Taking on the "Gig Economy," and the Tenuous Future of American Jobs
A Generation That Will Determine the Course of American Employment
This is going to be a story about millenials, wait, don't leave just yet, I'm not here to make accusations of narcissism and laziness. In fact, as you may have guessed, we'll be talking about how millennial needs, opportunities, and interests will define the working landscape in America for the foreseeable future.
Better? Good. Because as the much fussed over generation starts to take the reins in business, academia, media, and most importantly, technology, the millennial generation will prove to be a pivotal one. The success of tech startups, in part driven by innovative young people, has changed the way we think about jobs.
Moreover the ways millennials have learned, over their tech-saturated lives, to interact with the world are profoundly different from how people interacted in the past. What I mean by that is, the ubiquity of personal technology effects not just what we see and how we see it, but how we think.
To quote Donna Haraway "Social reality is lived social relations, our most important political construction, a world-changing fiction." The fictions of facebook, instagram, and twitter, ever-present streams of information that are essentially figments of language, are here to stay. And their effect on everyday social life has been revolutionary.
People used to lament spending too much time on a smartphone, they saw it as a distraction from real life, but now the things we do and say from our phones are just as real as anything else. It's not just that facebook, twitter, and instagram make keeping in touch with friends that much easier, but also that having a social life without these programs becomes more difficult every day.
It should be no surprise, then, that this bleedover from fiction to reality has started to show itself in our economic lives as well. Yelp has been a powerhouse in making the social media model work for business; so much so that restaurants, in particular, are made and broken all on the site. Some small restaurants forgo an official website, relying on Yelp for their online presence.
More recently, the ride-share services Uber and Lyft have been the subject of debate. In part for the great success they've had adapting a social media framework into a true business model, but also for what detractors see as a misclassification of employees. Not to mention the fairly legitimate argument that both companies are operating unlicensed cabs.
Despite widespread criticism, the ride share programs continue to be popular with both riders and drivers. Uber is particularly popular with, you guessed it, Millennials. Young, urban, cost-conscious, and hip, Uber is quickly becoming the modus operandus of the smart phone and craft beer set.
The success of the model comes, in my estimate, from the permissible boundary between the two, employee and customer— making use of the social media model means that employees and customers stand on ostensibly even ground within the uber app itself. Riders give drivers a performance rating, but drivers rate riders as well, and both have user profiles with their photo and information. Millennials are attracted to this seeming equality and transparency. Skeptical but idealistic, slow to trust, and valuing authenticity above all other virtues; millennial attitudes are a direct product of the dicey economic times time in which they have come of age.
The Gig Economy, or, We Can Share What We got of Yours 'Cause We Done Shared all of Mine.
Because of the trouble they've had getting into college, paying for college, and then making a living, millennials unsurprisingly tend to be economic liberals. (And they are overwhelmingly social liberals, for a number of reasons we won't discuss here.) Even those who are politically conservative tend to be moderates. They are also fiercely politically independent, automatically mistrustful of the status quo.
Millennials have decent reason to be mistrustful of the economic establishment, watching their parents crash (with many of them crashing hard) during the "great recession" was a terrifying wake up call. As evidenced by the millennial desire to delay everything: they stay in school longer, put off getting married longer, and wait longer to buy houses.
Furthermore, and despite the recovery we've made since 2008, things are still not peachy for young people, as their higher misery index attests. Much of the fault lies in the fact that the economic recovery has not been an even one, with low wage jobs rising much faster than high paying jobs.
For instance, if you are a twenty-something, just graduating from college, your prospects will probably look something like this:
Option A— find a white collar office job that will pay you just below what you would be making in the mid 1990's, and work 60–70 hrs. a week for two years before you burn out and start the process over again at a different company, sometimes at a reduced rate. Option B— Take two or more part time jobs that will work you 50+ hrs. a week at just above minimum wage with no benefits, no advancement, no set schedule, and, it goes without saying, no job security. And if you don't like those options you can always return to school to earn a professional degree, racking up $50k–$60k in debt, just to funnel back into option A at either a slightly increased rate or in slightly improved conditions— choose one.
Small wonder, then, that under-employed millennials have turned to services like uber, lyft, and any number of online talent pools, in an attempt to make ends meet. The fashion now is to call this kind of ad hoc employment "gig" work, and the industries that rely on it make up the "gig economy."
And it's not just the youngsters participating in this new kind of work. Uber, for instance, according to an internal survey, has a higher percentage of drivers over 50 than 18–34 year olds. 50% of all uber drivers are married, 46% of them have children, and 25% use Uber earnings to support a relative.
These findings offer a surprising contrast to the popular image of the Uber driver as a college student working part time for beer money. Instead, this kind of work is becoming a source of necessary income for lots of people, across the demographic board.
The new terminology that we've developed to describe this work is necessary because the gigs one can find these days are distinctly different from past examples of freelance jobs. Freelancers have contracts, terms, fixed rates, and benchmarks that ensure they get paid.
This gig economy is more like working the docks in Elia Kazan's On the Waterfront. Instead of standing around the dockyard, you log into an app and wait in the car, or login online and wait by your laptop until, hopefully, your name is called.
Uber drivers of days past. Wikimedia Commons.
Unlike real freelance work, there's no negotiating with the gig economy, you compete for the opportunity to work, and with Uber alone valued at $50 billion, with income stagnant, it seems clear who benefits from this transaction.
Proponents, including the companies themselves, will be the first to say that this type of work is not intended to be a regular job, but as a supplement to regular income. But with 1 in 3 American workers classed as freelancers, their credibility in making such a distinction is tenuous.
The arguments for gigging and the arguments for "at-will" employment are much the same, however, it is becoming increasingly evident that "right to work" does not include the right to know whether your rent will be on time.
Proponents of this system herald it as an open marketplace where the best information technology meets sharp and hungry creatives wherever they are, offering endless opportunity for those with the motivation to take it. In part, it is the incarnation of bootstrap theory— a free market playground where gumption, hard work, and smarts determine financial outcomes.
The Uber Bubble
Despite it's high valuation, it has been difficult to tell whether or not Uber is actually making any money. Certainly its owners are making money, but the company, and therefore the essential model of the gig economy, may in fact be unsustainable.
Reporting epic losses in China, Uber, not uncharacteristically of tech startups, prospers on a bubble of optimistic speculation, carried along by its substantial pop culture presence. Like the ubiquitous predecessor platforms Youtube and Facebook, Uber's valuation is a product of its nigh-universal presence, not hard dollars.
But with Facebook and Youtube remaining monstrously popular, almost necessary, it is very likely that presence, ubiquity, user base, and popularity are all at least as valuable as cash. But web platforms in general, and Uber in particular, are consumer products and depend desperately on a large base of users wielding disposable income. Of course one of the reasons why Uber has become so popular in the wake of the recession is that it lies at a salient intersection of price and convenience. Still, unless incomes start rising across the board, and particularly for struggling millennials, there's no telling if demand for Uber rides will increase. And the company does seem to be hedging its bets on increasing demand, particularly in light of its gamble on the precarious Chinese consumer middle class.
And the problem lies not just with Uber. The key difference between the social media model and the gig economy is where the money comes from. Facebook , Youtube, and Twitter are based on a targeted-ad model that generates passive income from advertisers who want to reach customers wherever they are.
This model is broader and more resilient than the Uber model. Uber relies on selling a product directly to the consumer whereas social media sites are platforms first and advertisers second.
Talent pools like Toptal and Upwork suffer from a similar weakness. They are primarily a source of cheap creative work like web content, graphic design, and video editing. All of which depend, again, more heavily on consumer demand than the platforms they've adapted.
The progress we've made towards economic recovery since 2008 means that there's still enough money kicking around to support the gig economy. But as growth of low paying jobs outpaces higher paying ones, the gigsters are eating into their own consumer base. Simply put, if things keep going the way they are, the gig economy and the workers it utilizes will form a negative feedback loop wherein low wages drive down demand, leading to fewer gigs, and so on.
Proponents of project-based gig work are quick to laud the flexibility of working hours and the capacity to determine one's own work/life balance. But it's impossible to have any work/life balance when you're not making enough to live on. And, as the survey says a significant enough number of Uber drivers depend on that income to raise some serious concerns.
As a final note, having worked freelance gigs off and on for years, freelancing is occasionally fun, but I can't even imagine trying to make it work as a primary source of income; the fun of working from your favorite coffee shop quickly dries up when you don't have the money for coffee.
As always, thank you for reading. If you have an employment issue and would like to speak with an attorney, then don't hesitate to contact one of our employment lawyers today.