Will AirBNB And Etsy Destroy The Economy, Or Save Us All?

Sites like AirBNB and Sidecar let people obtain services in a peer-to-peer way that was impossible before the Internet, but are those services disrupting or supplementing the industries they’re in? Is a traveler staying in a spare bedroom through AirBNB hurting a city by not paying hotel taxes, or is their longer stay just as beneficial to the city and its whole economy?

This isn’t just an issue in New York, but everywhere. In making its case for why its “hosts” should be allowed to continue renting spare rooms and empty apartments, AirBNB claims that people using its site for housing stay in the city longer and spend more money at local businesses that aren’t hotels. The spare cash helps many hosts to stay in their homes.

Outside of the context of New York City and its fight with AirBNB, the real issue here is micro-micro-entrepreneurship, people sharing resources for pocket money, but not enough to earn a living. These exchanges don’t really fit into the way policymakers and ordinary people think about the economy, about jobs, and about industries.

The important question is this: are sites that connect people to share in ways that they couldn’t in the traditional market good or bad for the economy? On paper, it looks like productivity is staying pretty much the same while fewer people are “employed.” If you’re using unemployment claims to count how many people are employed, a person who sells a few crafts in an Etsy shop, picks up some copywriting work on oDesk, or offers a seat in their car for cash doesn’t count. Someone who performs any kind of work for money counts as “employed,” after all, and someone doing extra work after their regular work hours is just “employed.” Of course, someone who picks up a little bit of work for money but doesn’t report it is still officially unemployed too.

The Rise of Invisible Work [Atlantic Cities]
The Rise Of The Renting And Sharing Economy Could Have Catastrophic Ripple Effects [Business Insider]

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  1. franklydear says:

    My experience in looking for AirBNB lodgings is that there is nowhere near the number of available beds as there are in a single hotel. They’re often in semi-undesirable places, or come with restrictions because they are owner occupied during your stay.

    I think AirBNB supports the economy best when it brings travelers who couldn’t otherwise afford a pricey hotel room.

  2. CommonC3nts says:

    Nothing wrong with this to get around unfair taxes just to go home for the holidays.
    I think all rental car and hotel taxes should be suspended for holiday periods as people are not renting them for business.

    I rented a car in Chicago for thanksgiving for $20 a day for 4 days and the taxes are also $20 per day which is 100% tax. It is criminal.
    We need more people to people sharing services.

  3. SingleMaltGeek says:

    I’ve been reluctant to try AirBnB because the people who rent out their house don’t rely on renting their house for their livelihood. If a hotel regularly or even occasionally provides inadequate or even bad service, lots of people should know about it, and there should be some evidence of that online. Eventually it may drive the hotel out of business. But with the AirBnB model, people could try to make a quick buck once or twice a year, and if they eventually stop getting takers because of bad reviews they may not care.

  4. econobikerredux says:

    So it seems to be Ok for businesses to encourage the “rental” economy with items such as never selling software ownership, rent-to-own appliances/furniture, fighting to not allow copyrights to expire, but when the average individual does it then “the economy is going to crash”?

    It seems that the government is the one suffering since micro rental economy discourages or limits tax collections such as the hotel taxes or long term real estate taxes (because corporations typically strip out more value than they pay in taxes)…