For sure you have already heard about a collaborative economy or sharing economy. During the last few years, a bunch of companies has appeared around this new concept of access over ownership.

People can offer their stuff (cars, houses, tools, used clothes) to other users, so the first ones can earn some money, and the second ones can use someone else’s properties for a particular period of time, without the financial, emotional or social burdens of ownership.

Rental cars instead of owning cars. Swapping homes for holidays instead of buying a second home.

Nowadays, people don’t need to own two houses to go on holiday to a coastal village without needing to use a hotel. They can swap their home in Home Exchange or rent one room or an entire apartment in AirBnB. Probably, they neither own a car. So they rent one in Drivy (now GetAround). Or if they need a screwdriver, they won’t buy them at Home Depot. Instead, they will ask them to some neighbor in Neighborgoods

Split your fuel expenses offering your long car trip to other users in Blablacar. Take a car in the city with Car2go. If you don’t own a bike, rent one from people in Spinlister.

The original concept of collaborative or sharing economy

The original purpose of this kind of economy was like a communism system. But one that really works. Where we could reduce the consumism and where we can skip the big companies to get things or services. Where we could share our resources and take advantage of the ones of people from our communities.

In the circular economy, the waste is reduced almost to zero and the resources are continuously reused. So there is a close-loop system where there is no leakage and minimal pollution.

Source: Wikipedia

The reality

Companies have emerged with this new concept in mind, doing a good job of marketing, convincing everyone that this is called collaborative economy. The reality is we are not talking about sharing here. We are talking about companies that sell a service as intermediaries just connecting users, or selling their products to more people, like the case of Car2go, that belongs to Daimler AG, the automotive maker.

Harvard professors, Giana M. Eckhardt and Fleura Bardhi, has written an interesting article about this new wave of marketing. They prefer to call it an access economy rather than sharing economy.

But, all this new wave is about sharing, or because we are getting poorers?

Ok. This is so cool. People sharing their resources with other people, and gathering around platforms to avoid expending money in big corporations. But, why do the sharing economy has exploded in the last few years? Some indicators and researchers are concluding that youngs are poorer than their parents.

Between 65 and 70 percent of households in 25 advanced economies have seen how their wages and income from the capital were flat or had fallen in 2014 compared with 2005, according to a McKinsey report. This compared with less than 2 percent, or fewer than ten million people, who experienced this phenomenon between 1993 and 2005.

According to a CaixaBank Research study, Millennials are poorer than previous generations. All over the world. In the US, the median net worth for Millennials aged 25 to 34 is 60% that of young people from Generation X (those who were born from the early-to-mid 1960s to the early 1980s) within the same age range.

In Spain, the difference is higher and worst. Spanish median worth is 3.000 € compared with the 63.500 € accumulated by young people from the previous generation at the same age.

Spain: median net worth. Source: CaixaBank Research

The home ownership is falling among millennials

Owning a home is a good indicator to measure the net worth. In the US, 34% of Millennials own their own home, against 39% of the preceding generation. In Spain, we are talking about a 44% against 65%. Paying the rent usually takes a big part of our wage, so there is a huge difference between owning a home or not.

Likewise, non-mortgage debt is also a good indicator. In Spain, 33% of those who do not own their own homes have some kind of debt, mostly consumer credit. The financial burden of this debt (repayments) represents 21% of the household income, much higher than the 13% for comparable Generation X households, while 33% of Millennial households suffer from financial stress.

After the Great Recession, world economies have slowed down their growth, with a result of more unemployment and lower salaries for young people and a non-competitive economy. In Spain, there is still a young unemployment rate of almost 35%. And that’s too much for a country that has their pension system in risk.

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