New economy companies are redefining the nature of work, says Steven Hill
Many of the protections workers have long expected are in danger of disappearing, he says
Editor’s Note: Steven Hill is a senior fellow with New America and the author of the recently published book, “Raw Deal: How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers” (St. Martin’s Press). Follow him on Twitter: @StevenHill1776 The opinions expressed in this commentary are his.
What will jobs of the future look like, in a world in which Uber, Airbnb and TaskRabbit are becoming the model for new job creation?
The U.S. workforce, which has been one of the world’s most productive and wealthiest, is undergoing an alarming transformation. Increasing numbers of workers find themselves on shaky ground, turned into freelancers, temps and contractors.
Even many full-time and professional jobs are experiencing this precarious shift. Add to that the steamroller of automation and robots, which some experts predict will eliminate millions of jobs, and the picture starts looking grim.
Workers across a broad swath of occupations and industries already are being affected. Meet Chris Young, an assembly line worker at Nissan’s manufacturing plant in Smyrna, Tennessee, whose job was described in a Washington Post article. Young doesn’t get to wear the coveted Nissan jersey that many of his fellow workers wear, because he doesn’t work for Nissan.
Instead, he is what is known as a “perma-temp,” working for Yates Services, a private contractor that now provides a majority of Nissan’s workers. Young does the same work as the Nissan workers, but he and other Yates employees receive half the salary, less job security and way fewer safety net benefits.
Nationwide, temps like Young are responsible for nearly a fifth of the total job growth since the Great Recession ended in 2009, according to federal data And increasingly the temps aren’t very temporary. Some workers originally hired as “temps” have been employed at the same company for as long as 11 years without receiving a full-time position — hence the term “perma-temp.”
Now from Silicon Valley comes the latest economic trend: the so-called “sharing economy,” (aka gig economy) with companies allegedly “liberating workers” to become “independent” and “their own CEOs.” In reality, workers are taking ever-smaller jobs (“gigs” and “micro-gigs”) and earning low wages, while the companies profit handsomely.
Companies like Upwork, TaskRabbit and Freelancer.com have created “labor brokerage” websites and mobile apps, many of which amount to online auctions in which vulnerable workers bid against each other for work, driving down wages to that of the lowest bidder. Since the Internet is global, some of these labor brokerage websites put U.S. workers into direct competition with workers in the Philippines, India and other places. The result is predictable: cheap, Third World labor undercuts developed-world wages.
One worker tried to make a go of it utilizing TaskRabbit and other websites, but found himself running like a hamster on a wheel. “The wages offered look decent at first until you realize that you spend at least half your time commuting (from gig to gig) and/or dealing with flakes, neither of which is paid. Add in the 15% self-employment tax, the cut that the sites take (usually 10% to 20% of each gig), and it really starts to suck.”
But here’s where the “share-the-crumbs” economy becomes even more sinister, unleashing a profound existential crisis. In a regular job, a worker gets paid “on the clock” for an agreed-upon number of hours per day or week.
Rest and bathroom breaks, staff meetings, training, even time at the water cooler with fellow workers, all those are paid time in a regular job.
But the gig economy is massively overturning this universal order. Suddenly the “extraneous” parts of a worker’s day are being eliminated. “Micro-gigs” reduce workers’ labor value to only those exact minutes someone is producing the report or raking the leaves or designing that logo – engaged in a specific task.
It’s as if New England Patriots quarterback Tom Brady only got paid when he threw a touchdown pass, or a chef got paid by the meal. It’s piecework, as in the late 19th century, with no annual salaries, no payment for research or preparation. You are paid only for your exact productive moments. The rest is on your own time and dime.
Many sharing economy gurus speak glowingly of this hyperefficiency. Leah Busque, CEO of TaskRabbit, explains it away by saying, “We’re about empowering these independent contractors to build out their own businesses. It’s good for them to have the autonomy and the drive to do what they want, when they want, for the price that they want.”
But the labor situation already has gotten even worse; now some companies have come up with “nano-gigs,” the smallest of jobs, such as labeling photos on Amazon’s service Mechanical Turk for a nickel each. For example, you can describe women’s shoes with words like “sandal” and “flats,” which aids in Internet searches. The rate of pay? About $2 per hour.
An app called Spare5 allows you to do small tasks while you are waiting for a latte at Starbucks or riding the bus home. They call it “monetizing your downtime.”
But hey, it’s just spare time, right? Who needs spare time?
The accelerated use by employers of the sharing/gig economy is contributing to a rapid erosion for workers and families. These services are threatening to further undercut the middle class and turn millions of workers into little more than day laborers.
Fortunately there is a pragmatic policy solution that would create a new kind of safety net for this new economy. The key is designing “portable benefits,” which would stay with a worker who moves from job to job. We could assign to each worker an Individual Security Account, and every business that hires that worker would pay a small amount of “safety net” premium, prorated to the number of hours worked for that business.
That “hours bank” system would be used to pay for that worker’s safety net, including unemployment and injured worker protection, health care, Social Security and a few days each of paid vacation and paid sick leave.
Innovative policies like that would allow the United States to launch a new kind of deal so technology and innovation would enrich all Americans, instead of just a handful.