This week, my MIT AgeLab colleague Luke Yoquinto and I published an article in The Washington Post about how the sharing and on-demand economy stands to change the lived experience of old age — and how it will shake things up for business along the way. Whether you're considering the transportation, housing, or care industries, a new class of tech-enabled companies is coming to change the way things are done. In many cases, the new economy is taking services that were once the domain of traditional, "senior"-oriented entities — often not-for-profits and government agencies — and replacing them with services aimed at the full age span. Now, getting meals and groceries delivered, hiring a helping hand around the house, and requesting a ride to your front door have all become things that are not just for Millennials any more but for everyone of every age.
That trend has three major effects for the older consumer: One, there's now a way to get the benefits of these services without any of the stigma that once came with them. Two, this trend will introduce competition in many areas where there was none, ideally improving the quality of available services. And three, this will cost real money.
There are no easy answers to the question of how tomorrow's older adults will afford to take part in the sharing economy. Renting and hiring products and services instead of owning them will equate to a heightened need for liquid cash on hand at all times. One way of taking illiquid assets like real estate or a car and turning them into cash is to put those assets to work in the sharing economy. More and more drivers for Uber and Lyft are over 50, and use their own cars to make money. But perhaps more interesting is how many older adults are using services like Airbnb to rent out rooms, pulling cash out of the ultimate illiquid asset: one's own home.
What's fascinating to me is that as they do so, older adults are actually hearkening back to a longstanding tradition.
During the Industrial Revolution, working-class older adults relied on a sort of family economic strategy to make ends meet, wherein parents collected the earnings of both young and adult children on a regular basis. "Raising dutiful children constituted a wife's most important economic function, since the family eventually relied on children's wages," write historians Carole Haber and Brian Gratton. "In one respect, the costs of raising children, in direct expenditure and in wives' labor, became a form of savings."
It was children who, after older adults found it difficult or impossible to secure factory work for themselves, would support the household. "While [the male household head's] wages appear to fall across the life cycle, children's wages rents, and other sources increase; as a result, household income tended to rise well into the late middle age of the household head," Haber and Gratton write.
In an important respect, that's still the case today. Although the financial role played by children in that model has been handed over to government programs, the fact remains that dutiful (adult) children — usually the eldest daughter — are the ones providing the vast bulk of care for older adults. And there's yet another way that aging today resembles that of the Industrial Revolution. Once again, we're taking on boarders.
During the Industrial Revolution, as households aged, they became more likely to collect rent as a form of income. Around the turn of the 20th century, among working-class households that were neither poor nor wealthy, nearly 30 percent of the 60-plus took on boarders. (Read more in Haber and Gratton's Old Age and the Search for Security.)
Today, many empty-nesters with room to spare are discovering that it makes sense to do the same, this time through newfangled intermediaries like Airbnb. The products and services of the new economy will cost money, but sharing companies can also provide new income sources… that are actually far from new. In many respects, when it comes to how we live throughout the full lifespan, the more things change, the more they stay the same.
MIT AgeLab’s Luke Yoquinto contributed to this article