Trey McKinney, Staff Writer

Imagine an economy predicated on mutual cooperation, allowing for greater expediency and efficiency; that provides services reflecting a real interest in the consumer, and not just the service provider; that allows for everyday conveniences, making your life just a little bit easier.

What if that economy was based on technology, social media, and a growing sense of community? What if it reflected a greater sense of social responsibility, and gave each of us a role to play?

What if it facilitated self-employment and entrepreneurship, making it easier and cheaper to start your business, and market it accordingly? 

And what if that economy isn’t nearly as good for us as it seemed?

The Sharing Economy

The sharing economy refers to an economic system characterized by the peer-to-peer sharing of access to resources, though it may encompass any number of industries and services streamlining our day-to-day lives. It seeks to monopolize on the dormant productive capacity of otherwise unused, privately-owned resources; these can range from your car to your time to your skills, and even to your unwanted items. The principle is that there is wasted social utility in all of these things that could be taken advantage of, given the proper coordination and infrastructure.

The idea of a sharing economy (or collaborative consumption) is not really new. The term 'collaborative consumption' was first coined back in 1978 in a paper by Marcus Felson and Joe L. Spaeth. Its earliest vestiges in the most contemporary sense go back to the early 2000s, with services like Wikipedia, Couchsurfing, and Freecycle. Yet is was not until the past five years that the sharing economy became a fixture in public discourse, and a staple in many of our lives. This dramatic increase in visibility and utility can be reduced to three factors: technology, convenience, and monetization.

While there has always been latent value in our unused time and assets, it was never feasible to make them available to the public in a way that was mutually beneficial for both provider and consumer. Coordinating between people separated by distance and schedules made the endeavor more hassle than convenience. However, in the era of smartphones, social media, and interminable Internet access, the logistics have become much easier to manage.

Companies like Uber and Lyft can exploit GPS tracking to provide easy, accessible, and timely transportation services. Airbnb users can make their property availability known to anyone with Internet access at little to no expense. Because of the ubiquity of technology, we can coordinate across great distances with relative ease, providing services that are in demand to a receptive public. And, better yet, we can get paid doing it.

The Good

With the sharing economy comes additional opportunity. Most millennials have come of age in a difficult economic time, during or in the immediate wake of the Great Recession. This, coupled with stagnating wages and substantial amounts of debt, has created difficult circumstances for many entering the work force. Consequently, flexible employment that can provide a secondary source of income is of great value. In this respect, many services made available through the sharing economy are very helpful, providing people with extra income or the cost-saving measures necessary to keep themselves afloat.

It isn’t all a matter of survival, either. Uber is convenient. So is Taskrabbit, and Washio, and any number of other services that are either part of or inspired by the growing prevalence of peer-to-peer services. There is something to be said for removing tasks from an otherwise busy schedule. In a world where people are ever busier, we appreciate services that make for one less headache or eliminate that one extra errand.  Particularly for those living in metropolitan areas, with absurd traffic and crowded public transportation systems, options that allow us to circumvent the need to perform these menial tasks can seem like a god-send.

And then, of course, there is the freedom afforded by the ability to contract yourself and your own skills out for your own profit--the ability to decide when you will work and even which jobs you will take. 

So what’s not to love? Through the sharing economy we have taken advantage of a void in the market place, made the unused useful, and maximized the utility of the limited resources at our disposal. We are providing easy employment that requires little more than initiative, and willingness to allow access to other members of the community. If there is a socially-progressive, efficient business model suited for the coming century, this would seem to be it.

The Bad

Locating the difficulty here is in part a matter of perspective. If you view participation in the sharing economy only as a convenience that simplifies your hectic life, then it probably isn’t readily apparent to you. It also indicates that you aren’t as dependent on the sharing economy as others. This is because for many, services like Uber and AirBnB aren’t just conveniences. Rather, they are invaluable ways of providing supplementary income that, in their absence, would be far more difficult to come by.

Is the sharing economy a response to an untapped market, an exploitation of those without better options, or just a predictable response to the growing ubiquity of technology? The answer is: all three.  

Taking Uber as an example, the chance to earn a little extra cash by making your own vehicle available to the public seems harmless and beneficial. Likewise, the ability to get a ride when you can't or are unwilling to drive also seems like a good thing. That is, unless the need for extra cash is due to insufficient pay for (or lack of) steady work, and the need for a ride is the product of an inability to afford a car. 

Now, these are not always the circumstances that drive the sharing economy. But we should not fool ourselves into thinking they are rare, either. In truth, there are many people without substantial, long term employment. 

There is some contention as to whether this is truly a bad thing. Fortune’s Anne Fisher writes that a "big chunk of the workforce these days is made up of freelancers and contract workers...The U.S. Department of Labor projects that will grow to 65 million in the next five years.” More and more people are moving away from traditional employment, eschewing the constraints of 9 to 5 jobs and opting instead for opportunities that allow for freedom and mobility. But along with that frequently comes additional responsibility and, sometimes, liability. This can mean putting oneself at legal risk, or forgoing the company benefits that established employers can provide. Companies like Uber and AirBnB, as relatively new operators in the market, are still figuring out their position within governmental frameworks around the world, and some regulatory issues are still being resolved.  

For Millennials

It is important to note that all of this discussion about the sharing economy is only significant insofar as it sheds light on the financial issues confronting people in the labor market today.  Ultimately, what it reveals is a growing tendency to adopt secondary and part time work, less value placed on ownership among younger workers, and a willingness to collaborate as an extended community in order to offset financial difficulty.

When considering the future for Millennials, the outlook is unclear. Society is changing with regards to both the composition of the labor force, and the demands that we place upon it. Older people are living and working longer, and younger people want more out of employers. For the latter issue, it remains to be seen whether Millennials will get the changes they desire over the long term. But despite the uncertainty, there are certain considerations that are likely to retain their importance in evaluating long-term financial security for individuals and households. Among these are the acquisition of substantial, big ticket assets, like homes and vehicles.

Home ownership is one common indicator of financial stability. People with tenuous economic standing are unlikely to be able to manage or sustain the financial burden of paying for a home. Further, buying a home is one of the key ways to accumulate wealth and pass it on through generations. With that said, many Millennials are demonstrating indifference, or even disdain, for taking on the longterm responsibility of buying a home.     

Part of this may be due to the housing crash, and the harsh reality foreclosure brought to bear on friends, family members, and acquaintances. There is also the significant difficulty of finding solid employment and managing to save. Debt is a major obstacle, as is establishing good credit. Declining marriage rates and higher ages at first marriage are also a factor, as couples are more likely to have the financial stability necessary to buy a home. For some it may even be a question of values, as many millennials are more likely to spend money on leisure expenses than putting it toward ownership of anything.

Whatever the reason, it is important to recognize that acquiring real assets like a home should not be viewed as an obstacle to a desired lifestyle or an insurmountable financial difficulty. Rather, it is a meaningful investment in yourself and your posterity, and a goal to be worked toward over time. 

Looking Forward

When trying to understand the Millennial proclivity toward leisure spending given a harsh economic climate, there are a lot of factors at play. We live in an increasingly social environment, where experiences are highly valued. Precarious economic standing leaves many of us wary of making long-term investments, be it in jobs or homes. And then there is the fact that most millennials are somewhere in their twenties, still young and trying to enjoy life.

But even with all of the external factors contributing to our financial hesitancy, ultimately we must recognize the realities for what they are and respond accordingly. There is no magic bullet, no hidden path to windfall gain. In the end, for most of us it will come down to common sense and hard work.

In a piece for LinkedIn, Nissar Ahmed profiles three Millennials who found their way to financial security. In their own words they describe the steps they took to reach this security. There are themes common to all three: sacrifice, effort, self-control. In the end, self-reliance and the careful management of the resources at our disposal are going to be the principles determining our financial futures.

Now, for all of us, it is time to show and prove that we can do the same.