Cities are still wondering how much to embrace the sharing economy. There are good reasons they might want to do so–from economic development to expanding services–but also reasons to be wary. The gig economy clearly upsets the position of traditional businesses like taxicabs and hotels, and sometimes falls outside existing laws and regulations. And these companies, let’s remember, are hardly charities. Their motives are worth assessing before cities hand over the keys.
As such, cities are moving cautiously and selectively, says a new report from the National League of Cities. “The general sentiment of cities towards the sharing economy is shifting in certain municipalities, while others remain more resistant to change,” it says.
Some cities encourage sharing, others not so much, says Brooks Rainwater, director of NLC’s City Solutions center. Indianapolis, for example, has tried to foster ride-sharing to complement its existing transport and attract millennials to foster a downtown revitalization. Others have tried to shut the door. Witness New York’s treatment of Airbnb last year.
The report is based on dozens of interviews with city leaders, and shows how cities are thinking through questions. For example, is it necessary to have new regulations for Airbnb-type rentals, or is the existing framework okay? Recently, there’s been a move away from treating Airbnb as a “special case.” The company has agreed to pay taxes in Washington, D.C., Chicago, and other markets. Rainwater says that’s probably the right thing to do, though he understands why some cities have been lenient: They may want to expand accommodation space and promote tourism to people who can’t afford hotels.
With the sharing economy being so young, we still don’t really know how or if it contributes to economic development overall. While there are plenty of studies indicating uplift (many of them paid for by Airbnb), they don’t show whether it’s really new activity or if Airbnb is replacing a more traditional service. Rainwater wants to see a full national assessment of the sharing economy’s economic impact, which certainly seems like a good idea.
Most promisingly, the sharing economy has the potential to help lower-income groups most. Peer-to-peer marketplaces allow poorer groups to buy into assets they couldn’t afford to own, research shows. They also let people with spare time or house space to make extra cash to supplement other income.
Cities can promote opportunities for lower-income groups, but only if they have more access to company data, Rainwater says. To expand ride-sharing in certain areas requires knowing where Lyft and Uber are currently picking up passengers, for example. “Right now, many of these companies keep the data very proprietarily,” Rainwater says. “I really think data is a public good. As we move forward in the relationships between these companies and the cities, there needs to be more broad access to that data.”