It can be changed if, as PriceRip says, we have the will to do it.

up
2 users have voted.

There is no justice in America, but it is the fight for justice that sustains you.
--Amiri Baraka

I have more faith in a reliable taxi company getting me to the airport on time than Uber. Also, taxis are a heck of lot easier to spot than Uber cars. It's impossible to hail an Uber car.

up
2 users have voted.

Beware the bullshit factories.