So I picked up a book called Raw Deal, by Steven Hill, subtitled How the Uber Economy” and Runaway Capitalism are Screwing American Workers, and started reading it the other day while waiting at the orthodontist’s office during my son’s appointment. I read the first chapter and skimmed through the remainder, and the gist is simple: American employers are “screwing American workers” by hiring them on an independent contractor basis, with no protections and, often, subminimum pay, and, if present trends continue, soon enough every employer will discover that this is the path towards riches and no one will be a proper employee any longer, as factories and offices alike are transformed into gathering places of 1099 workers.
The usual villians all make their appearance here, some which I’d heard of before (Uber, Airbnb) and some I hadn’t. Uber gets a whole chapter, with a litany of complaints that have all been voiced elsewhere: Uber’s competing unfairly with taxi drivers because the latter have to posess medallions, Uber is unfair to its users because of its surge pricing concept, Uber pays its drivers poorly. Megan McArdle wrote in an article a couple weeks ago that the bloom is off the rose, and Uber’s drivers are starting to recognize that they need to take expenses and wear and tear into account in determining their net earnings, and, when doing so, that their earnings aren’t so hot — and, as a consequence of doing so, many, she believes, will cease driving unless Uber raises its reimbursements. Even skimming through this chapter in Hill’s book, he describes drivers waiting for “surge” pricing to go into effect, which suggests a de facto negotiating power on the part of the drivers.
Airbnb? Can’t get too upset about that one. We’ve booked two places through there for our upcoming trip. I’ve flipped through his complaints about them, and they have nothing to do with workers; just the same litany of complaints that renters aren’t screened and could be troublemakers disrupting the neighborhood, homeowners might be crooks and rent in violation of their lease, condo association rules and regulations, or a locality’s ordinances, don’t pay the same taxes as a hotel would, etc.
On the other hand, there are some companies I’d never heard of. Fiverr.com, for instance, offers the opportunity to purchase tasks from sellers at rates starting at $5. It’s tempting to see if I could find someone on the site who would, for a cheap rate, find royalty-free photos that fit with recent blog posts, but the reality is that most of the sellers are from outside the U.S. — such locations as India, Bangladesh, Pakistan, Croatia, Sri Lanka, from the selection of offers I looked at — offering such services as website creating, WordPress migration, drawing/illustrating, even creating and recording a jingle from text or homework help (or just plain doing the homework itself); which means it’s unlikely such a seller would understand enough about the content of my blog and about my largely American readership to be able to find effective images.
It’s a fascinating concept, and you can get lost reading the services offered. Is this an instance of the destructive gig economy? It’s hard to say that these are American employers taking advantage of hapless workers, when, from what I can tell, virtually all the sellers are not American at all, and are doing work that, depending on local cost of living, could be reasonably well-paying.
There are similar ventures, such as CrowdFlower, in which, similar to Mechanical Turk, workers perform tasks such as tagging images; according to Wikipedia its buyers are corporations, not small businesses, and it seems (unlike Mechanical Turk) to find its workers worldwide. And Australia-based Freelancer.com adds the dimension that potential work providers post their job description, and prospective workers bid on the work.
So all of these offer low prices due to the global nature of the site, the work, and the economy. The “gig economy” service called Task Rabbit, which I had never heard of before, is different, because the work is all in-person and local. The book describes this as a system whereby desparate unemployed people bid to do menial services for others (cleaning, laundry, delivery of groceries or restaurant food orders), and where the desparation of the workers produces low bids, cheap services, and high profits for the company. When taking into account the costs of driving from one job site to another, repeatedly over the course of the day, Hill claims that the “rabbits” earn pitifully low wages, perhaps even less than the minimum wage.
Now, as it happens, the company changed their business model in 2014. Why Hill doesn’t acknowledge that isn’t clear — perhaps he wrote the book over a period of years and didn’t check that his original research was still valid, or perhaps he chose to ignore this because the new approach doesn’t make the case as strongly: now, workers set rates and availability, and, when a potential user looks online, the system offers a couple alternatives from best matches; if the worker selected by the customer declines the job, an alternate user is offered it. How this works isn’t entirely clear to me, and one couldn’t get very far on the site without registering and, it seemed, actually posting a task. It also seems that, unlike the original “on-demand” model, the company is moving towards emphasizing full-time “taskers” who are always available.
How much do “taskers” (company terminology)/”rabbits” (Hill’s reported label among the workers themselves) actually earn? A Time/Money article from a year ago profiled several workers with satisfactory earnings: one charges $150/hour, and does jobs such as carpentry and construction. Another charges “$25 an hour for events and $60 or $65 an hour for heavy lifting tasks and furniture assembly; $80 an hour for moving.” Another says, “I tend to do a lot of furniture assembly and minor home repairs. For that I charge $35 to $45. When I’m a personal assistant it’s $26 and product testing is $25.”
Is there a lot of variability? Do taskers set their (fixed) pay rates low in order to get the job? Surely the biggest issue is supply and demand and the local labor market, but TaskRabbit also promotes itself as having responsible, reliable (and middle-class) “taskers” and I’m not certain whether they accept the typical sort of immigrant worker who ends up mowing lawns or cleaning houses.
Now, it’s my understanding that some of these service providers find themselves under fire for classifying the workers as independent contractors rather than as employees, but consider this: a home care worker, travelling from home to home providing services for the elderly, shares some characteristics with a TaskRabbit worker, but they are considered employees. Could a company such as BrightStar change their business model and save money and grow their profits by turning their employees into 1099 independent contractors? Steven Hill would say, “of course,” but they can’t, not really. Not if they want to provide quality, reliable, consistent service for their clients.
And the same is true for any employer who wants their employees to show up for work at predictable times, who wants a set of workers who are trained in their systems, doing predefined tasks, in teams or under the supervision of a manager to accomplish a project. And this won’t go away.
Readers, do you have experience with these services?
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