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2 April 2020updated 21 Sep 2021 6:32am

How coronavirus proved just how dangerous the sharing economy could be

While we laugh at the demise of wealthy Airbnb landlords, the sharing economy's precariousness will hurt low-paid workers more than anyone else. 

By Sarah Manavis

In January 2020, things had reached boiling point. The compact city of Edinburgh, with just over 500,000 residents, was being overwhelmed by an onslaught of tourism – from the festivals, from Americans, and from it’s increasingly popular Christmas markets – jacking up prices for pretty much everything locals might need or want. The greatest hit for residents of the city, though, was arguably Edinburgh’s insane Airbnb market, which was at full saturation across many British cities (in London, there was an Airbnb for every 112 residents; in Edinburgh there was one for every 42). In January, the Scottish government announced brand new restrictions on short-term lettings companies that would come into play in 2021. But little did they know that the problem might be naturally sorted even sooner.

The coronavirus outbreak has already taught us many things: the value of a nationalised health service; that the government can implement swift changes that in December 2019 they called impossible; and the need for clear, drastic policy to combat aggressive threats (just to name a few). But more than ever, the current pandemic has shown how flimsy and flammable the sharing economy is for those who work in it – in a matter of weeks, the people relying on these multi-billion pound industries have been brought to their knees. 

Just in the last month, the Airbnb side of the sharing economy has taken an extraordinary hit. James Temperton wrote for Wired about how London’s rental market is now being flooded with cheap Airbnb listings – desperate hosts looking to make their losses not so colossal after failing to get guests through the short-stay site. In Dublin, where the housing crisis was driving landlords to list empty homes on Airbnb, there has been a 64 per cent rise in properties entering the rental market after being removed from short-term letting sites. Airbnb landlords across the world started posting risible videos complaining the company wasn’t supporting their personal businesses of renting out flats for extortionate prices to tourists, with one saying: “You give us the illusion of stability, then you tear it from our bleeding hands when we need it most.”

Airbnb occupies the same space in the online discourse Venn diagram as buy-to-let landlords – particularly those managing multiple properties as their sole source of income. People have been relishing the collapse of these individuals’ lettings schemes, as landlords are now faced with the prospect of having to work for their income, rather than simply own. One post on Reddit of a landlord complaining that all 32 units in their building were organising to not pay rent until they can return to work started to do the rounds on Twitter, with one user posting: “32 apartments is EASILY 32k a month how the fuck have you not managed to save any for emergency situations.”

Watching incredibly wealthy landlords struggle through this crisis may feel like a silver lining, especially when, in turn, they are consequently improving the renting and buying markets in cities. But Stewart Lansley, an economist and author of A Sharing Economy: How Social Wealth Funds Can Reduce Inequality and Help Balance the Books, says that most sharing economy jobs are done by low-paid workers, for companies like Uber or Deliveroo, and they are the ones who will be hit worst. 

“There’s been a rise in the proportion of people who are in precarious work, ie, short term work, zero hour contracts, temporary employment, and people setting up little companies not making much at all,” Lansley tells me. “The bulk of those will be non-essential workers and many will be recently involved in these schemes, so most of them won’t get any of the compensation package that the government is promoting… This group is particularly vulnerable to unemployment and particularly vulnerable to not getting help. They’re the ones who are going to go.”

Lansley also says that, despite the landlords potentially losing their businesses, companies like Airbnb will come out of this crisis alive. “It’ll be the big companies that survive and the small companies and the small new businesses and these locally productive areas that will be most affected,” he says. “They won’t all go, some will survive, but I suspect a lot of them are going to suffer from this… They’ll go to the wall. They might come back when the crisis is over, but it’s going to be a bit of a struggle.”

It’s unsurprising, when you take even a cursory glance at these industries, that those making money from sites like Airbnb were doing high-risk work. However, for the past ten years, the sharing economy has been marketed as a saving grace for the capitalist systems we work in; a new way to gain autonomy like never before. 

In March 2019, Susie Cagle wrote a piece for OneZero about this campaign entitled “The Sharing Economy Was Always a Scam”. She wrote that companies such as Uber, WeWork and Airbnb were a “Trojan horse for a precarious economic future”.

“In some instances, the sharing economy appeared to inflame the very problems it purported to solve,” she wrote. “The supposed activation of underutilised resources actually led to more, if slightly different, patterns of resource consumption. A number of studies have shown that the ease and low cost of subsidised Uber and Lyft rides are increasing traffic in cities and apparently pulling passengers away from an actual form of sharing: public transportation… Alongside making it easy to rent out spare rooms, vacation rental platforms encouraged speculative real-estate investment. Whole homes and apartment buildings are taken off the rental market to act as hotels, further squeezing housing markets in already unaffordable cities.”

Cagle pointed out that, at their core, companies that thrived in the sharing economy only made the lives of those working for them more precarious. “A true sharing economy is full of friction and discomfort, and the margins — if there are any to speak of — are paper thin. Real sharing is time-consuming and not particularly profitable for anyone,” she wrote. “More than a decade into the sharing experiment, we’ve been able to fully assess the costs. Capitalism wasn’t tamed… it was stoked.”

It was announced on 1 April that Edinburgh’s Airbnb scene would take the biggest possible hit imaginable. The cash cow that is the Edinburgh festivals (the Fringe, the Book Festival, the Art Festival, and the International Festival) would be cancelled, and with it, the opportunity for hosts to charge the high rates that, for some, make up most of their income. But while performers, residents and those looking for cheaper rent in future can rejoice, the sharing economy’s real damage lies elsewhere. For those low-paid workers, their livelihoods have disappeared overnight, with few other options to gain the financial support they desperately need. And at the end of this crisis, large companies like Airbnb will still be left standing, ready to take over a newly vulnerable market.