The Sharing Economy: 3 Critical Opportunities for Aging Demographics
A version of this article appeared on Economics21, a portal of the Manhatten Institute, on June 9, 2016.
“Aging boomers and the sharing economy go together like peanut butter and jelly” – The Globe and Mail, November 20, 2015.
We have a big problem…I mean, opportunity, on our hands. By big, I mean a billion big. In 2010, there were an estimated 524 million people globally aged 65+, or 8 percent of the population. By 2050, this number will triple to 1.5 billion, or 16 percent our global population. See what I mean by big?
As of today, one in three Americans is 50+. According to estimates, by 2030 one in five Americans will be 65+. As each year passes, four million people in the U.S. reach the age of 55. That’s enough with the numbers for now, you get the point.
Couple this demographic shift with a massive health care funding gap, a significant reduction in caregivers, and increased debt loads for seniors, and we have a big prob… ugh, I mean opportunity on our hands.
So how is this an opportunity, and what can we as a society do to facilitate the healthy and productive lifestyles of our aging demographics? Enter the sharing economy.
“What is a sharing economy” – Glenn’s Mom, last week.
What is the Sharing Economy?
The sharing economy is an umbrella term that encompasses thousands of online platforms that allow people to turn underutilized assets into income-producing ones. These assets include cars, homes, consumer items, hobbies, and more. And, these online services, of which there are thousands, include Airbnb, Uber, TaskRabbit, and more.
But, by sharing we don’t mean the benevolent kind. The sharing economy term is a bit misleading because when you boil it down, it’s not really about sharing, it’s about access. You, the person with excess assets, are allowing access to those assets for a pre-determined fee. Simple as that.
This is not just a fad either, this is a fundamental shift in the way people consume. PricewaterhouseCoopers (PWC) predicts that the sharing economy will grow from a value of $15 billion in 2013, to $330 billion by 2025. Consider also that Airbnb currently has over 2 million listings worldwide, whereas the largest hotel chain, Starwood-Marriot, has only 1.1 million rooms.
According to TIME Magazine, one in every five American adults has earned some form of income in the sharing economy. Another study by JP Morgan found that sharing economy workers boosted their income by 15% through this flexible work option.
This paradigm shift is global and all-encompassing, but what does that have to do with aging demographics? Let me explain.
Aging Demographics Opportunity #1: Income Supplementation
In reference to the sharing economy, Forbes Magazine declared that this economic shift is “better for Boomers than Millennials.” There are many reasons for this worth noting.
But don’t listen to me, check out what seniors are already doing. According to Uber, 25% of its millions of workers are 50+, and more drivers are 50+ than under 30.
The sharing economy is the embodiment of flexible employment, and that is extremely appealing to retirees looking to supplement income. Have a few extra hours today? Turn on your Uber app and take a few riders. Have a spare day next week? Schedule a handful of handyman jobs on TaskRabbit. Have a spare basement apartment or room in your home? Rent it out on Airbnb.
You get the point. For more on specific opportunities in the sharing economy for retirees, check out a recent article I wrote.
Aging Demographics Opportunity #2: Aging In Place
The average monthly cost of an assisted living one-bedroom unit is $3,500. Now consider that the average income for those aged 65+ is $31000. So, the yearly cost of an assisted living facility is about $42000, and the average retiree in the U.S. has a total income of $31000. And, more than 40 percent of us will need to stay in some form of assisted living facility at some point in our lives. This is an opportunity!
To illustrate how the sharing economy can help people live more independently at home and save money, I will share a quick story.
Unfortunately, Robbie’s wife of 43 years passed away last year, leaving him struggling with day-to-day activities. Robbie’s grandson, Mike, is a regular at the Casual Capitalist, and began introducing his grandfather to online sharing economy platforms. Mike believed, and he is absolutely correct, that the sharing economy could help Robbie with his day-to-day activities instead of him having to live in an assisted living facility.
Today, Robbie lives at home and enjoys the following sharing economy services that help him age in place:
- Grocery delivery via Instacart every Friday
- Uber drives to, and from, medical appointments
- Uber drives every Saturday to Robbie’s favorite coffee shop to meet friends
- A TaskRabbit Tasker, named Jerry, on an irregular basis to help around Robbie’s home
Robbie is now a sharing economy pro, and this illustrates the amazing opportunity the sharing economy holds for independent living.
Aging Demographics Opportunity #3: Staying Social
One of the top three concerns of those aged 65+ is the fear of isolation. Certainly, no one wants to be alone in their golden years.
As you know, Baby Boomers account for a large portion of sharing economy workers. One of the biggest reasons they work in the sharing economy, aside from income supplementation, is because it allows them to interact and socialize on a regular basis.
In addition to earning some money, working in the sharing economy will expose you to other sellers and users. This is a treasure trove of socialization that allows sharing economy workers to interact with other like-minded people.
Now, this opportunity isn’t as tangible as the other two, but it certainly will help promote and foster a healthy lifestyle among aging demographics.
As you can see, the so-called sharing economy holds three significant opportunities for aging demographics. As this group continues to increase in terms of numbers, the sharing economy can serve to fill income gaps, independent living requirements, and the social needs of our aging population.