Why New York's Sharing Economy Is A Win For Job Creation And Innovation

from the innovation-works-by-making-things-more-efficient dept

Each year, CEA (the Consumer Electronics Association) inducts a new group of inventors, engineers, business leaders, retailers and journalists to our Consumer Electronics Hall of Fame. And it's not lost on us that we celebrate innovation and disruption tonight in New York City, where New York State Attorney General Eric Schneiderman has fired the most recent shots against creative disruption and the sharing economy in his ongoing attack against Airbnb.

The term "sharing economy" refers to platforms that make it easy for anyone to become an entrepreneur by offering up an unused resource for sale or rent, be it an empty bedroom, a parked car or a skill. While still a fledgling industry, the sharing economy will have a substantial impact on our nation's overall economic success -- enhancing competition and consumer choice, lowering barriers to entrepreneurship and boosting consumption overall -- but that depends on regulatory atmospheres at the federal and local levels that promote, rather than stifle, innovation and entrepreneurship.

More Choices, Greater Efficiency

The sharing economy includes new platforms for existing providers of different goods and services (like transportation, lodging or cleaning) that let consumers compare prices and features before they buy. For example, some people may choose not to purchase a vehicle because they find their needs are met through ridesharing, while others who might decide to buy a new car using their supplementary income from ridesharing. There are also platforms for selling unique items (Etsy) or offering specific, freelance labor services (oDesk, TaskRabbit) – production and exchange opportunities not previously available to consumers.

Lowering Barriers to Entry

Suppliers in the sharing economy –- sometimes referred to as "micropreneurs" -- have backgrounds as varied as the goods and services available. Peer-to-peer businesses allow for flexibility in hours and payment for skills or basic services that may not constitute full-time employment. More, these jobs eventually may act as "on ramps" to full-time, sole proprietorships or other entrepreneurial activities.

Growing the Pie

The peer-to-peer businesses enabled by these new platforms can draw on underused human capital: People supplement their full-time jobs with extra work as Airbnb hosts or Lyft drivers, for example, or professional providers can find additional work via platforms like Uber and Kitchit. Technological change that generates more output from the same capital, or that facilitates a more efficient use of labor, increases productivity. This kind of productivity-enhancing, technological change typically contributes to long-term economic growth -- a "bigger pie" -- that can often boost other industries as well.

The 2014 Consumer Electronics Hall of Fame induction celebrates the promotion of technology, the delivery of consumer products in new, exciting and profitable ways, and the importance of ensuring that innovation and entrepreneurship can thrive. But when this innovation threatens legacy businesses such as broadcasters, hotels, or taxis, these entrenched industries use their heft to influence regulation and enforcement to block competition. CEA stands with Airbnb and the countless other disruptive innovators that fuel the sharing economy and, in turn, drive our greater economic growth.

Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World's Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro.

Filed Under: innovation, job creation, sharing economy
Companies: airbnb, cea, lyft, new york, odesk, taskrabbit, uber