The Gig (i.e. sharing) Economy is not helping workers

For one month, I became the “micro-entrepreneur” touted by companies like TaskRabbit, Postmates, and Airbnb. Instead of the labor revolution I had been promised, all I found was hard work, low pay, and a system that puts workers at a disadvantage.

Excerpted from a must-read article by Sarah Kessler:

The prospects of finding a living wage in America do not seem any brighter than they did back in 2008 when Busque founded TaskRabbit. Unemployment has drifted down from its high of 10% in October 2009 to 6.6% in the January 2014 report, but income inequality is, according to research based on tax-return data from the IRS, the worst it has been since 1923.

And the anecdotal evidence is appalling. Walmart, the single largest private employer in the country, was spotted at one location last holiday season hosting a Thanksgiving food drive for its own workers. McDonald’s, the second largest fast-food chain in the country, teamed up last summer with Visa to sketch out a budget for its low-paid full-time workers. The budget presumed they would each be working a second job. More than a decade after Barbara Ehrenreich wrote Nickel and Dimed to chronicle firsthand the struggles of low-wage workers, conditions only seem to have worsened.

Meanwhile, politicians have begun fighting over what they might do to help, namely, raise the federal minimum wage from $7.25 an hour to as much as $10.10 an hour. President Obama and the Democratic lawmakers advocating the raise hope that it spurs private employers to follow suit. Gap, for one, announced that it would raise its lowest hourly wages to $10 an hour by next year.

In the tech world, fueled by the success and high valuations of Airbnb (room or home rentals), Uber (car service), Lyft (car service), DogVacay (pet sitting), Postmates (urban courier service), and the many other services that rely on a new cadre of employee to fulfill what they’re selling, hope remains high that these marketplaces can create the solution. “People who are renting their homes out in Airbnb or driving for Lyft, they may make more money than working a minimum-wage job,” says Jeremiah Owyang, a former social-media analyst who last December launched Crowd Companies, a firm devoted to helping name brands such as Ford and Home Depot connect with startups in the gig economy. These folks are doing so well, in fact, Owyang says, “For some brands, this is a threat to employment.”

Some examples cited in the story:

“people like Sharon in San Diego, who has a goal of making $300 a week on TaskRabbit to help pay her bills, but hasn’t hit it yet. Or Kristen in New York City, who bids on tasks when she’s working full-time as a receptionist. Or Stacie, who works full-time as a software engineer in Boston, but always keeps the TaskRabbit website open so she can complete tasks on her lunch hour, after work, on weekends, or without leaving her desk. Stacie made about $6,000 on TaskRabbit last year, earning her “elite TaskRabbit” status. She likes helping people out, but she would never work on TaskRabbit just for the money. “If I wasn’t working full time, I could do more tasks,” she tells me, “but even if I doubled that, that’s still poverty–$12,000 a year. And there are no benefits. You don’t know what you’re going to wake up to. You could wake up one day, and be like, oh my god, I made $300 today, and then have three days where you’re making $12.”

When Stacie heard about Lyft, she decided to try that, too. She passed the screening process, attached the requisite pink mustache to her car, and had a great time driving people around for a day. Then she read an article about the insurance risks of driving for a peer-to-peer ride platform like Lyft. She became afraid that if someone were to sue her for getting hurt in her car, her insurance would not cover it. “I have savings, I have kids, and I have a house. I can’t risk it,” she says. “If I were 25 and I had nothing, yeah, to make a buck, what are the chances.” (Lyft has recently made efforts to address such concerns by expanding the insurance it provides drivers, but there are still ambiguities about what happens if claims exceed Lyft’s $1 million protection.)

Leena Chitnis, a former Fulbright scholar, finished an MBA program at Syracuse University last year and, while she looks for work, set up eight gigs on Fiverr to keep her going. So far, she’s completed a total of 27 orders and made $176. “I have $90,000 in school loans,” she says, “so when people say, can you edit my business plan for five bucks, I’m like, people charge $10,000 to write your business plan, and here I am editing it for four bucks [Fiverr takes 20% of every $5 fee]. I’ve seen panhandlers get more money outside of the 7-11.”

When I order my next Postmates delivery, I talk with the courier who biked through an icy storm to bring me a bag of cashews from Whole Foods. He’s 22, which means he can still use his parents’ insurance. On this four-hour shift, one of his first since signing up for Postmates, he expects to make about $40. “I don’t rely on this for my main source of income,” he says. “I haven’t talked with anyone who does.”

Every once in a while on a crowded New York City sidewalk, a puff of sadness will float off a stranger and hit me like a cloud of too-strong cologne. Whether it’s coming from a deliveryman with ice caked to the back of his bike or from a man with an overly starched white collar, it only lasts as long as it takes us to pass each other.

Not so in the gig economy. When you meet your neighbors, you meet their hardships. Sometimes they’re upfront about it. “Going through a divorce,” reads one TaskRabbit task. “Need somebody to preview emails from a contentious ex, redact any contentious material and summarize the essential practical elements (like ‘pack the kids’ rain boots next week,’).” Other hardships, like Teresa’s loneliness, sneak up on you. But it’s Marge who makes me want my desk job back.”


Continuing on her own experience, Sarah writes:

“My experiences in the gig economy raise troubling issues about what it means to be an employee today and what rights a worker, even on a assignment-by-assignment basis, are entitled to. The laws regarding what constitutes an employee have not yet caught up to the idea that jobs are now being doled out by iPhone push notification.

In a recent lawsuit filed against Uber–in the wake of an incident in which a driver hit and killed a child pedestrian on New Year’s Eve in San Francisco–the prosecuting attorney is arguing that Uber drivers are employees because their vehicles are logged by the Uber App and are therefore “on the clock” even when they don’t have a customer in their car. Postmates asks their workers to sign up for shifts. Zirtual asks them to be available during working hours. And most gig economy platforms have a system for weeding out employees who don’t get good reviews from customers. TaskRabbit “removes” them after the “second strike.”

I ask Postmates CEO Bastian Lehmann whether he thinks there’s a case to be made that his couriers are actually employees. “I don’t think it’s up to the companies or the startups to decide whether there’s an argument to be made or not,” he tells me. “There is a law that defines how you employ people, and that law allows independent contractors to be working for companies under specific conditions. If people want to change the scope of the discussion, then I think we have to discuss what is allowed by the law and not what a startup does.” Lehmann then trots out the now very familiar argument about how these independent contractors can choose to take the jobs or not, and he points out that FedEx also uses independent contractors (it contracts with small businesses to pick up, deliver, and transport packages).

By Lehmann’s math, Postmates couriers are making pretty good money. About 20% of couriers on Postmates’ platform are working the job as their primary source of income, he tells me. And for those who might complain they aren’t even making minimum wage as a Postmates courier (a charge leveled on Internet message boards and picked up by The Register), Lehmann thinks they’re doing it wrong. “Saying we don’t provide minimum wage, that’s like saying, I’m driving for Uber and there is not enough jobs at 6:00 in the morning,” he says. “It’s like saying, I don’t make any money on Airbnb because I only rent my apartment out on Wednesday night.”

My last call is to Leah Busque, CEO and founder of TaskRabbit, to seek comment on many of the problems that I and my fellow TaskRabbits have encountered while working on her platform: the difficulty of scheduling work, the lack of insurance, the desire for recurring work. Busque tells me that a platform revamp is scheduled to go live in the United States this year and that it will address some of these issues. She says that she’s “looked into a benefits program” for TaskRabbits and it’s “in the works.”

But Busque is emphatic that her company’s responsibility to TaskRabbits is only to provide the best platform possible–nothing more. “We’re about empowering these independent contractors to build out their own businesses,” she says. “We don’t want them to be TaskRabbit employees. It’s good for them to have the autonomy and the drive to do what they want, when they want, for the price that they want.”

Given the challenges I witnessed in making a living wage via TaskRabbit, I ask Busque how many people are able to work full-time via her labor market. She puts the percentage of TaskRabbits who use the site as their sole income at about 10%, and she says they “cash out” about $5,000 or $6,000 each month. Another 75%, according to TaskRabbit, “rely on the service to pay their bills.”
Busque would like to see both numbers increase. “I think we have a real opportunity to match our vision,” she says, “which is to revolutionize the way people work. And to do that, we have to see more and more people using the platform full-time.”

By the last day of my employment in the sharing economy, I’ve booked precisely zero Fiverr gigs. Nobody has invited me to cook pizzas at their hipster special occasions (and after about a month, my menu has mysteriously disappeared from the site). Apparently the people of Manhattan are better with Scotch tape than I anticipated, because I have not had a single Skillshare student. WunWun still hasn’t responded to my application. I have had two DogVacay requests that I could not accommodate. Two of the services on my list, Prim and Cherry, have shut down. One of them, Exec, was acquired. It had started as an broader errand-running business, and one of the founders wrote a farewell blog post in which he noted that “it was difficult to get [people seeking supplemental income] to stick around when we couldn’t guarantee work.”

I have come to realize that one of the cruel ironies of the gig economy is that even though it’s geared almost exclusively to serve urban markets, the kind of densely packed cities where space is at a premium, one needs a car to have a shot at the cream of the work that’s available. Even worse, the universe of gig economy startups is mostly relying on young people and others who are underemployed–exactly the people whom are least likely to be able to afford a car in a city. Or have an extra bedroom. Or a parking space. Or designer clothes. Or handyman skills.

When I’m looking for dependable work, I find myself at the bottom of the digital employment totem pole: Mechanical Turk, Amazon’s freelance marketplace. More than 500,000 people–many of whom live in the U.S.–have signed up on the site to complete mundane, repetitive tasks posted by such companies as Twitter, LinkedIn, and AOL. Site veterans can earn qualifications that allow them to accept better, higher-paying tasks (my college degree has no pull here). My best asset is that my IP address is registered in the United States. It’s a prerequisite that allows me to take some of the better jobs, like spending 24 minutes taking a survey that pays $0.70.

I spend the biggest chunk of my time, about two hours, labeling photo slideshows at a nickel each. Each of them has five photos, and each photo has 11 pages of labels to use on it. That means that it takes at least 55 clicks to earn $0.05. There are slideshows of cats on couches. Cats on beds. Dogs on beds. Cats in sinks. Dogs with cakes. Cats with cakes. Cats with pizza. Cats with windows. Dogs in car mirrors. Dogs with bananas.

On my way to completing 61 slideshows, I begin to resent Larry Zitnick, the Microsoft researcher who posted this maddening task. When I call him later, he’s actually quite nice. Zitnick explains that my slideshow labels are helping to train a computer to recognize images. “In the early 2000s, our datasets generally had hundreds or maybe a few thousand images in them,” he says. “And now we had have datasets with millions of images in them. It’s because of Mechanical Turk.”

Labeling slideshows suddenly feels very important. But it still doesn’t pay. I make $1.94 an hour. Research suggests most people, like me, aren’t making substantial income off their Mechanical Turk work. Only 8% of workers surveyed by researchers at the University of California, Irvine, said that Mechanical Turk income always helped them meet their basic needs.
My best day at TaskRabbit suddenly seems like a winner. I made $10 an hour at the dance job (not counting the performance that will take place the next day), $15 an hour at the Harvard Club, and about $20 an hour wrapping presents: $95 in total. My eight-and-a-half hour day was a best-case scenario. There was no downtime. The only break I had was a 10-minute lunch that I grabbed next to TaskRabbit user Mark’s apartment before gift wrapping his presents. But when you factor in the time I spend commuting between tasks, I only made $11 an hour.

That week, I make $166 on TaskRabbit, which is $46 above the median active TaskRabbit in my neighborhood. I also made $100 in cash from the tutoring job that started on TaskRabbit but was paid off the platform.

Near Central Park the next day, in the second blizzard of the year, my fellow dancers breathe into their mittens for an hour while waiting for the choreographed marriage proposal. “I would never say this professionally,” says the choreographer, “But I don’t fucking care. Do whatever you need to do to stay warm and get through this.” The girl from Sweden doesn’t have any boots. She fantasizes out loud about going home to stick her feet in the bathtub as we all jump around trying to stay warm. I mention the $20 I’m making, which at this point seems rather low. The dancers stare at me. It turns out that I and two other TaskRabbits are the only members of the group who are actually getting paid.”

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