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How Much Are People Making from the Sharing Economy?

priceonomics.com

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Re: How Much Are People Making from the Sharing Economy?

#31

Post by tommynicholas »

WheelsAtLarge wrote: post #23

I think people are missing the point of the article. I summarize that the sharing economy is not a good way to make a living. In search for the lowest price we have people that can't make enough to get an apartment and raise a family. Raising a family has become a luxury for some people. Try to raise 2 kids and you fall into poverty status. The scary part is that it's possible to see a future where a big chunk of the…

The somewhat optimistic view of these "gigs" is that they have two important qualities:

- They can be picked up/put down at any time - They require no specific time commitment and can be managed in parallel with other money making endeavors/jobs

Most "jobs" are actually difficult to get (go try to get a job as a waiter - you probably need to know someone), require a very specific time commitment, and if you decide you have other opportunities you want to pursue for any period of time you have "quit" the job and renounce the right to work it likely forever.

Those are really shitty qualities! There's tremendous value in a job you know you can start/stop anytime and don't require any specific commitment in order to continue to have the job available to you. We should look at the gig economy not in any way as a career (although some may find it appropriate to use it as such) but rather as a new income generating tool. When considering whether the gig economy is good or bad, we should consider that context. My overall take is that we need more "gigs" but that the rate of the shift towards "gigs" in general is too fast and is worrying. I assume it will slow dramatically but if it doesn't...

Re: How Much Are People Making from the Sharing Economy?

#32

Post by nostrademons »

frgtpsswrdlame wrote: post #20
sokoloff wrote: post #15

Earlier quoted context omitted.

I suspect a lot of those low-hour, occasional drivers were going to have all of the fixed costs of the vehicle anyway and are only looking to cover the marginal costs. That's a perfectly reasonable strategy and the fact that they aren't covering average cost is irrelevant, so long as they're covering the marginal costs of driving Uber/Lyft.

I think those low cost drivers, if they even think about it, believe they're more than covering their marginal costs. They idea that they're essentially paying depreciation plus a small premium to themselves would not go over well if it were more apparent. Perhaps what we need is another anti-ride-sharing calculator where you can plug in a whole bunch of details about your car and insurance, normal driving habits and…

The car's going to depreciate whether you drive for Uber or not. Most car owners treat the car as a sunk cost that you need to live in America today, and figure they might as well earn some extra money if they have to pay that cost anyway. I really doubt there are many people going out there and buying cars just so they can drive for Uber.

Re: How Much Are People Making from the Sharing Economy?

#33

Post by yorwba »

rch wrote: post #22
ceejayoz wrote: post #16

Earlier quoted context omitted.

> I think it's pretty patronizing to suggest that people spending 40+ hours a week driving for Uber / Lyft are too incompetent to calculate out their own finances. Your average person isn't great at calculating out their own finances. I don't see any reason to assert Uber/Lyft drivers are better than average in this regard. I'd suspect this is one of the reasons 96% of Uber drivers don't last a year. http://www.cnbc.…

You could use that same number to support the proposition that they are accurately calculating their returns.

Yes, but only in hindsight, when they realize they have been losing money or didn't make as much as they expected.

Re: How Much Are People Making from the Sharing Economy?

#34

Post by ThrustVectoring »

jvm wrote: post #4

I usually enjoy priceonomics posts, but this analysis is disappointing. The sharing economy is a way of deploying labor and capital. So the operating question is, is it a good way of doing so on net? In some sense the market is spoken in that many people are willing to sell in these marketplaces. However, an argument could be made that services like Uber actually exploit the hidden costs associated with selling throu…

You can't really avoid taking a position on the distributional aspects. All "willing to sell in the marketplace" gives you is that their choice is better than their next-best alternative. It tells you nothing about whether the system as a whole provides fair choices and opportunities for people. It tells you nothing about whether rents are getting extracted through coercion. It passes no judgement on who gets the surpluses from trade.

Re: How Much Are People Making from the Sharing Economy?

#35

Post by myroon5 »

aantix wrote: post #26

For larger income Lyft/Uber drivers (probably those in SF/NYC), is it common to setup an S-Corp? Or you could setup an LLC with S-Corp accounting.. With such a low average earning, they could basically pay FICA on the first 20%, but take the rest as a dividend distribution and avoid those taxes. Would save them about an extra 18(?)% on taxes for the cost of a CPA & S-Corp filing (probably about $1800/yr). EDIT: Looks…

Can dividends be issued at-will? Or are they restricted to being quarterly / pre-planned / etc.?

Re: How Much Are People Making from the Sharing Economy?

#36

Post by neilwilson »

Anybody who studied how British dock workers were hired in the late 19th Century could have told you this.

Those who fail to study history are doomed to repeat it.

Never believe the hype about extreme individualism. You will always certainly make far more money if you team up with others and make your case politically.

Re: How Much Are People Making from the Sharing Economy?

#37

Post by _yosefk »

neilwilson wrote: post #36

Anybody who studied how British dock workers were hired in the late 19th Century could have told you this. Those who fail to study history are doomed to repeat it. Never believe the hype about extreme individualism. You will always certainly make far more money if you team up with others and make your case politically.

You mean if everyone teams up and makes their case politically, we'll all make far more, in real terms? So teaming up increases overall productivity? (Not impossible but would need more evidence than teaming up increasing bargaining power, though of course the latter needs evidence, too as a junior unionized worker doesn't have bargaining power against senior workers whom union arrangements incidentally tend to benefit.)

Re: How Much Are People Making from the Sharing Economy?

#38

Post by nickthemagicman »

tommynicholas wrote: post #31
WheelsAtLarge wrote: post #23

I think people are missing the point of the article. I summarize that the sharing economy is not a good way to make a living. In search for the lowest price we have people that can't make enough to get an apartment and raise a family. Raising a family has become a luxury for some people. Try to raise 2 kids and you fall into poverty status. The scary part is that it's possible to see a future where a big chunk of the…

The somewhat optimistic view of these "gigs" is that they have two important qualities: - They can be picked up/put down at any time - They require no specific time commitment and can be managed in parallel with other money making endeavors/jobs Most "jobs" are actually difficult to get (go try to get a job as a waiter - you probably need to know someone), require a very specific time commitment, and if you decide yo…

The problem is less with the qualities of the job and more with the pay of the job.

It's poverty wages and exploitative. It's not profiting off these people, it's profiteering off of them.

Re: How Much Are People Making from the Sharing Economy?

#39

Post by nostrademons »

sidlls wrote: post #14
Simon_says wrote: post #5

Earlier quoted context omitted.

My thinking is that the population of people who are applying for loans in any given month is going to be drastically different than the population who are not applying for loans in exactly the metric, personal finances, that Pricenomics wants to look at. Kudos on Pricenomics for being so upfront about their data, but I wouldn't have titled it "How Much Are People Making from the Sharing Economy?", because it's not.…

Different in what way? Just for example, during the housing bubble of the 2000s, people in any given slice of "personal finances" one cared to measure were applying for loans (purchases and lines of credit). I suspect the people who are in the gig economy are more likely to be in a class that has lower education, income, and assets. In that sense I'm not sure "personal finances" as a selection bias would apply (that…

There's a strong inverse correlation between how much you make and how much you borrow. People who are making enough to cover their daily expenses don't need to borrow, by definition, and so they tend to be underrepresented in loan origination statistics. Similarly, people who are making very little money tend to need cash, which makes them more likely to seek out loans, because the very product a loan is selling is cash (today, in exchange for more cash tomorrow).

While its true that during the housing bubble, people who took out loans included people from all different slices of the income distribution, the borrowers were disproportionately drawn from poorer income segments. That's why they called it a "subprime" crisis; the percentage of the mortgage market lent to people who wouldn't otherwise qualify for prime loans was much higher than normal, and predictably, these loans ended up defaulting at a higher rate.

Re: How Much Are People Making from the Sharing Economy?

#40

Post by wisty »

robotresearcher wrote: post #30
WheelsAtLarge wrote: post #23

I think people are missing the point of the article. I summarize that the sharing economy is not a good way to make a living. In search for the lowest price we have people that can't make enough to get an apartment and raise a family. Raising a family has become a luxury for some people. Try to raise 2 kids and you fall into poverty status. The scary part is that it's possible to see a future where a big chunk of the…

> I wish the new tech entrepreneurs would find a better way to fix the low skill problem rather than find a way to reduce services/costs to the bone. Just a few years ago there was a big push in this direction. MOOCs reduced the price of access to college level material close to zero [1]. There is more to it than access, of course. [1] edit: following others, notably MIT, who have been releasing great stuff for free…

I believe there were predictions that the gramophone, radio, television, videos, DVDs, and computers (back before the net was a big thing, then several times after it was) would all revolutionize education.
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