The Instability of Labor and the Gig Economy

By GREGORY N. HEIRES

The gig economy is receiving a lot of attention these days as online businesses like Uber car service and Airbnb Inc. hoteliers prosper.

Optimists predict online businesses will continue to grow rapidly and workers will increasingly find their niche in jobs in that sector.

This Pollyannaish outlook views the gig economy as an economic sector where we can enjoy our freedom to define ourselves and fulfill our sense of entrepreneurship and creativity through the free market–and earn a lot of money.

Some analysts believe that the gig economy will be the answer to the failure of the economy to produce good jobs since the Great Recession and, in the long run, lead to a reduction of economic inequality.

Others are more skeptical.

“In reality, the so-called ‘gig’ economy is really two quite different economies,” former Labor Secretary Robert Reich wrote recently on his Facebook page. “Wealthier Americans are using ‘gig economy’ platforms to rent assets like their homes (Airbnb) or sell products they own or make,” he wrote, commenting on a JP Morgan Institute report that questions whether the gig economy will reduce inequality.

“By contrast, low-income workers sell their direct labor, such as working as Uber drivers or TaskRabbit movers. In other words, the gig economy is giving those who already have wealth a higher return on that wealth. But it’s not giving those who only have their own labor a higher return on that labor, because it’s enabling corporations (like Uber) to shift business risks onto workers–and those added risks are reducing economic security and predictability.”

Unmasking the Gig Economy

Panelists questioned the bullish view of the gig economy during a May 6 forum called “Unmasking the Gig Economy: Harmful or Helpful?” at the 41st Annual Convention of the Metro New York Labor Communications Council, which represents labor and community communications professionals in the New York City area.

While recognizing that employment in the gig economy may represent what more and more workers will face in the future, panelists warned of the abuses, low wages and exploitation accompanying this process.

Without government oversight and regulation, the gig economy could just be a continuance of four decades in which workers have experienced declining and stagnating wages, financial insecurity and an erosion of benefits accompanied by skyrocketing inequality.

“Is this the end of employment?” the moderator, investigative reporter Robert Hennelly, said.

In the gig economy, workers will need to look after themselves by bargaining for their pay and rights and learning how to analyze contracts, panelists said. Meanwhile, unions should adapt to the new economy by reaching out to these workers.

A positive sign was the decision of writers at Gawker online media to vote for a union last year. Workers at other online journalism businesses have followed.

“Our primary task is to push back,” said panelist Katie Unger, a writer with City Limits magazine.

Declining Traditional Jobs

The gig economy reflects the growth of alternative work arrangements in the United States.

As the country continues its shift to a service economy, the number of temporary help agency workers, freelancers, contract workers, on-call workers and independent contractors are increasingly defining the 21st century economy.

The percentage of workers in these alternative work arrangements increased from 10.1 percent of the workforce in February 2005 to 15.8 percent in late 2015, according to a March study by economists Lawrence F. Katz of Harvard University and Alan B. Krueger of Princeton University.

An alarming finding of the study is that alternative work arrangements apparently account for all of the net employment growth in the United States from 2005 to 2015.

Workers employed in alternate work arrangements increased by 9.4 million during that period while workers with traditional jobs dropped by 0.4 million. A new study by Intuit Inc. projects that the contingent workforce — which has grown from 17 percent 25 years ago to 36 percent today — will reach 43 percent by 2020.

Estimates of the size of the gig economy vary quite a lot.

Krueger and Katz conclude that 0.5 percent of the workers in the United States provide services through online intermediaries. The JP Morgan Chase Institute estimates 3.1 percent of adults earned income through online work between October 2014 and September 2015.

The gig economy is part of the casualization of the economy that at least so is failing to address income inequality and the lack of good jobs.

So, the gig economy may be lining the pockets of owners, but it too often means an unstable job with no benefits, no union and an uncertain income for workers.

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