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 this increase to companies’ coffers, providers want reassurance that their wealth will also increase. In the cooperative world, this is called co-wealth generation, and it makes cooperatives attractive. When co- wealth is mentioned, the easiest examples to point to are equity or dividends. The cooperative model could be worth working toward, but in the meantime, there is room for other types of co-wealth generation. Companies or peer advocacy groups can build programs that have real material benefits for providers. The focus group participants made no mistake that peer economy companies are backed by venture capital. In the San Francisco Bay Area, there is a normative understanding that the typical venture capital agreement requires rapid business scaling. This has led to suspicion and discontent among some provider communities—TNC drivers question whether social media advertisements boasting up to $35 per work hour are realistic when the company aggressively onboards new drivers (long-time drivers perceive this as an oversupply), and some long-time Etsy sellers oppose Etsy’s move to allow more than just handmade and vintage products ; they believe that when faced with questions of growth, Etsy chose the side of their star sellers rather than remaining the champion for small vendors. Scaling in the peer economy is not symmetrical. As demand for services and products grow, companies can recruit more providers. Providers, on the other hand, can only scale their individual efforts to a point. Some services require an exchange of time, equipment, and presence for a single transaction (i.e.: TNCs and personal service platforms). Others have more room for scaling (i.e.: multiple property management on shared space platforms and production methods on small manufacturing platforms). It is more crucial for platforms whose providers cannot scale indefinitely to create a sense of co-wealth generation. While equity and member dividends are highly unlikely, there are ways to leverage collective might for material benefit. As mentioned in a previous chapter, collective bargaining could make supply chain costs more affordable (for KitchenSurfing chefs, this is the market price of seasonal ingredients). There might be a tiered benefit program for active providers who are striving to earn a full livelihood. Whatever the avenue and whatever they might be doing already, companies must clearly communicate co-wealth generation.
RECOMMENDATION #3 - The value of fostering community between providers and consumers
Platforms can create a more pleasant work atmosphere if they foster mutual respect between providers and consumers, and they should make those efforts visible. Providers think of themselves as more than just a service. Hosts who also use Airbnb as guests (crossovers) think of it as a better and more personable stay than the typical hotel experience, and they expect their guests to feel the same and act accordingly. TaskRabbits may need the money, but they want the tasks to be more than just a transaction. Providers are aggravated when they perceive that consumers are neither considerate nor respectful in kind. TNC drivers stressed the need for passenger education; the focus group participants were particularly worried about how passengers rank them on a five-point scale. Their perception was that Headquarters (HQ) read anything lower than a five as a red flag, even though HQ had not done a sufficient job communicating their five-point understanding to passengers. Due to territorial tension with taxi drivers and public transportation, drivers worried about idling in high-traffic areas while passengers take their time to make it to the car . Meanwhile, most consumers certainly do not intend to be the source of concern, especially repeat users who appreciate peer-to-peer marketplaces. Drivers and passengers need to be gracious with each other, explains Emily Castor, Lyft’s director of community relations. When Castor knows she is running late, she asks her idling driver to start the fare (Castor 2014).
Aside from crossovers, community is scant across some provider-consumer platform divides. Community potential on providers’ side is strong; when I first began my field research and asked community managers to point to signs of the community, these materialized in providers’ relationships with one another. Consumers come to peer-to-peer marketplaces to fulfill a need; community is secondary to them. Consumers are a constituency—a group of people who have the same interest but not necessarily a mutual and lasting bond because of that interest. There is kindling for a provider-consumer community, and the sparks are visible in individual transactions (it is reflected in what our previous provider calls “friend crushes”). However, critics and skeptics perceive a power dynamic between providers and customers that reifies class divides. In terms of income, consumers are typified as the “haves,” and providers are the “have-nots.” This speculative tension between providers and consumers has yet to manifest in any explosive way, but to maintain respect beyond the few crossovers (those who are both providers and consumers on the same platform), companies should invest official effort to harmonize the two groups. Growing these embers into something more may grow the compassion and graciousness that distinguish a human-centered economy.
In the end, we harvested rich qualitative data, but we take our results with a grain of salt. There were obstacles to our recruitment methods; we wanted to reach out to providers who ranged in time spent on peer economy platforms to the percentage of income they earn from those platforms. Time and incomecorrelate with community participation, and reaching out to occasional peer economy providers proved difficult. The focus groups took place in January 2014, but we began publicizing and outreach in November 2013. Even with two months’ lead to target what is presumably a wired population (peer-to- peer platforms are optimized for mobile transactions), we still did not have sufficient channels to reach people who are not interested in the peer economy for camaraderie or philosophical interest. Since we sourced participants primarily from Peers’ 10,000 members in the San Francisco Bay Area, we were aware that these providers were self-selecting, eager to stay on top of peer economy developments and probably subscribed to the ideology of the peer economy. In Ethnography - Step-by-Step, David M. Fetterman explains this ethnographic approach:
One of the most common assumptions of inferential statistics is that the sample is random. Typically, ethnography uses stratified judgmental sampling rather than a truly randomized selection. The use of parametric statistics requires large samples. Most ethnographers work with small groups, however. The issues of expertise and appropriateness raise further difficulties. (Fetterman 1998:106)
Since we found our focus group participants using a convenience sample and the snowball recruitment method (we asked providers and community managers to put us in touch with more providers), I must end the chapter by stressing the scope of the study again. As a company’s competitive asset, private data is not commonly shared in this budding sector. There was no publicly accessible data anchor, so I endeavored to substantiate a starting point through data collection. The study results reflect how providers navigate their work and how they experience company-provider dynamics. This recruitment approach attracts the most impassioned and reachable people. We do not know whether there are any significant correlations between providers’ income generation and participation level with the likelihood that they would hear of or volunteer for a group interview. The focus group research also took place in Silicon Valley, which has a prominent tech scene. This context plays out in factors such as access to numerous peer economy income options, professional networking potential, a deeper than average understanding of the venture capital model, and—since San Francisco is the birthplace and testing ground for many companies—the level of a platform’s community engagement. Ideally, several more focus groups would be conducted to form an even fuller perspective.
That said, the field research affirmed that providers are anxious about the legal ambiguity around their work, and some do not know how to manage the risk of being an independent. Money is the single-most important thread to provider longevity, but providers deeply enjoy being the source of a good customer service experience. Companies that cultivate community have a long-term competitive edge in retaining providers, and these communities eventually grow into their own and set up community hubs independent of the platform. However, the more assets (including time and presence) and skills (including effort) that are required for financial participation, the more expectations the provider has of the company.
When I first began my research, I was eager to dive into certain questions: What is an onboarding process for marginalized and underprivileged communities to take advantage of the peer economy? What particular support and resources do these communities need? Immediately, I ran into walls asking some of the questions I was most excited about. Before answering any of them, I had to sort between popular assertions as either speculation or substantiated studies. Finding very little to stand on, I took on qualitative fieldwork as an intervention. This chapter summarizes the findings of my intervention, and my hope is that it is a clear enough starting point for researchers to tackle more questions. That said, other questions I would have hoped to investigate include:
Do certain platform combinations lend themselves to a better patchwork income? If so, what is the combination of platform characteristics that make these combinations work well for providers?
- If quantitative data flowed more freely, where would we see seasonal fluctuations that could give providers a sense of rhythm?
- What is currently the proportion of full-income users, partial income users, and occasional income users?
- Do early adopters earn more money when the platform is young? If so, will peer economy providers have to hustle from platform to platform as early adopters to sustain a decent income?
- What is the conversion rate for those who sign up as users to become active providers? What is the latency period between being a consumer and becoming a provider?
- To date, what linear events have had an effect on the peaks and valleys in conversion (i.e.: dramatic changes to job rates, national events, natural disasters)?
“The idea that anyone can benefit is a common sentiment within the Sharing Economy,” write Dorian Commode and Jules Bentley about the peer economy’s presence in New Orleans. “But while the internet may have potential as a democratizing force, it has in common with democracy itself that it does not serve all its constituents equally” (Commode and Bentley 2014). Questions in this branch to investigate include:
- If there is a way to visualize a provider heat map across demographics and local geographies,
what are the opportunities to approach practicing providers from underprivileged communities to codesign an inclusive onboarding process?
- What would guarantee a baseline of economic security for people to feel confident about working
in the peer economy? Secondarily, do countries that invest more in universal social welfare turn out more confident peer economy providers?
- As the tide changes, how far outward is the peer economy’s legitimacy penetrating? For example,
would peer economy providers be fine with their children aspiring to be peer economy providers as part of their fluid work careers?
Qualitative fieldwork is a rewarding but drawn out process. Although I now hang up my hat as an MIT researcher, I hope other researchers will consider these additional questions and adopt some of them in their own studies.
CONCLUSION - Getting at a human-centered economy
...certain ideas burst upon the intellectual landscape with a tremendous force. They resolve so many fundamental problems at once that they seem also to promise that they will resolve all fundamental problems, clarify all obscure issues... The sudden vogue of such a grande idee, crowding out almost everything else for a while, is due, [Susanne Langer] says, “to the fact that all sensitive and active minds turn at once to exploiting it. We try it in every connection, for every purpose, experiment with possible stretches of its strict meaning, with generalizations and derivatives.” After we have become familiar with the new idea, however, after it has become part of our general stock of theoretical concepts, our expectations are brought more into balance with its actual uses, and its excessive popularity is ended ...if it was, in truth, a seminal idea in the first place, [it becomes] a permanent and enduring part of our intellectual armory. But it no longer has the grandiose, all-promising scope, the infinite versatility of apparent application, it once had. —Clifford Geertz, The Interpretation of Cultures (Geertz 1973:3-4)