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The Gig Economy’s False Promise
- exogeny 10y agoI think a better discussion is how almost none of them appear to understand the correlation between negative unit economics and writing a bullshit, "At least I tried!" failure-disguised-as-success Medium post about how your company failed.
- tarr11 10y agoIt seems several of them are now failing. Like you say, it's basically a miscalculation of unit economics over time, but being able to reduce staffing costs by 20% or more certainly gave them more runway. Hard to say if the others have fixed their economics (eg, Instacart) or are simply better at fundraising. Here's a list from 2015 [1] showing some of these companies that are trying to switch to W-2. Munchery Stiffs Early Backers and Cuts Staff in a Bid for Survival [2] Luxe Valet shuts the door on two more markets [3] [1] http://www.web-strategist.com/blog/2015/07/30/collaborative-startups-shift-from-contractor-to-employee-relationships/ http://www.web-strategist.com/blog/2015/07/30/collaborative-... [2] https://www.bloomberg.com/news/articles/2017-03-29/munchery-stiffs-early-backers-and-cuts-staff-in-a-bid-for-survival https://www.bloomberg.com/news/articles/2017-03-29/munchery-... [3] https://www.axios.com/luxe-valet-2219230863.html https://www.axios.com/luxe-valet-2219230863.html
- ChrisPodlaski 10y agoNobody said the transition would be easy, and nobody said what we have now is the gig economy... The gig economy we were promised is made up of decentralized enterprises built on protocols like ethereum, not market companies.
- qyv 10y agoThe gig economy is not build upon technology ideas, it is built on disposable and expendable labor.
- coldtea 10y agoMeet the new economy, just like the old economy.
- ChrisPodlaski 10y agoWhen its here you'll know.
- coldtea 10y ago>Nobody said the transition would be easy Actually many said it -- Uber for one.
- ChrisPodlaski 10y agoActually I believe they said something like "You people are just placeholders until we can create a viable autonomous vehicle"
- coldtea 10y agoTheir actions said that, yes. Their ads, no.
- ChrisPodlaski 10y agoTrue. I am viewing this from my post-humanist Bay Area echo chamber.
- techterrier 10y agoIt's been a patent scam from the get go.
- skynode 10y agoWhat isn't a scam these days? Scams have only become more modular and probably smarter; so there are scams targeted at simpletons (e.g. the Nigerian Prince Plot, which apparently still works af), the middle class (e.g. the importance of working hard at your 9-5 job so you can move up the ladder, probably pay off that mortgage and send your kids to college, both of which have a low chance of occurrence especially in SF & co.) and the elite (e.g. investing your money in 2/20 hedge funds, attributing more value to expensive wines, etc.) At different points in your social and economic development, different modules of the scam program are working to deceive you and emphasize unimportant details rather than big picture perspectives.
- moonka 10y ago>Since workers for most gig economy companies are considered independent contractors, not employees, they do not qualify for basic protections like overtime pay and minimum wages. It concerns me how eager we are to be to roll back the hard won protections that our forefathers fought for. Time and again we see that the vast majority of businesses only look towards maximizing the short term, and exploit any loopholes that allow them to.
- brudgers 10y agoMy great grandmother worked in a Manhattan button factory at age 8. It made her mean. It's more than just overtime and minimum wage.
- cm2012 10y agoSorry to hear that, meanness and hate reverberates through generations.
- deleted 10y ago[deleted]
- dkarl 10y agoAnd we often allow ourselves to be distracted by hypothetical future policies when discussing whether to allow current protections to be undermined.
- mljoe 10y agoI can't imagine that 1099 contractors were ever envisioned to be used in the manner they are being employed by these companies. These employees (err.. I mean contractors) are long term, often full time and core to the business of the gig companies. I think that is incentive enough to make sure they aren't using 1099 payments as a loophole to abuse people or to pay less then min wage. Companies get punished for this all the time, and even if you are a big company with good lawyers you don't want the IRS as a plaintiff, ever. I think we'll see law that puts some bright policy lines on the gig economy, but as is the case politics is a lot slower to catch up.
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- bkeroack 10y ago"In reality, there is no utopia" Shocking! It almost leads one to the conclusion that the only route to a successful happy life is hard work and persistence, regardless of whether you do gigs or a 9-5.
- coldtea 10y agoIf only everybody had such starry eyed optimism. Rather it leads to the conclusion that "forget 9-5, the new "gig" reality will be closer to indentured servitude, and forget "successful happy life" while you're at it too, it will just be a living, if you're lucky. Oh and those other 9-5/non-gig jobs? They're on the wane...".
- enraged_camel 10y agoThe Gig Economy represents the decline of the American Middle Class, as people who would have been able to find white-collar work or stable and well-paying blue-collar work 15-20 years ago now have to enter the service economy and perform low-level jobs, many of which require little or no specialized skills. For some reason we celebrate this trend as a society and laud its positives (e.g. being able to determine one's own work schedule), but in a decade or two the problems will become obvious and hard to ignore, as many gig workers find themselves too old to work but with no retirement savings, for example.
- EliRivers 10y agoe.g. being able to determine one's own work schedule This is, of course, something of a Hobson's choice. They can't work their own schedule; they have to work to the schedule of the temporary employer. The choice they have in this is to simply not work at time X, rather than move their work to time X.
- malandrew 10y agoOr they can learn some skills and work for a different employer or start their own business. The options are always going to be limited for those with the least skills that aren't learning new skills. It's 2017. Never before in the history of mankind has so much knowledge been accessible for so many at such a low cost (typically just the cost of a computer and internet access).
- deleted 10y ago[deleted]
- cmahler7 10y agolet them eat cake (delivered by grubhub)
- lithos 10y agoI really do like to bash on the gig economy, and while I don't expect much from the editorial section... The article uses insufficient data to make any strong arguments, Two anecdotes and the actions of one minor company.
- teej 10y agoI'm surprised they mentioned the $30,000 number multiple times in the article. How much someone makes without the context of how many hours they drive is meaningless.
- deleted 10y ago[deleted]
- xanderstrike 10y agoWhat's weird to me is the addictive qualities of "gig economy" jobs. I have friends who had real jobs and could have them again, but continue to drive full time for uber/lyft/postmates/whatever because they insist it's better. They're working 80+ hour weeks and still never have money for anything, but that's okay because they don't have time to go out either. Being able to set which hours you work is meaningless if all you can do with your time off is sleep.
- FilterSweep 10y agoHave you asked them over other intangibles that may be driving them to choose 80 hours of lower pay over 40? Some may find the corporate environment so emotionally taxing that the alternative is still a better solution.
- gutnor 10y agoBeing your own boss and not a wage slave anymore, having the chance to make it big. The 9-5 worker has been demonised in the media - but in the Gig Economy you can be proud to be a hard worker. You are part of the next revolution, you are the future of work, pioneers, ...
- xanderstrike 10y agoYeah but there's no chance to make it big driving for Uber/Lyft. You're just letting other skills you might have wilt while you wait for your job to be automated out of existence.
- carsongross 10y agoWork stimulates the reward regions of the brain for many people, as it gives a sense of purpose and progress towards a goal. Jordan Peterson says that one of his first recommendations to depressed people who are unemployed is to get a job, any job.
- rhapsodic 10y ago> What's weird to me is the addictive qualities of "gig economy" jobs. I have friends who had real jobs and could have them again, but continue to drive full time for uber/lyft/postmates/whatever because they insist it's better. Maybe "addictive" is more apt than you realize. Just spitballing, but maybe driving for Uber has the same reward mechanism that makes gambling addictive. Each big win, no matter how infrequently it might occur, keeps the gambler chasing the next one through loss after loss. Perhaps an Uber driver gets such a rush when he makes $60 for a short trip during peak demand that he can't help but endure long slow hours behind the wheel waiting for the next big score.
- pnathan 10y agoIt would be prudent for the policy-inclined among us to work with the state houses to develop a third category besides contractor or employee. As Homejoy's founder correctly pointed out, a gig worker coordinated by a central company falls in the cracks. It's incredibly important to get law to properly regulate this space in a sane way that levels the playing field and guarantees worker protections.
- mpweiher 10y agoWhy a third category? Just classify them as employees.
- pnathan 10y agoThey aren't employees. They provide their own materials, they set their own schedule.
- bowlich 10y agoProviding your own materials isn't really a unique thing. There's a lot of blue-collar jobs that require you to bring your own tools to the job. When I applied for a construction job back as a teenager it was a requirement that you bring your own tool belt, hammer, hard-hat etc. My girl-friend's ex bought $100,000 worth of CNC equipment for his first job. My grandfather owned his own bulldozer and while he was an employee of the company he rented the dozer to his employer. I know mechanics that own and bring their own tools into the shop. Even today, I provide my own laptop, desktop, and work environment (I work remote). If you are particular and a specialist in the tools that you use then it makes sense to bring them with onto the job.
- pnathan 10y agoInteresting. My understanding of this is from the Microsoft contractor case, where a key part of the finding was that since MS was providing the tools, the contractors were employees. I may misunderstand the details though! ( http://articles.latimes.com/2000/dec/13/business/fi-64817 http://articles.latimes.com/2000/dec/13/business/fi-64817 )
- malandrew 10y agoI find it funny that the news media treats working for yourself as a new relatively phenomena fueled by a few companies when Daniel Pink (and others) were thoroughly documenting the shift from salaried to self-employed as far back as 2002. http://www.goodreads.com/book/show/165415.Free_Agent_Nation http://www.goodreads.com/book/show/165415.Free_Agent_Nation All the current crop of companies did is reduce the transaction costs low enough to democratize working for yourself just about anything can participate. Once anyone can participate, it's a natural outcome that earnings in these markets will deflate and stabilize around the price that the least skilled/educated are willing to work for. The biggest irony is that without these companies, a lot of the people doing this kind of would probably be unemployed or underemployed. There was a LOT of latent demand that went unsatisfied. Transportation network companies haven't just taken away some of the demand from existing options like taxies and livery companies, but have increased the size of the market by at least one other of magnitude in terms of rides and miles driven. AirBnB enabled people to capitalize on under-utilized real estate assets that they own or rent with a little administrative overhead as the only labor input. The real failure isn't the gig economy, but government economic policy that drives some aspects of living costs higher while real income drops. The biggest culprit here are housing costs. Deflation in real income isn't a problem if there is a corresponding deflation in cost of living expenses as well.
- cmahler7 10y agoI agree, gig economy is just a symptom. College grads aren't working as baristas and Uber drivers by choice, it's because the economy is absolute garbage and has been for nearly a decade now.
- smsm42 10y agoOr because they got a garbage degree because they bought into an idea that getting an overpriced useless degree is the only entry way to the job market.
- John23832 10y agoThat's not necessarily their fault though. These people were sold a dream, and they did what they thought they had to do to enter the market. I'm sure their parents weren't great forward thinkers either, it just so happened that the (blue collar job) dream they were sold worked for them until recently.
- sixQuarks 10y agoThe "Gig Economy" may have started off with good intentions, but it's obvious to me that its really just a "Transition Economy". Almost all of those jobs are on the front lines when it comes to automation.
- malandrew 10y agoOne interesting thought experiment is to imagine how "rough" that transition would be if we didn't have these gig economy companies bridging the gap between labor and automation in a variety of markets. Instead of less desirable work options, they likely would have few if any work options.
- balozi 10y agoMaybe the idea of an everlasting supply of stable white-collar and well-paying blue-collar work was a mirage in the first place.
- okreallywtf 10y agoThe alternative being what? I think this might be trues simply becase we work for the economy and not the other way around. To me, we've been sold (though many of us don't believe) this notion that the economy is some kind of natural system that we simply have to accept. I'm not advocating communism necessarily but yes, the economy as designed and implemented may not create a stable middle class world for us to live in naturally, but does that have to mean there cannot be one? I think those who are accumulating the vast majority of the wealth would be happy to see it as natural selection but I think the system is much more artificial than that. The economy has been tweaked and tuned to favor the wealthy even if it also naturally would do the same thing. Tweaking the system to maintain or increase the standard of living for the society is much easier than convincing said society that it should be done for some reason I have yet to figure out.
- AJ007 10y agoMass affluence seems to be a historical anomaly. Most would agree it has been very hard on the earth's ecosystem. Following that, it may not be sustainable no matter which economic policy choices are made.
- Apocryphon 10y agoMaybe we need access to more resources. Colonize space?
- ashark 10y agoColonizing and mining the poles and the ocean floor would be way cheaper and safer.
- Apocryphon 10y ago
- paulpauper 10y agoIn reality, there is no utopia at companies like Uber, Lyft, Instacart and Handy, whose workers are often manipulated into working long hours for low wages while continually chasing the next ride or task. These companies have discovered they can harness advances in software and behavioral sciences to old-fashioned worker exploitation, according to a growing body of evidence, because employees lack the basic protections of American law. The gig economy is feedback-based, meaning those who get a lot of good feedback can possibly generate a decent self-sustaining business from it, but the wages often still don't pay well relative to the amount of work involved, especially for Americans on Fiver who have to compete with workers from developing countries, and feedback means gig employees are 100% accountable for whether they succeeds or not. This is good for the economy and the consumer because it means more efficiency, lower prices, and better service, but harder for the gig workers. For non-gig jobs, the entire company bears the costs of sub-100% productive employees, but gig workers bear full responsibility, thus any sloth directly impacts gig workers instead of being redistributed among an entire company (like Dilbert, where all the employees but Dilbert and Wally are kinda incompetent).
- therpe1 10y agoThe Times is on a role. First we get to hear about "The Myth of Main St."[1] and now it turns out the gig economy is a lie. What a bummer. It is interesting though how quickly the elites are turning on capitalism. I feel like just yesterday the Times was offering paeans on free trade and the new "networked" economy. It really does seem like the creative destruction of capitalism was a cause celebre until a lot of the destruction started reaching more fair-skinned peoples. It does turn out though that this is a very regular pattern. This same sort of a "panic" of capitalism rose in the Great Depression and in the 70s. Unemployment and underemployment really seems to scare the elites. Score for democracy I guess. [1] https://www.nytimes.com/2017/04/08/opinion/sunday/the-myth-of-main-street.html https://www.nytimes.com/2017/04/08/opinion/sunday/the-myth-o...
- brettproctor 10y agoIf only we could somehow prevent Uber from forcing people to drive for them, we could solve this problem once and for all... I really just can't understand the mentality of "These people are too stupid to realize they're being taken advantage of, let's write opinion pieces to enlighten these poor simple minded masses to the errors of their ways." It just feels so condescending and elitist to me to take this viewpoint. If it really is a bum deal, people will figure it out and quit. Uber will either go out of business or work harder to retain drivers. Or if customers get too upset at always having a new driver they'll seek other options.
- peacetreefrog 10y agoAgree, bottom line: if you think gig economy jobs are a rip off, don't get one. It's as simple as that.
- maxxxxx 10y agoIt's not that easy if more and jobs are like that. It's pretty condescending to tell somebody who doesn't have much choice that he should do something else if he doesn't like it.
- IAmGarrett 10y agoWork at McDonald's or drive Uber? Drive Uber because it's cooler than making fries. Make fries because there's a matching 401k program at McD's. These drivers have a choice. If Job 1 pays $100/day and Job 2 pays $110/day, the person should choose Job 2. When other things come into play like fulfillment, entertainment during the day, interest in one's work, etc., the choice becomes less clear, of course. The big thing for me is that these drivers have costs that aren't immediately realized, like the wear and tear on their vehicle or the lost compounding benefit of matching funds in a 401k that they could find at another job. They continue to make an economically poor choice because these costs are easy to forget/ignore/be unaware of.
- earthtolazlo 10y agoOr not, because the economy for the lower and middle classes is garbage and most people doing these jobs are doing them out of necessity.
- arkis22 10y agoThe only thing Uber did is create taxi drivers without artificial medallion limits. Why are there expectations for a taxi dispatching service to be the savior of the middle class? The gig economy may make "false promises" about how happy their workers are to get more, but I would consider that marketing. People need to check their assumptions and expectations.
- s73ver 10y agoUber also was a pioneer in this trend of making everyone "independent contractors" who are clearly employees.
- payne92 10y agoThis analysis, like many others, compares gig economy workers to their full-time equivalents and therefore misses a lot of the positive aspects. The flexibility has huge value that is difficult to quantify, especially for folks that are augmenting an existing job, a school commitment, retirement, family obligations, or some other constrained situation. Consider the same at work in two different arrangements: one with a very rigid schedule that pays X dollars per hour, and the other with a completely flexible schedule that pays Y dollars per hour. What's the ratio of X to Y?
- peacetreefrog 10y agoExactly. The National Bureau of Economic Research just did a paper on this: http://www.nber.org/papers/w23296 http://www.nber.org/papers/w23296 and found twice the supplier surplus compared to more inflexible working arrangements. They estimate that if drivers had to work at the same rates, but for inflexible hours, they'd reduce their hours worked by 2/3s.
- prostoalex 10y agoAgree, my most recent Lyft ride was a [by choice] stay-at-home father whose wife was working full time, which enabled him to moonlight in the busy 6-10 pm hour. Anecdotal evidence, but still. Not many job opportunities are available at weird hours and the ones that are (e.g. bartending, retail) usually require more rigid and unpredictable schedule than driving for a ride-sharing network.
- olivermarks 10y agoA previous generation of the 'gig economy' hype was 'Free Agent Nation', a 2002 Daniel Pink book that extolled the virtues of being your own boss. The economy was cratering and in reality it became a game of musical chairs for what work was available. https://www.amazon.com/Free-Agent-Nation-Working-Yourself/dp/0446678791 https://www.amazon.com/Free-Agent-Nation-Working-Yourself/dp... This all promotes a race to the bottom for least pay and lack of benefits IMO. Given that medical costs are a cynical for-profit business in the USA it's odd there is such enthusiasm in some quarters for these ideas. I do know several people who fly around the word making money hand over fist speaking about the joys of this brave new era...presumably lots of people are showing up to hear the dream...
- peacetreefrog 10y ago"Since workers for most gig economy companies are considered independent contractors, not employees, they do not qualify for basic protections like overtime pay and minimum wages." "Most [drivers] said the money they earned from online platforms was essential or important to their families." What do you think would happen to the average driver if the government or labor organizers came in and mandated that these workers receive overtime pay, minimum wage or other benefits? Would ride costs be the same? Would Uber be able to hire the same number of drivers? The space is competitive, it's not like Uber has a monopoly. They make 19 cents a ride on average and lost a bunch of money last year. If anything, Uber should be celebrated for the fact it allows low skilled people without many other alternatives to be productive. Or would it be better if these people without many alternatives had... one less alternative?
- 1_2__3 10y agoThe counter argument would be that we learned many decades ago the societal consequences of employment that does not cover basic needs. We can't pretend a human can survive in many parts of America on that kind of wage without government assistance. So we either pay it for the Uber rides, or we pay it in social welfare, or we pay it in the consequences of insufficient social welfare. You're just complaining that it's Uber riders who would have to pay for the externalities caused by Uber's business practices.
- malandrew 10y agoSo the alternative is having no employment options, which naturally cover none of a person's basic needs. Performing a job that meets some basic needs is strictly better than no basic needs being met because there is no job. We have welfare and other options to aid with unmet needs. Without these options, individuals who need welfare end up being a 100% burden on the system instead of a partial burden. Furthermore, those that remain unemployed for an extended period of time are increasingly likely to remain unemployed indefinitely. Having a job, even if it doesn't meet all needs, can at least serve as a more likely stepping stone to one that does. With that said, these jobs are meeting basic needs. They may not provide enough income to support a family, but they certainly do provide enough income to support an individual. And before anyone claims otherwise, realize that the economy has always had jobs that have only ever provided enough income to support individuals, not families. Such low-paying entry-level jobs are not a new phenomenon. We've always had them. We just have a lot more of them now. The problem isn't the existence of these jobs and the companies that offer them, it's the lack of other jobs that pay better. There are hundreds of thousands of people doing this kind of work, and many have been doing this kind of work for several years. That's a clear sign that these jobs are meeting needs. There is a big difference between "Are you happy working for company X?" and "Would you be better off if company X did not exist?". Even people with jobs considered good jobs by most may be unhappy working that job. Even if they don't like the job, it doesn't mean that the arrangement isn't mutually beneficial. These companies are not at fault for the current job market. Most people here are simply using them as a convenient scapegoat for other other problems.
- LordHumungous 10y agoTechno-utopianism has always been a smoke screen for good old fashioned unfettered capitalism. It's the same system that's been trying its best to screw over workers since the dawn of industrialization. The more things change, the more they stay the same.
- dlwdlw 10y agoIn a way, cushiness was forcefully taken away via democritization. Just as a rich father may gives his son a sinecure, a rich country gives its citizens sinecures out of excess wealth. Competition amongst people though rapidly reduces the sinecure to no longer be sinecures. Taxi cabs may have had a monopoly, and people were willig to work for less to driver ubers (eg poor college students) but they did not have a sinecure. Many were struggling to make ends meet. And they had been struggling for years. And so did not have the energy to pursue, say, learning Haskell. Just as there are laws to prevent olympic atheletes from taking a super drug, breaking all records, and then dropping dead, what governs society should have rules to prevent people working themselves to death. Unions were once the answer, but their major drawback is reducing competitiveness. In attempting to keep sinecures sinecures, you become less competitive. Meanwhile, the peasant rice farmer is saving every penny to buy his kids a better education and even beating them when they get too low of a math score. An american who is used to runnning water, electricity, and all night raves who is struggling to pass his college algebra class has nothing on the poor farmers son who grew up in a mud hut and was forced into learning calculus in high school at belts end. Who deserves the cushy job? The college student example may outwardly express a desire to have a fairer world, but also may resent the poorer peasant racing them to the bottom and the more educated peasants rapidly surpassing them in salary, (eg they get a tech job).