Tag: sharing economy
Could Ride-Sharing Services Slow U.S. Car Sales?

Could Ride-Sharing Services Slow U.S. Car Sales?

By Greg Gardner, Detroit Free Press (TNS)

DETROIT — Global new car sales will soar from 70 million in 2010 to 125 million by 2025, but the way those cars are used and who will own them is going to change rapidly according to a new report from the McKinsey consulting firm.

Urban Mobility at a Tipping Point is a 22-page discussion of the trends such as in-vehicle connectivity, electrification, car sharing, ride-hailing and autonomous vehicles that are expected to create new options for how people get around, especially in big cities.

While the report, which is co-authored by experts from McKinsey offices in Detroit, Stamford, Conn., San Francisco and Los Angeles, steers clear of sweeping predictions that Google and Uber will dominate this new market, it raises a series of provocative questions.

It does recognize that individual vehicle ownership is not going to disappear. One chart illustrates that, even in the technology-embracing San Francisco Bay Area, the cost of travelling 10,700 miles per year by ride-hailing services such as Uber or Lyft (more than $22,000 per year per vehicle equivalent) is more than twice as expensive as a financed new vehicle (about $9,200 per year) and nearly three times as expensive as a financed used car ($7,500 per year).

That’s even factoring in parking costs and California’s higher-than-average gasoline prices.

But the McKinsey study says that for those who use Uber or Lyft for shorter distances per year, the cost is more competitive.

Car sharing, through companies such as ZipCar, now owned by the Avis Budget Group, also continue to grow. Other major rental companies, as well as automakers, are getting into that market. Daimler launched Car2Go. BMW has Drive Now. Earlier this year Ford introduced Peer-2-Peer, a car sharing option being tested through November in Berkeley, Calif., Oakland, Calif., and San Francisco; Portland, Ore., Chicago and Washington, D.C., as well as London.

Ford Credit is inviting 14,000 customers in the U.S. and 12,000 in London to sign up to rent vehicles to prescreened drivers for short-term use. U.S. customers participate through software provided by ride-share company Getaround.

The strongest economic argument for car-sharing, in McKinsey’s view, is that instead of sitting idle for 90 percent of their useful lives, car-sharing vehicles will be on the road much more and perhaps reduce the number of cars on the road.

“There is little argument that widespread car-sharing would mean each vehicle gets used more intensively, thereby increasing its annual mileage from 11,700 to 20,400 miles.”

U.S. new vehicle sales are running near record levels, but most of the global growth in new car sales will continue to come from emerging markets.

Traditional automakers are phasing in various levels of autonomous driving, but so far they aren’t moving away from personal ownership as the foundation of their business model. New players such as Google and Uber, and perhaps Apple, may pursue fleet-based, on-demand services that could change the way some consumers look at vehicles.

“If I were in Google’s or Apple’s shoes I would try to acquire as much automotive talent as I could,” said Stefan .Knupfer, one of the study’s authors.

The McKinsey report cites data from the University of Michigan Transportation Research Institute showing that the rate of vehicle ownership in the U.S. has fallen from 0.79 vehicles per person in 2006 to 0.74 in 2012, while vehicles per household has dropped from 2.05 to 1.93 in the same period.

The report counters recent data published from automakers showing that millennials — those born after 1980 — are beginning to buy cars and trucks in numbers comparable to older generations.

“Surveys has found that American millennials are 16 percent less likely to commute by car to work, use public transit almost three times more often and are 23 percent less interested in owning a car that the generation that precedes them,” the authors wrote.

Near the end the McKinsey authors provide this observation.

“Given rising incomes and aspirations, there will be more demand for mobility. That will stress the world’s infrastructure, as well as its nerves.

“So what will the future of urban transit be ? Our view is that it will be more on-demand, with more sharing, and it will provide a broader spectrum of services … Urban mobility will likely be lower cost, faster and safer, and the lines between private and public transport will be increasingly blurred.”

(c)2015 Detroit Free Press. Distributed by Tribune Content Agency, LLC.

Foot traffic streams past Uber offices on Market Street in San Francisco. (Karl Mondon/Bay Area News Group/TNS)

Seniors Gear Up For The Sharing Economy

Seniors Gear Up For The Sharing Economy

By Mark Miller

CHICAGO (Reuters) — Five dollars may not sound like much pay for doing a job, but do not tell that to Brooke Folk.

At age 67, Folk spends up to 30 hours a week on projects generated through Fiverr.com, a shared-economy website that requires all its vendors to offer something to customers for just $5 and takes a 20 percent commission on earnings.

Folk, a former radio announcer and small business owner who lives near Pittsburgh, earns approximately $10,000 per year in supplemental income to his Social Security benefits on the site writing short stories and narrating scripts. He also sells — no surprise here — an e-book explaining how to succeed on Fiverr.

“When I first heard about it, I wondered if I should do something for $5, but what happens is you often upsell customers something additional. The most that I’ve billed an account is $1,300, and that’s a far cry from $5.”

More Americans than ever intend to keep working past traditional retirement age — whether it’s just to keep busy or because they need to financially — and entrepreneurship is becoming a more common alternative to full time jobs.

Entrepreneurs age 55-65 accounted for 26 percent of all startups last year, up from 15 percent in 1996, according to the Kauffman Index of Entrepreneurial Activity.

Fiverr may be a millennial-dominated platform with just 2 percent of sellers over the age of 55, but growth in vendors age 55-64 shot up 375 percent at the end of the second quarter this year compared with a year ago, according to the company.

Starting a business may sound like a risky investment of capital, but it does not have to be. A “micro-enterprise” — or side-gigging — can help retirees generate supplemental income without putting capital at risk and perhaps even enough to stall filing for Social Security or ease the pressure for drawdowns from retirement portfolios.

Folk is participating in an emerging online ecosystem that helps micro-entrepreneurs leverage their accumulated knowledge and experience. Other platforms include retail site Etsy.com (handmade and vintage items), and freelance marketplaces Guru.com and Freelancer.com.

But the action is not limited to the knowledge economy. For example, Airbnb.com recently noted that 10 percent of its hosts are over age 60.

Older Drivers

And AARP’s Life Reimagined — a program focused on guiding people through life transitions — recently announced a partnership with Uber aimed at recruiting older drivers. Life Reimagined has 1.4 million members; for Uber, the alliance is part of a strategy to hire hundreds of thousands of drivers as it works to meet surging demand for its service.

If driving strangers around in your own car for hours on end does not sound like an ideal retirement to you, AARP begs to differ. While it is not putting an age limit on applicants, AARP sees the Uber program as ideally suited to the younger end of its constituency — workers over 50 who have been sidelined by economic turbulence.

“The shared economy is offering people an opportunity to follow their hearts, have flexibility in their work, be empowered to make money, and be their own bosses,” says Adam Sohn, vice president of strategic initiatives at Life Reimagined.

“And, for millions of people who are doing what they don’t love, or have been pushed out of precarious jobs and are having trouble fighting their way back into the workforce, this kind of work also can provide a transition to whatever is next.”

Microentrepreneurship certainly offers a path around the age discrimination that older workers face.

In an AARP study released earlier this year, more than half of older workers who lost jobs during the Great Recession said age discrimination had a significant impact on their ability to find new work. But in the gig economy, if you can get the job done, no one cares about your age.

Nearly 25 percent of Uber’s drivers are over age 50, according to a study commissioned by the company recently – and among new drivers with no previous professional driving experience, 39 percent are over 50. Three percent were retired before driving for Uber, and 8 percent were unemployed; one in five drivers was employed in a temporary job.

Uber does not disclose data about the earnings of its drivers, but the report states that drivers are making $19 per hour on average.

(The writer is a Reuters columnist. The opinions expressed are his own.)

(Editing by Beth Pinsker and Alan Crosby)

Photo: Alper Çuğun via Flickr

2016 Presidential Race Emerging As The First Uber Election

2016 Presidential Race Emerging As The First Uber Election

By Lisa Mascaro, Tribune Washington Bureau (TNS)

WASHINGTON — The so-called sharing economy is fast emerging as a 2016 presidential battleground, exposing fundamentally different approaches over how to embrace new technologies without hurting American workers.

Eager to court millennial voters and deep-pocketed tech executives, Republicans have almost universally praised smartphone apps that allow consumers to hire drivers, rent apartments and buy or sell just about any service online, latching onto them as prime examples of free-market entrepreneurship and workplace deregulation.

But in what is shaping up to be the first Uber election, Democrats have been more cautious, struggling to avoid appearing resistant to the popular new ventures while highlighting their potential negative impact on workers’ pay and benefits.

Democratic candidate Hillary Rodham Clinton sparked the Uber debate last week by pointing to the risks such new business models pose for workers.

“This ‘on demand’ or so-called gig economy is creating exciting opportunities and unleashing innovation,” Clinton said, “but it’s also raising hard questions about workplace protections and what a good job will look like in the future.”

Top Republican opponents pounced on her skepticism, portraying her as out of touch. Within days, former Florida Gov. Jeb Bush made a public show of ordering up an Uber car to deliver him to a tech firm in San Francisco.

Sen. Marco Rubio (R-FL) whose 2015 book American Dreams included a chapter called “Making America Safe for Uber,” focused on the generational divide, saying Clinton was “trapped in the past, and cannot understand how the world is changing.”

Rand Paul, the libertarian-leaning Republican senator from Kentucky, wrote dismissively on Twitter that voters shouldn’t listen to a candidate who’s been driven in a limousine for the last 30 years.

Clinton risks alienating Americans who are increasingly enamored with the convenience and efficiency of the “gig” economy, or aligning herself too closely with labor-backed liberals, such as New York Mayor Bill de Blasio, who is fighting Uber’s push into his city.

“Progressive politicians are making a major error by positioning against the sharing economy,” Dan Pfeiffer, a former senior advisor to President Obama, warned in a tweet. “We need to be shaping the future, not opposing it.”

Veteran GOP digital strategist Mindy Finn called Clinton’s comments a “huge misstep” that could backfire. “When I see Hillary Clinton kind of pushing back on the sharing economy … there’s nothing about that that I think will be appealing to younger voters.”

But the risks don’t flow one way. With some economists predicting the sharing economy could be as transformative as the Industrial Revolution, Republicans, too, may suffer with voters if they present too rosy or simplistic a view.

Just as the 19th-century backlash against industrialization and worker exploitation led to many of the labor rights and safety protections enjoyed today, a similar movement is building in support of “gig” workers forced to scrape together a hodgepodge of jobs that barely pay the bills and lack security, pensions and other workplace benefits.

“This happened during the Gilded Age,” said labor historian Nelson Lichtenstein, professor at the University of California, Santa Barbara, comparing the vast wealth of the startups — 5-year-old Uber is now estimated to be valued at a stunning $50 billion — to that of the 19th-century industrialists. “That creates the inequality we talk about.”

It’s a conversation playing out not only on the campaign trail, but in legal battles against the companies in states across the country, including California. At issue is how to reap the economic benefits of the new technologies without losing the hard-fought protections and benefits for U.S. workers. Some policy experts envision a new category of workers, falling between independent contractors and traditional full-time employees.

Clinton’s team downplayed the partisan debate and stressed that she has “no beef” with Uber or other aspects of the sharing economy. At the same time, Clinton anticipates engaging in a broader policy discussion about the changing workplace environment.

“What she’s trying to do is start a very serious conversation about this important and growing part of our economy that is adding innovation and opportunity and excitement, frankly, but is also raising challenges and questions,” Jake Sullivan, a top Clinton policy adviser, told a group of journalists last week.

David Plouffe, Obama’s former top campaign strategist who now works as a chief adviser to Uber, said the reaction to Clinton’s July 13 speech was “overblown,” noting that she also said “very positive things” about the sharing economy. “My suspicion over time is you will see her embrace what this means,” Plouffe said Monday on “CBS This Morning.”

The bigger peril for Clinton, according to her party’s progressive wing, would be to retreat from Republican critics and fail to tackle the looming workplace issues raised in the new economy.

“It’s a phenomenal opportunity for Democrats to make clear they stand on the side of working people, even when they support innovation,” said Neil Sroka, communications director for Democracy for America, the organization founded by former Democratic presidential candidate Howard Dean.

At the same time, Republican candidates may find their Uber-loving stances get them only so far. Their positions on other issues — from immigration reform to net neutrality — are at odds with much of the tech-savvy and millennial audience they’re trying to attract. When Bush spoke last week in San Francisco, for example, some in the audience were more interested in his opposition to gay marriage.

“It looks so phony,” said one tech industry professional in Washington who was granted anonymity to frankly discuss the campaign. “If they’re trying to cater to Silicon Valley and people like me, we see right through this. … It’s a dangerous place to put yourself out there as the ‘new economy’ guy.”

While Uber and other startups have been careful to build bipartisan support for their budding industries and some leaders skew toward libertarianism, leading Silicon Valley-based executives have also made no secret of their reliance on Democratic mainstays. Uber Chief Executive Travis Kalanick, for example, recently praised Obamacare, saying that allowing people to obtain health insurance benefits outside of their job made it possible for people to adopt “more flexible ways to make a living.”

Uber is also well aware that the current debate is only the beginning of a long discussion about labor policy that will extend beyond the campaign trail.

“Layered on top of all of this is the important question: What’s at stake here?” said Benjamin Sachs, a professor of labor and industry at Harvard Law School. “Are the forms of protection and social welfare that we’ve provided since 1935 — are people going to just lose all of that because we have technological change? … How do we make sure that workers share in the sharing economy?”

(Los Angeles Times staff writers Seema Mehta in San Francisco and Michael A. Memoli in Washington contributed to this report.)

(c)2015 Tribune Co. Distributed by Tribune Content Agency, LLC.

Photo: Scott L via Flickr