Vyacheslav Fos and other write,
Following Uber’s entry into a market, workers with access to the ridesharing platform are 4.8 percent less likely to receive UI benefits. Moreover, they experience a relative decrease in total outstanding balances of $544, or 1.3 percent of the average individual’s debt burden. Finally, we find that the effects of the ridesharing platform extend to credit performance, with workers experiencing a relative decrease in delinquencies of 2.9 percent.
I know someone who does IT consulting who, between jobs, used driving for Uber to make ends meet. The article insinuates that the ability to do this helps reduce the burden of unemployment in general. But this has not been stress tested by a recession. I doubt that we could add half a million Uber drivers in the course of a couple of months without creating a significant excess supply.
I thought at first that most of the effect could be ascribed to robust transportation. Transportation fragility is a huge factor in unemployment. However, they have the analysis that partitions into leasing vs car loans. I’m not sure whether that does what they think it does – they say that leasing is primarily keeping cars out of the gig economy. Does it also correlate with the reliability of the car as transportation to work and/or issues surrounding car cost/availability? I’m uncertain.
From my perspective, this is another example of how the web/mobile/cloud revolution has impacted modern lives. Digital services/platforms like Uber, Lyft, Airbnb, Task Rabbit, and Mechanical Turk have impacted economies in two general ways: 1. they enable multi-use of equipment/property (business use of personal property), and 2. they enable income derived from task-oriented freelance work rather than hourly/yearly wage work.
Understanding that ride-sharing is about multi-use equipment allows us to not only consider the car/insurance/maintenance aspects but also the smartphone/data-plan required by the driver. Compared to a taxi, the ride-sharing app replaces the need for a custom car paint job, roof sign, fare meter, radio, dispatch service, and payment system/process.
What has changed is that these digital platforms have enabled low-skilled workers to leverage their personal property and engage in freelance work. I don’t know if it is good or bad but it is new. We were never worried about high-skilled freelance work before but now there is a general unease about the power of these digital platforms and the exploitation of low-skilled freelance work.
Arnold, does your comment that Uber cannot take up the slack at the start of a recession imply that the economy is something of a GDP factory in the short run, before PSST are re-established?
Let me speak, as if it were my turn.
I take the opposite order. It is PSST now, and if it passes the stress test it get an official GDP factory production line.
It is gig economy, meaning the most business transactions are internal to the personal accounts of the operator. Like home production, internal transactions are hidden from the GDP factory. After the stress test their is the ‘Aha’ moment which becomes,’Back to squre zero’ or ‘Hey this works’. In the latter case, the apparent surplus is enough to get a ledger entry into the GDP factory ledger.
In the model what we are dealing with is an incomplete sequence, that is a known unknown. This is our first time through, we need to visit the future at least once to price the past; and we know it.
Just read this 2010’s Recap by venture capitalist Fred Wilson and I thought the following point about Uber might be of interest here: