How are ride-sharing and other digital platforms changing our cities? Questions remain about the impact of the sharing economy on our jobs and the economy.
“I’ll just grab a Lyft or Uber,” I casually said when my friend asked how I was planning to get home to Etobicoke from the heart of Toronto. If you aren’t familiar with Toronto, the city spans about 630 square kilometres, and Etobicoke is its westernmost district.
The part of Etobicoke where I’m from is 25 kilometres from downtown. To put this distance into a broader context, 25 kilometres from downtown Vancouver would put you roughly in Delta or Surrey, and in Montreal it would take you halfway to Laval. Needless to say, Toronto is big, and getting around in it can be a challenge — so much so that a recent study named Toronto the worst city in North America for commuting. This isn’t exactly what we want to come first for. One key development — ride-sharing — is taking root and scaling fast, and it is helping Toronto shed this less than favourable reputation.
The rise of the sharing economy
How are the digital economy, the gig economy, ride-sharing and the future of transportation important for Canada, for our collective economic future and for the shaping of our cities? What is the impact of the increasing influence of technology across economic sectors, and what does it mean for Canadians in terms of jobs, skill needs and changes in employment and the economy? These are some of the issues that the Information and Communications Technology Council studies.
One thing that is increasingly reshaping how we understand our economic systems is the changing nature of work. What we refer to as the sharing economy operates mostly by reliance on gig workers who are part-time, freelance or on contract rather than full-time. Such employment is a central component of the sharing economy, which offers opportunities for people to pool underutilized resources, such as properties or vehicles that they own, while generating income and also connecting people in the community.
Recent estimates suggest that the proportion of Canada’s workers who are engaged in part-time, temporary work or self-employment is around 30 percent. Clearly, the sharing economy and gig work — both disrupters of traditional work structures and business models — are here to stay.
Ride-sharing is more than just driving
Looking at ride-sharing, we see new apps and services emerging regularly. Examples include companies like Curb, based in San Jose, which lets users schedule pickups ahead of time, or Wingz, based in San Francisco, which allows users to schedule rides to and from airports at flat fees and even to choose their preferred driver.
A substantial player in the sharing economy, ride-sharing is quickly becoming a staple of transportation. Peer-to-peer platforms that blend technology and community-driven services, ride-sharing apps have recalibrated what it means to commute and travel. With the simple use of a mobile phone, applications like Turo, Lyft, Uber and many others provide access to vehicles on demand.
I lived in Los Angeles for a few years, and ride-sharing was a significant lifeline. Offering the ability to hail a car within minutes, platforms like these provide a convenient and cost-effective method of travel — particularly for millennials like me, who increasingly choose not to own a car. Similarly, companies like Amazon, through Amazon Flex, are also using the concept of ride-sharing to bolster their businesses, while providing new avenues for employment. Applications like Turo challenge the vehicle rental market, by allowing users to connect to vehicle owners in their community to essentially “rent” a car. If you consider that the majority of vehicles reportedly are not in use 95 percent of the time, finding a way to make the best of that unused time by sharing them seems logical.
Other digital platforms have also taken off. While some of the more well-known ones are accommodation-rental services like Airbnb, of particular interest is the growth of services that focus on pets. Apps like Rover let users browse available pet-sitters in their area, and DogVacay matches pet owners with sitters in the area who can host the pet at their homes.
The future of transportation for Canadian cities
A few weeks back, I had the pleasure of joining a panel in downtown Toronto, moderated by TV/radio host and author Amber Mac, where I chatted with Turo’s Cedric Mathieu and Lyft’s Aaron Zifkin about ride-sharing and what it means for Toronto. Icons of peer-to-peer vehicle sharing, both companies had recently followed Uber’s decision in 2012 and chosen Canada as their first location for expansion outside the US. While Lyft is still fairly new to the Canadian market, this spring marked Turo’s two-year anniversary in the city.
What are the results so far when it comes to ride-sharing in Canada? Uber is currently available in 17 cities across the country. During its two years in Canada, Turo managed to draw 350,000 users to its platform, which lists more than 10,000 vehicles. Similarly, even before its debut, Toronto was already gearing up to go for a ride with Lyft. The app received more than 50,000 downloads in Toronto prior to official launch. Whether you’re hailing a car to get from one end of the city to another, or renting one to drive to Mont-Tremblant for the weekend, sharing applications like Uber, Lyft and Turo service a need for convenient, fast and affordable transit alternatives.
In the end, the 25-kilometre ride from the panel in downtown Toronto to Etobicoke cost me $20 on a Lyft Line — a car-pooling option similar to UberPOOL. On that journey I met two other passengers who were going my way and chose to car-pool. For $20, I was able to get to my destination quickly and conveniently, make a connection in the community and possibly eliminate the need for one or two more cars on the road. Similarly, the next time I need to take a trip outside of the city, I will most likely forgo a trip to Hertz and grab a Turo instead.
Ride-sharing, connected cities and the future of work
The benefits of the sharing economy — increased connectivity, the efficient use of assets or skills and greater economic participation — are playing an important role in our cities and communities. Ride-sharing apps like Lyft and Uber fill a need for accessible and convenient transportation. Services like Airbnb, Homestay and Couchsurfing provide access to accommodation that might offer better prices and more flexibility than traditional hotels, and freelancing platforms like UpWork and Toptal allow skilled workers to access more employment opportunities.
These kinds of services are transforming the places we live, and also how we interact with them and within them. Increasingly, they are inspiring questions about how basic needs like housing, employment and transportation should be met. Uber currently has over 40 million active users per month, and Airbnb cites more than 150 million global users on its platform. Challenging the traditional modes of transportation like taxis, or traditional accommodation like hotels, these services offer a greater availability of options, convenience and experiences for consumers, and could reshape our cities.
However, even these new developments, which are propelled by consumer demand and are shifting business and economic models, often require some finesse to operate within our current economic and social platforms. Last month, the city of Barcelona instructed Airbnb to remove more than 2,500 listings that were operating without city-approved licences. The crackdown on Airbnb was a direct result of the increase in popularity of Barcelona as a tourist attraction, which had led to a surge of Airbnb listings, limiting the ability of residents to find affordable housing.
The city of Amsterdam took a different approach, in its effort to battle excessive rents and low vacancy rates. It introduced a regulation allowing owners to rent out their places on Airbnb for a maximum of 60 days per year. Owners who surpass this limit have to apply for a hotel licence.
The idea behind both approaches is to allow these alternative services to continue, while ensuring that communities are not negatively impacted by them.
The sharing economy and regulation
During the Q & A portion of the Toronto panel, an audience member raised a question about the role of inclusivity in the sharing economy: While the sharing economy has immense potential to integrate new players economically, what can we do to ensure that this new marketplace doesn’t become an elite platform of income generation for those who already own assets like housing or vehicles? How can populations such as remote communities, people with disabilities and Indigenous communities benefit from the sharing economy? These are important questions that need to be kept at the forefront of the discussion and will play a key role in regulation.
While in some ways, sharing economy platforms like Uber or Lyft have been seen to offer expanded mobility and employment opportunities for people with disabilities, for example, issues including unfair pay and lack of work benefitshave recently arisen. In May, the Supreme Court of California tackled this issue. Its ruling significantly limited the ability of businesses to classify workers as independent contractors who therefore do not receive key employment benefits. While the debate about how the sharing economy should be regulated and who should regulate it continues, decisions like these will guide the public bodies that are willing to engage in the debate.
Most of the regulation we have seen to date around the sharing economy has taken place at the city level. Some early adopters of the sharing economy like Portland, Oregon, Washington, DC, and Chicago have established tax-collecting arrangements with sharing companies. This means that these sharing services will be subject to taxes, just like traditional businesses. Similarly, in 2016, five Florida-based cities formed a public-private partnership with Uber to subsidize rides. All Uber rides in these cities were subsidized to the tune of 20 percent, and those taking public transit were subsidized by 25 percent. This initiative was undertaken in order to alleviate traffic problems and to find savings on transportation and road building.
However, not all regulators have been as positive toward the sharing economy as those in Florida. For example, in late 2017, Uber shut down operations in Denmark, following the development of new taxi laws that required Uber vehicles to be fitted with fare meters and seat sensors. Companies like Uber continue to face challenges in many European cities, following the decision by the European Court of Justice classifying these services as transport companies. This ruling means that ride-sharing services are subject to stricter regulation and licensing in the EU.
The sharing economy vs. traditional industries
Innovations like ride-sharing can reshape the way we think of driving and commuting. They could even contribute to turning the most challenging commute in North America into one of the best. But ultimately, the success of these and other applications in the sharing economy is rooted in their ability to contribute to economic growth and their ability to provide advantages for everyone, including Canada’s most vulnerable populations. It’s our job to ensure that the new doors that the sharing economy opens are open to all, and that the future economy is one that everyone has the opportunity to participate in.
How will these trends in transportation affect consumer markets and labour productivity, and what impact they will have on the economy in general? In the interests of creating an inclusive, sustainable and innovative future for Canada, we need to evaluate questions like these.
In Ontario, over the past few years, the government has tailored insurance schemes to be relevant to ride-sharing companies. The Financial Services Commission of Ontario has approved auto insurance products for eight ride-sharing companies and three car-sharing companies. They work by activating the company’s insurance while the app is in use, and then switching to the owner’s private insurance once the app is turned off. Responding to changes and disruptions created by these new platforms, the Ontario government recently created the Sharing Economy Framework with the intent of generating new wealth for the province, while assessing challenges and issues along the way. The framework seeks to conduct research and consult with stakeholders on the sharing economy, identify opportunities or gaps, develop methods to address those gaps and gather data on actions taken to assess outcomes and results.
The approach to regulating the sharing economy is not standard across the country. In 2016, the British Columbia Chamber of Commerce called for policies on the sharing economy. This call focused on assessing proper taxes on short-term rentals like Airbnb, as well as the establishment of relevant regulations, the removal of unnecessary red tape and the integration of ride-sharing into the broader provincial Passenger Transportation Act. However, progress has been slow to date, and BC has become all but infamous for the delay in allowing these services to enter the province. Most recently, stating the need to develop BC-specific policies and insurance mechanisms to support ride-sharing, the government announced that ride-sharing would continue to remain unavailable in the province until the fall of 2019. Instead, the province has committed to adding more taxis to the road in the interest of mitigating supply shortages.
What is the best way forward for Canada in the sharing economy? Should legislation and policy development be considered on a case-by-case basis at the municipal level, as in the Florida cities that forged a partnership with Uber for reduced fares? Should it be at the provincial level, encouraging the development of policy frameworks for each province, like Ontario’s Sharing Economy Framework? Or should it take place at the federal level, offering a clear standard or guidelines for all provinces and municipalities to implement, similar to the ruling by the European Court of Justice that Uber is a transportation service?
The answers to these questions are neither easy or straightforward. They require substantial research and data collection on considerations relevant to each type of sharing platform, as well as extensive consultation with stakeholders, policy-makers and consumers. While the policy needs of British Columbia may differ in some ways from those of Ontario when it comes to this newly developing economical structure, one thing is clear: the sharing economy is not only here, but it is likely here to stay. The challenge now is to assess the appropriate balance between safety, consumer protection and economic needs, while at the same time continuing to support and drive Canada’s growth in the innovation economy.