Worker Support Infrastructure in the Emerging Peer Economy

* Master of Science MIT THESIS. Reading between the lines: Blueprints for a worker support infrastructure in the emerging peer economy. Denise Fung Cheng. June 2014

URL = http://hellodenise.com/mit-thesis.pdf

Abstract

"Look around you. What unassuming skills or assets are just bursting with potential? Meet the peer economy, where people monetize skills and assets they already have using online, peer-to-peer marketplaces. Lyft, Shapeways, Etsy, Skillshare… these platforms enable strangers to transact confidently. Instead of education, reskilling or being network rich, new marketplaces emerge everyday to reconfigure people’s existing assets and skills into income generating opportunities. Airbnb, TaskRabbit, KitchenSurfing, Postmates… From small-scale manufacturing to space sharing to personal services, amateurs and professionals alike can easily jump in.

As an alternative to full-time employment with benefits—a 20th century model worn thin—the peer economy (sometimes called the “sharing economy”) is setting imaginations on fire. At its best, the peer economy can reintegrate people who are defined out of the traditional workplace and, therefore, the traditional economy (the elderly, homemakers, those with varying physical and mental ableness, those at risk for human trafficking, etc.). At its worst, it exploits human labor and degrades human dignity.

Between positive and negative speculations, I have identified five particularly sticky issues:

1. Can peer economy opportunities comprise a livable work lifestyle?

2. Who is accountable when something goes wrong?

3. Do legal classifications override social relationships?

4. Can providers cultivate a collective voice?

5. How do peer economy actors historically contextualize the model?

The thesis begins with a historical overview of how we have arrived at this moment of possibility. The second act brings readers up to speed on conversation among investors, startups, cities, policy makers, entrenched interests, media, scholars and critics, and labor advocates. As antecedents to the peer economy, I introduce marginalized movements in the third chapter that could inform how the peer economy develops; I believe that this space can be a distributed network that matchmakces providers’ needs with capacity across the sector. From 2013-2014, I conducted ethnographic field research to suss 4 out emergent needs among peer economy providers, and I summarize the results in chapter four before finally tying together why the peer economy—regardless of speculation—has been so captivating.

This thesis is a confluence of historical analysis, economic theory, sociology, rhetorical analysis, qualitative and ethnographic fieldwork, and legal precedents that culminates in interventions for the peer economy. First and foremost, it considers whether the peer economy is a livable work lifestyle. The peer economy is a charismatic and rapidly spreading concept that is fundamentally transforming the way many people think about employment." (http://hellodenise.com/mit-thesis.pdf)

Summary

Denise Cheng:

"The normative understanding of work is imploding. Throughout most of the U.S.’ twentieth century, landing a job was equivalent to a lifetime of smooth sailing, but today’s Americans are always anticipating the next round of layoffs. This thesis kicks off with the rise and ebb of gainful employment through the 20th century. It then introduces the peer economy as a well-positioned, future work model for mainstream adoption. I run through the peer/sharing economy ideology before introducing stakeholders—providers, companies, investors, entrenched interests, regulators, cities, labor advocates, strategists, scholars and critics, and media—as well as known problems in the space.

I suggest three historical antecedents from which to draw from:

• The domestic workers movement for identifying emergent needs, organizing strategies, and as a natural partner in procuring labor rights

• An indictment of legal work status in the US and an exhortation to expand its classifications beyond “employee” and “independent contractor.”

• The franchise dilemma offers legal terms — ”convenance of good faith and fair dealing” and “contract of adhesion” — that capture tension between providers and platforms that both groups have had difficulty articulating. These terms are necessary to carry on a truly productive conversation of ethical issues in the peer economy.

The fourth chapter summarizes qualitative and ethnographic fieldwork in New York City and San Francisco. I interviewed various stakeholders with an emphasis on social welfare. Instead of summing up known issues, the chapter conveys how providers see themselves in relation to companies and customers.

This thesis ends by locating the peer economy within a larger movement to redefine work. It contextualizes the peer economy as one model and articulates the motivation among all stakeholders, which applies across labor models: “The excitement that I have observed around the peer economy—even when it is naïve—is a recognition that now is a chance to do things better.” (http://hidenise.com/post/54356670782/mit-thesis-reading-between-the-lines-blueprints)

Excerpt

Defining the peer economy

(it would seem that the author's understanding of the peer economy is the commercial sharing economy - MB)

Denise Cheng:

"The peer economy is a framework of online, peer-to-peer marketplaces that enable people to monetize skills and assets they already have (see figure 4). To a provider, the peer economy is immediate relief. It provides an income stream while also freeing providers to choose when to work, what to do, and where to complete the work. Providers sidestep traditional constraints such as geography or rigid work schedules. Those who did not find inclusion in a traditional workplace—stay-at-home carers, the elderly, those varying in physical and mental ableness—suddenly have an empowering way to generate income.

The peer economy is also a beacon of light in the technological doom-and-gloom. The darkest view of technology is that automated processes will one-day master all human tasks. In contrast, the peer economy represents technology’s power to be a humanizing force. The digital divide is still very real, but Internet access is taking on qualities of a basic utility (thereby underscoring the urgency around the digital divide). Where once networked communication was only possible through private, expensive infrastructure, whole worlds are now accessible to private citizens at the cost of Internet access. In commerce, expensive infrastructures are one of the highest barriers to entry and innovation, but when it comes to communication, the Internet is bulldozing that cost. The ease of communication, lowered startup costs, and rapid scalability are all affordances of digital technology. Companies that have taken advantage of these lowered barriers—peer economy companies included—can test their concepts in the marketplace with very low costs. Additionally, code—the scaffolding for these marketplaces—is far less expensive than tangible equipment. These affordances cross many scales; with marketplace tools at their disposal, peer economy providers can try out the income opportunity without a cost-prohibitive, upfront investment.

In addition to its accessibility, vocal supporters praise the peer economy for its role in reducing consumption (and, inversely, reducing demands on industrial manufacturing that contribute to environmental degradation). Consultant Rachel Botsman often uses the example of a drill (Botsman and Rogers 2011). The average drill only gets a few sessions of use. A person who remodels a house may buy a drill, and once the remodeling is complete, the drill sits around indefinitely. Meanwhile, plenty of people would like to use a drill for one-time projects, but they may not want to invest in a drill that will end up in their own equipment purgatory. Lending via the peer economy means one-timers invest only what it costs to rent a drill, drill owners earn some money, and the drill has now been revived with a purpose. Peer economy enthusiasts would point out another layer to this transaction: connection between strangers. Because the drill owner lent the drill to a one-time user, a connection is forged. This connection could stay as simple as that transaction, but it has the potential for people to exchange stories: Why did the owner buy the drill? What project is the one-timer working on? Perhaps a friendship will grow out of this transaction. Even if it does not, two strangers have glimpsed each other’s lives, which might be different than their own.

This aspect of connection, solidarity, and humanity is a selling point for peer economy companies, seeing as the peer economy business model is built on an inherently inefficient “inventory.” There are boundaries to optimizing human performance—including physical limitations, societal values, and quality of life— before it is outstripped by automated performances. However, as a selling point, every transaction with a provider is a tailored and irreplicable experience. Therefore, the emphasis is on assets and basic skills, which frees people from the vicious cycle of human capital investment. Peer economy companies boast about the communal nature of peer-to-peer transactions. By doing so, they position their weakness as a strength. Ultimately, though, the peer economy’s great innovation is systematizing trust and reliability between strangers." (http://hellodenise.com/mit-thesis.pdf)

Policy Recommendations

Denise Cheng:

RECOMMENDATION #1 - Incorporating financial literacy into workforce development training.

"In order to set the scene, a city employee said to me that workforce development training was an outdated model. How would a workforce development curriculum look moving forward? Based on the collected data, there are at least two branches I would recommend for any workforce training: personal financial literacy and navigating return on investment.

The providers I interviewed acknowledged that there are seasonal rhythms that affect their work frequency. Etsy sellers experience a spike in demand during the holiday season. Airbnb hosts have more business during vacation season and conference season. TNC drivers receive more requests during long weekends. But valleys happen just as often. A traditional employee is accustomed to a steady paycheck because companies smooth over the peaks and valleys. As independent contractors, providers must manage the same extremes for themselves. Providers who rely heavily on the peer economy may be able to coast off savings or projected earnings. However, to weather the feast and famine, providers need to develop personal financial literacy. These include such basics as distinguishing between revenue and income, setting aside earnings for taxes, and record keeping as a planning tool to set minimum work hours across seasons.

Return on investment is another critical planning tool. Providers appreciate the flexibility of their work because they value their time. Time is a valuable asset that can be divided between due diligence and return on investment. Due diligence is the minimum amount of time for upkeep, but return on investment is the ability to weigh whether something is worth more time and effort. TaskRabbits already have a sense of this, and Airbnb prices account for the amount of work that hosts are willing to put into the experience. However, providers are playing the long game when it comes to platforms such as Etsy, Shapeways, or KitchenSurfing. Since there are endless micromoves to make, providers must weigh whether the probability of their desired outcome is worth their sweat equity, which might be better spent elsewhere.

===RECOMMENDATION #2 - As companies grow, they need to convey the growth in wealth for their providers.===

The best-known peer economy companies have closed on several rounds of venture capital funding. With

[unable to copy-paste continuation of rec. 2 and 3)

(http://hellodenise.com/mit-thesis.pdf)