The Gig Economy
Essayscenter / left / right / Tech Sunday / workers19 Comments
What if the future is bleaker than we thought?
Have vs. Have Not.
That’s the usual framework for discussions about the digital divide: people who have access to technology and those who don’t. In this scenario, we picture homes without computers or internet access. Children doing homework with pen and paper instead of a laptop and a word processor. Homework done without the aid of the Internet for research. These days, digital have-nots might as well include people without smart phones or tablets.
Today, however, I’m going to posit a different digital divide that, in my most paranoid, hopeless, moments, makes me fear for the future.
But First, Argument By Anecdote
In my early days as a data person, I created a database-driven web application that allowed customers to answer a few questions about a certain task and end up with all the documents required to complete their task for the rules and requirements at their location. Nifty! Great for my company! But that application meant the company no longer needed to warehouse printed documents. They no longer needed the people who worked in the warehouse or the employees who maintained the manual method of creating and vetting physical batches of documents.
That’s a now familiar disintermediation. Old jobs disappear and other ones take their place, and there is, the thinking goes, a net stasis in jobs one might have. In the 1950s no one was a web developer, after all. In the 1950s, you had to go to your local stores to buy soap, clothes, or appliances and the like. Today, we can shop online, avoid the terrible traffic and parking tickets, and get the exact product we want instead of the one in the store that we don’t really want, but that’s all they have.
The digital economy has the potential to create a new and very large underclass of underemployed people. It’s already happening. I’m not talking about Buggy Whip jobs (TM by JSON!) that have all but vanished as a viable career. I’m talking about a transformation of the workplace where full time employees are replaced with “You’re Your Own Boss” jobs that rarely pay a living wage. Uber puts up billboards promising drivers $5000 a month income. A possibly chimeric income, it seems:
I thought great, this would be a great job for me. But then after working like two weeks and I saw what I actually got paid, it was less than minimum wage. Here
Here’s what the US Department of Labor says:
Unfortunately, current tax, labor and employment law gives employers and employees incentives to create contingent relationships not for the sake of flexibility or efficiency but in order to evade their legal obligations.
Gigs Not Jobs
Let’s talk about gig and how that is a service disintermediation. In the publishing word, book covers are a case in point. A cover produced by a traditional publisher (in some circumstances) might cost upwards of $5000. Publishers have art departments with employees, but they also hire independent contractors. Some of the same people doing covers for indie publishers are also doing covers for traditional publishers.
The going rate for self-published covers is less than $300, and that’s covers that involve some actual talent to pull together. A “pre-made” cover might cost $35.00.
At $300 per cover, a book cover designer is going to have to sell a lot of covers to pay the bills. If that person lives in a high cost of living area, a living wage income might be as much as $5000 per month, before taxes, assuming little to no debt. Such a person would have to have work consisting of at least 17 book covers a month. That’s about a cover every weekday of every month.
Companies like Fiverr, Top Coder, and 99 Designs provide inexpensive services for people looking for help with a task or work. A host of people compete for what amounts to work at below the cost of a hiring a professional. If you are a person or company looking for help because you have no need of an employee dedicated to such a task, services like these must are a godsend. Decent work at below-professional level cost. It might even be a win/win in some cases.
The more you win, the more opportunities you’ll get. (99Designs)
What if you don’t win?
This is a clearing house, a way for designers to make money on gigs. The designers are not employees and other than the TOS here , 99Designs has no duty to the designers. I do not dispute, by the way, that a service like this is a convenient way for people looking for designers to find someone to do the work. It’s a way, obviously, for designers to find clients and get their work out there.
But are designers finding work through services like this going to make enough to live on? What about social benefits? How much work does a designer have to get in order to pay the bills and put food on the table?
If you’re someone looking to supplement your income, then gigs like these could indeed bring in much needed or just extra cash. Making enough money to pay the bills and keep a roof over your head is far more difficult.
ObamaCare exposed some nasty corporate mind-sets (no surprise to employees, but the dirty secret of those who say the market will protect everyone). One of the first things that began to happen in the wake of ObamaCare was employers reducing employee hours in order push the cost of health care onto the employee.
Jobs that used to provide solid income no longer do. They’re gone (The US Steel industry) or out sourced (call centers). Blue collar jobs are either vanishing or the protections established in the wake of pre-labor union work environments are being dismantled. As if some how the abuses that led to workers uniting never happened and could never happen again. White collar jobs are in the cross-hairs, too. (Top Coder, off-shoring, tele-medicine).
In my years in tech, I’ve watched lots of people get laid off and then brought back 6 weeks later as contractors. No benefits. No guaranteed income.
Darwinian Economics?
What I worry about is the notion that companies should operate without regulation because when ethics are left to the market, the market will self-correct to some degree of fairness. After all, exploding cars that kill customers are bad for business. Employee turn over is expensive, so surely a “rational” company will create employment environments designed to retain employees, right?
In this era of service disintermediation, I worry we’re creating a jobs environment in which people don’t have one job, they have many jobs. That in itself wouldn’t be a bad thing, but in the US we are not providing such workers any of the safety-net that is lost without full-time employment. What little safety-net there is under attack.
In the US we model our idea of a “worker” on an able-bodied white male. This able-bodied white male is assumed to (eventually) have a spouse at home doing most of the work of maintaining a home and raising a family. In reality, workers who are not able-bodied white males incur burdens that impact how often they’re hired, how much they’re paid when they are hired, how long they are in the workforce, and how competent they are perceived to be.
It’s not uncommon, in discussions about poverty and entitlements, to read about workers with multiple part time, low paying jobs. This is a reality a certain segment of society seems happy to pretend does not exist. The need for multiple jobs is increasing and creeping up the pay scale, as it were.
The Gig Economy
In the gig economy, it’s possible to hire someone without knowing gender, race, or disability status. It’s possible for workers to cobble together enough income via gigs to supplement a day job that either doesn’t pay well or that isn’t full time. The Gig Economy can help an entrepreneur get her business off the ground and running. That entrepreneur can get by with obtaining help on-demand in a market place created by technology. Instead of risking the business with the cost of an employee, new businesses can hire just the help they need, when they need it.
Sounds great, right?
There’s a downside. I worry about a world in which companies have far fewer employees and many, many more gig workers. As long as social needs such as insurance, time off, vacation, maternity and family leave, and more, are tied to full-time employment, the gig economy creates a whole class of persons who are under-employed, underpaid, and over-stressed.
If this is an emerging reality, we should be creating ways to offer benefits to those workers, too. Otherwise, all I can think is the future looks pretty damn bleak for a lot of people.
What do you think?
The situation’s a bit different in the UK, not least because we still have a national health service but even so:
The Scottish Green Party, as well as the Green Party of England and Wales are therefore in favour of a “Citizen’s Income.” It would be
Thanks for writing about this. It’s something I think about a lot, because the increasing reliance on a low-paid, contingent workforce is a serious problem in academia. It’s a fate I am lucky to have avoided.
@Laura Vivanco:
Thanks for that explanation of the differences. Here in the US, I would be called a socialist or even a communist, for suggesting that a right of citizenship includes the right to a basic income unconnected to employment. But, that is, in fact, at the core of these arguments.
@Liz Mc2:
Yes, academia is a microcosm of this issue. It’s scary and it’s now how we should be treating anyone.
Short answer – yes, you are right. I do a lot of freelance writing work. I know I’m competing with a lot of other writers trying to get the same jobs. I have turned down work because it paid too little, and once got a higher offer. But most people say they won’t even ask for more money – they are just glad to get the job.
This is something that’s been going on in small towns for decades (if not hundreds of years). The whole concept of a full time job with benefits is something people have always gone to the big city or the company town for (there are exceptions, and I was once one of them, moving to a remote town in Montana in 1993 to become that town’s first degreed reference librarian ever). I’m not saying it’s right, but I am saying it’s not new, by any means.
I think the anomaly of the company man (like my father, who worked for the same company from 1947 until he retired in 1985) was exactly that, an anomaly, something that happened for a few decades between the Great Depression and the Great Recession. We got used to it, and the support network changed to accommodate it. Now it’s changed again. The real difference is that now there’s a whole parade of stuff that’s different than it was when people were cobbling livings together back in the old days.
For instance, I for one absolutely refuse to (as opposed to can’t) understand why on earth one’s health care should be tied to one’s employment. You can talk about the historical aspects of how that came to be until you’re blue in the face, but I Will Not Understand.
It’s all a pendulum. It’s just that it’s more like Poe’s pendulum than anything else.
As someone who spent most of the past decades as an “independent contractor,” don’t expect any gasps of astonishment from me. You just noticed this?
@Lil: No, I didn’t just notice. As I said, I have watched over many years as employers laid off full-timers only to bring them back as contractors. But I do think the trend is both accelerating and widening.
Edited to add: I didn’t mean for this reply to sound curt, which I think it did. You are right, of course. The trend has been around for a scary long time, and in ways, as you note, that are only now getting wider notice.
Great essay. I’ve definitely noticed this trend in social work and psychology. You used to be able to find whole departments full of full-time, experienced workers. Now, everything’s been gutted: it’s common to have entire social service departments made up of rotating, part-time contractors, outside of management — workers who don’t get paid health insurance and sometimes have to cobble together 2 jobs at the same time to make ends meet. This is for Master’s level jobs (MSW), I might add.
I escaped the trend and have a full-time job, but I don’t know how long it will last. It’s scary, tbh. It’s incredibly hard and stressful to have to piece together freelance gigs, because of everything mentioned in the essay: no insurance, no vacations, no long-term stability. I really think corporations CAN still compete while giving people steady work with livable wages, but, my god, do they WHINE about doing so. This in a world where corporate profits are higher than they’ve ever been.
@Diana:
Maybe employers/hirers should have to pay toward the insurance and basic wage of every person they cut a check to. No more jobs without benefits. Period.
I find this line interesting:
One would think so.
Even food service minions are costly to hire, train, just to have them go away within three months–if not three shifts. The food franchise I worked for for years spend more in training new employees–with piddling success in improving service–than it did in raising hourly pay for existing employees.
It also stopped promoting hourly supervisors into management, instead hiring fewer managers from outside–sometimes at the same or lower rate than some of the supervisory hourly employees. Who weren’t pay all that princely to begin with, by the by. Made for fun dynamics.
It is absolutely nothing new, but it’s becoming more and more normalized, and scary.
I’m one check away from disaster, even though I am now a salary employee with health insurance. There are no savings or the hope for same, and side-gigs are both hard to get and barely making a difference.
@azteclady:
It’s baffling to me that employers will say they want to retain employees but do very little of the things that would achieve that. Pay them more, provide a flexible work place, etc. But so often they don’t. I have a family member who works for a company that schedules people so as to minimize overtime or additional hours and with constantly differing shifts and start times.
It scares me, as well, that this treatment of workers is increasingly common.
@M.M. Justus: Yes, the hours push down to refuse to give benefits has been a lot longer than the current administration, it’s just accelerated in the last decade. The reduction was intended to encourage giving experienced workers who were close to full time the benefits experienced workers should get as default. But employers just cut hours scheduled. This hit some in my family as they never had enough to buy healthcare on their own and hit a retail manager as she had to cut hours due to directives from above and thereby all the competent and ambitious keep quitting.
I think the base issue is short term thinking. High employee turnover and bad service doesn’t show how it costs the company clearly enough. Writers tend to look more at the long term, 1 year, 5 years. But a vast majority of businesses look at only the next quarter or two. Sports teams are heavily criticized for planning a season as rebuilding. But throwing all the social costs for business’ success at divesting themselves of benefits onto the government (which is less efficient than business) is not a solution that many Americans are willing to accept. Does anyone else cringe at Scrooge’s too timeless comments about workhouses and prisons, or is it just me?
This is definitely becoming more prevalent in Australia as well. When my family moved here (mid 90s) there was a fairly good balance between workers and employers. That balance has shifted significantly in the sat 29 years, not in a good way. The conservative government ( the Liberal party) did their best to destroy the unions and the collective bargaining setup that guaranteed workers rights. They overstepped in the end, and were tossed out for exactly that reason, but that has not stopped their recent efforts. There has been change in the way businesses and industries are structured, and some of the old protections don’t work, but who do the corporations think will buy their goods when they have screwed over all of the workers?
Some of it is that we don’t, as individual consumers, know how to value the broken apart services- if we have always received something as a package of services, how do we know what constitutes the appropriate costs? The labels on our cheap products don’t include the environmental costs of the cheaper item, nor do they include the societal cost.
The only real way to ensure that there is a change is a widespread boycott of the businesses with those unethical practices and a refusal to provide such services- which is pretty close to a general strike. Not something likely to happen, there is always someone to buy the cheapest service, and there is someone to offer it.
Thanks for posting this essay. I worry about the future and what is going to happen when there are less and less jobs for a growing population. The level of corporate greed and its consequences these days is very scary.
A really good and interesting documentary about the disappearing U.S. middle class and the struggles of the American worker is Inequality for All which features Robert Reich. I saw it a couple of years ago. It does a good job of showing what has been happening for the past several decades in the U.S.
There was a lot of this in my field (video games) as well — so much so, that I’m kind of relieved to be at a company where you’re not immediately fired as soon as the project ships. That used to be the norm, and still is for a lot of smaller companies, but the relative youth of our industry has meant there currently are and will be more significant perspective shifts as we age together. The first started about 5-8 years ago as people hit their 30s and wanted to settle down and have kids, which meant they couldn’t pick up and move across the country every 5 years. I work with folks celebrating their 10th, 15th, even 20th anniversaries (and our company is only 30 years old!) here and it’s made such an incredible difference in terms of quality of life, and quite honestly, quality of employees. Instead of firing the entire QA team or running them on 6-month contracts, they’re a major part of development. Instead of contracting or freelancing artists, we employ them long-term and they get to work on everything from concept art to comic book spin-offs. It’s honestly really great, and it’s meant that most people are able to diversify their skills to some extent while also becoming more skilled at their specializations.
This isn’t the norm, but I certainly hope it will become more of one. Most of my colleagues are at the age where we now have kids, and as the industry continues to age we’re going to have to adapt. I think it helps that a lot of the work done is so highly specialized and expected quality is so high that it’s really hard to outsource. We’ve tried. I’ve been on projects that had entire studios shut down or shuffled to another less-funded project because the quality just couldn’t line up with the rest of the us, even with people on-site and constant telecomm contact.
Having people around for multiple projects, and extended periods of time, not only means that they and we are all invested in continuing that — and it means we have metrics and can quantitatively track people and see for ourselves our returns on investment. I’ve worked in revolving-door places and there’s no way they could keep up the same levels, you know? It worked for cellphone games, but not for the stuff people wait for possibly multiple years to come out.
Morale is a heck of a lot better too when you’re not waiting for the next milestone and possibly the chopping block! I think some of the worst games I’ve worked on were ones where you absolutely knew everyone was getting fired as soon as their features or development cycles were complete, and no one should be surprised that those projects had significant delays and half the game wound up on the cutting room floor.
@Lindsay:
Thanks for your comment, Lindsay. That’s the problem with analyzing a business and its efficiencies on paper. On paper it looks great to push around the employee dots, bringing them on or off as needed. The problem, as you note, is the penalty incurred by treating employees as if they are dots and not social animals.
I’m glad you landed at a company that is behaving differently!
To address the section of the discussion about technology taking some jobs, but creating other jobs I can give some examples from my industry. I am an accountant. With a few clicks in QuickBooks or Excel I take the jobs of an entire department and produce more detailed work. I can slice and dice data in ways that prior to computers would have taken months. Where have the Bob Cratchits of the world gone? I don’t know, but I do know that Scrooge is doing his job in maybe fours hours a week. The tragedy is that there are no jobs for those people. Back then, if you were detail oriented, you could get a job somewhere in accounting, but not now.
In my teens I actually had a job at a switchboard in an answering service. We took messages and forwarded calls. I actually sat at a board and physically connected the calls using the classic cables. Teenage unemployment is a huge problem now.
Straight out of college (with a degree in biology) in 1984 I started working as a supervisor at a big California bank. I started right after the tellers stopped physically filing checks and typing out statements, jobs taken by advancing technology. Many, many people were fired and moral was terrible. Where did these fairly unskilled people go? I have no idea.
I hear about veterans waiting for benefits because the veteran administration is vastly understaffed and I see the potential for alleviating at least a tiny bit of the unemployment, but there is no funding. Major corporations are hiding their money off shore to avoid taxes, but the IRS can only go after individuals because it costs more to go after huge, influential corporations and the IRS has its funding cut every year.
You have to start the solution somewhere and it seems as if people want a silver bullet to solve the entire problem all at once. How about hiring some people in customer service? I haven’t had that in a while.
What’s very strange is I happenned upon this site and went to post and the person who posted most recently ^^^ has my exact same name! I have a very unusual name. How strange!
I wanted to comment that when you live in a place like Los Angeles, it really is like the movie Elysium and it’s very disconcerting. I wrote about it for The Huffington Post. People in LA drive cars (like Phantoms) that are over $250,000 and it’s not unusual to see $10k handbags. (Birkins are even more). It’s just crazy. Often what happens in California now is the future, 5-10 years in the future, for the rest of the country. There is no middle class. Rundown tear-downs cost close to a million. In my neighborhood (considered ‘affluent’) there is crime, robberies etc. and an 1800 square foot small 3 bedroom home START at $780,000. (In LA, this is considered basic. There are small homes here that go for $9 million easily near the water and more. I’ve seen rents $9000 a month). I am seeing that it is becoming the land of the very rich and everyone else. I worry that good, decent values are going the way of extinction. Basically considered “quaint.” I’m not anti-rich by any means but my god, what will it mean as a society if we become Elysium? I know I prefer to live in pretty cities with decent people with parks you can actually visit. I’ve heard it’s even worse in NYC.