A third strategy is to maintain the status quo but reduce the economic vulnerability of gig economy workers. In 2017, Virginia senator Mark Warner, a former tech entrepreneur, introduced legislation to test-drive a portable benefits plan for gig workers. The bill asked the federal government to set aside twenty million dollars in funding for organizations to use in order to look at the types of benefits programs individual workers could take with them from job to job. Possibilities include an “‘hour bank,’ modeled on a program used by some building trades, that tracks a worker’s hours for a variety of employers and collects and administers training and retirement programs. Or an ‘opt-in’ that gives consumers the option of adding a nominal amount to their payment that would go to a benefits fund for workers.”90
“Somebody may be doing very, very well as an Etsy seller and Airbnb user and Uber driver and part-time consultant[,] . . . but if they hit a rough patch, they have nothing to stop them until they fall, frankly, back upon government assistance programs,” the senator explained, calling the portable benefits an “emergency fund”: “It might be a fund to take care of a disability if you get hurt. It might work with some existing retirement programs. Part of it would be, depending on what happens with Obamacare, an ability to help deal with health care expenses. I think there will be a variety of models.”91
While the portable benefits plan may be helpful for Success Stories and Strugglers whose main employment comes from the sharing economy, Strivers who have alternative employment may not be as well served under such a plan. Additionally, the “independent worker” model recommended by Harris and Krueger, or the “on-demand contractor” classification, wouldn’t provide the workplace protections that all workers need.
THE TIME RULE SOLUTION
A solution for gig economy workers needs to be simple but still account for the variety found within the on-demand economy, in terms of type of work and the opportunities to excel or be exploited. It sounds complicated, but it isn’t. My solution doesn’t require creating a new category or getting legislative buy-in for a multimillion dollar trial. My solution doesn’t require playing an IRS version of the game twenty questions.
My solution is an easy one-step test for determining if a worker is an independent contractor. I call this test the Time Rule. If the hours/times of work are dictated by the employer or market, the worker is not independent.
Having employer-dictated hours is nothing new. Grocery store clerks and retail workers can’t just show up whenever they want—they have set hours. Law-firm attorneys, teachers, accountants, postal workers, emergency room doctors, and call center employees have their hours set by an employer and the market: no one wants their mail to arrive at midnight or to get a telemarketing call at 4 a.m. Some of these jobs also have staffing considerations: we want teachers to be present when students are at school and a certain number of doctors to fulfill the needs of a busy emergency room. There’s nothing wrong with requiring people to show up to work at certain times, but if you can’t do the job whenever you want, you should not be considered an independent contractor.
If work is truly independent, then the worker gets to decide when it will be done and isn’t pushed into one time slot or another. For a “true” independent contractor, worker independence is already expected, such as in the case of a freelance writer or novelist or an independent small-business owner. In many cases these individuals have incorporated in order to secure liability protections for themselves.
Uber and other sharing economy services may argue that they offer work-time flexibility as one of their great perks, but for-hire drivers have their hours dictated by the market—workers who don’t work rush hours make substantially less money. The platforms also incentivize drivers to work during specific hours by linking bonuses and income guarantees to certain times and days, further reducing worker flexibility. After the 2015 pivot, TaskRabbit workers were prevented from taking gigs outside of the hours of 8 a.m. to 8 p.m. Postmates and FedEx drivers must do their deliveries during a preset window. Airbnb hosts can pick any time of year to host, but the company requires that hosts respond to potential guests within a set time frame; and certain times of year, such as holiday weekends, are more lucrative. All of these workers would be employees.
Under the Time Rule, the default categorization for workers is employee. If you interview and hire someone—or if you provide them with access to your platform and make money off of their work—that person should be considered an employee and have the same access to benefits and protections as other workers for the same firm. A default setting such as this would especially benefit the Strugglers and Strivers who might otherwise find themselves vulnerable to physical, social, and economic risks and exploitation.
THE PAJAMA POLICY
A corollary to the Time Rule is what I call the “pajama policy”: work that is truly independent can be done in one’s pajamas, whatever those may—or may not—include. The pajama policy is a direct response to the monitoring that arises when work appears to be independent and flexible, but is patently not. For instance, Upwork (formerly known as oDesk and Elance-oDesk) was an early entrant into the online freelance marketplace model. Workers, who include graphic designers, writers, and computer programmers, use the service’s desktop app and work diary, which shows work-in-progress screenshots taken six times an hour. The diary also “records the total number of mouse clicks, scroll actions, and keystrokes per segment,” and workers are required to use both tools if they want to be covered by the service’s hourly-payment protection. Clients can also require that workers take webcam shots of themselves while working.92 Such “big brother” monitoring is at odds with the concept of allegedly independent work.
While screenshots and webcams are not (yet) being used in the gig economy services I discuss in these pages, monitoring is omnipresent in the gig economy. Whereas a white-collar worker in the mainstream economy can waltz into work thirty minutes late and probably avoid detection by the boss at least some of the time, the app-based tools allow for constant tracking. Thanks to GPS systems, Uber and Lyft know exactly when a driver arrives, picks up a passenger, where he goes, and when he drops them off. With required in-app communication, Airbnb and TaskRabbit track response times and record written communication.
Furthermore, the crowdsourced nature of peer review allows for constant evaluation. While not every client gives a rating score or completes a peer review, workers don’t know in advance who will or won’t. This leads to internal monitoring as workers know that they must perform satisfactorily or risk a negative review or low rating. The technological panopticon has been outsourced.
While ratings and reviews are marketed as a way to build trust and reduce the unknown for customers, such marketing is fallacious. Platform staff don’t examine the reviews to provide one-on-one feedback to workers or to implement additional training procedures. Instead, the rankings allow platforms to screen and evaluate workers en masse. Workers who drop below a certain metric are warned and then deactivated, losing access to the platform. The reliance on rankings and ratings doesn’t guarantee a good experience but simply normalizes constant worker surveillance.
WORKER CLASSIFICATION AFFECTS TAX REVENUES
Worker misclassification also impacts tax revenue. According to the Joint Committee on Taxation, the IRS’s 1984 Strategic Initiative, an examination of 3,331 employers for the 1984 tax year, found that 15 percent of employers misclassified workers as independent contractors. The IRS also found that “when employers classified workers as employees, more than 99 percent of wage and salary income was reported. However, when workers were classified as independent contractors, 77 percent of gross income was reported when a Form 1099 was filed, and only 29 percent of gross income was reported when no Form 1099 was filed.” Even lower income reporting was found among owners of sole proprietorships (the simplest and most common business structure), where “net income reporting averaged only 73 percent for Schedule C filers,” a reference to the pr
ofit or loss form that accompanies a personal tax return.93
While employers are generally required to generate a 1099 form for each individual to whom they’ve paid more than six hundred dollars in a calendar year, sharing economy services such as TaskRabbit appear to be exempt from 1099 reporting requirements owing to their reliance on credit card systems. Under the 2008 Housing and Economic Recovery Act, credit card payments via PayPal or another payment processor are exempt from reporting until they exceed two hundred payments and a twenty-thousand-dollar threshold.94 Although all income is supposed to be reported to the IRS, income that isn’t reported by an employer is much less likely to be acknowledged on personal tax returns.
Worker classification may take on increased importance under the 2017 Trump tax plan, where a pass-through provision allows workers to deduct 20 percent of qualified business income from partnerships, S corporations, and sole proprietorships starting in 2018.95 According to Patricia Cohen, “The provision will also allow independent contractors, like Uber drivers, to use the same deduction.”96 Under the approved tax plan, companies may classify more workers as independent contractors in order to lower their taxes and those of their workers, at the cost of numerous workplace protections. Implementing my solutions would reduce this risk.
ENTREPRENEURS BY CHOICE
Under the Time Rule and pajama policy, the category of independent contractor would be reserved for people who were largely self-directed. Workers could opt out of employee status and choose to be entrepreneurs by incorporating, which provides liability protection. Such an active opt out would allow workers with entrepreneurial inclinations to pursue those interests. This model would likely be chosen by the Success Stories who bring sufficient levels of skills and capital to their sharing economy work.
A freelancer who enters a contract to create a website or write an article and has a deadline for delivering the project would be an independent contractor. A self-employed accountant with numerous clients, but who can choose to do all of her work between midnight and 6 a.m., would also be an independent contractor. All gig economy workers would be employees. A worker on Upwork, who is monitored via webcam or keystroke software, would not be covered by the pajama rule and so would be an employee.
This model is not revolutionary: even in the tech industry, full-time and part-time workers for Google, Facebook, Apple, and Microsoft are hired as employees with workplace protections and benefits. The default in many fields is to be hired as an employee, with some entrepreneurial individuals seeking to go into business for themselves as independent consultants and contractors. Even workplaces that are part of the gig economy, such as Uber, TaskRabbit, Airbnb, Munchery, and Kitchensurfing, pay their professional workers as employees. Why should frontline workers be treated any differently?
Allowing workers who seek part-time, flexible work to benefit from workplace protections is not unique either. Instacart categorizes workers without cars (or who don’t want to deliver groceries) as shoppers or cashiers. Such workers are considered part-time employees and are offered a flexible schedule, but are limited to working up to twenty-nine hours a week (thirty hours a week is a common threshold for obtaining health insurance benefits). Workers who have a vehicle can work as drivers or driver-shoppers with unlimited hours. Instacart notes, “The vast majority of our Shoppers were already picking their own shifts at 20–30 hours a week. So this is right in line with what they were already working.”97
Some sharing economy companies may argue that the ability to shed employees in a heartbeat is crucial for competition. Yet sharing services that have opted to pay their workers as employees have succeeded in the sharing economy and even experienced great growth. Companies like Hello Alfred, MyClean, and Managed by Q are clear illustrations of how treating workers well—the “happy worker”/“good jobs” strategy—can lead to long-term success. Likewise, history has shown us what happens when workers are without workplace protections.
A BROKEN PROMISE
In Design: The Invention of Desire by designer and theorist Jessica Helfand, the author mentions that hack, a much-loved Silicon Valley–ism, stands for “horse’s ass carrying keys” and is prison slang for “guard.”98 Outside of the technological realm, to “hack” something is to gash, cut, and break it, like a person with a machete. In Silicon Valley, to hack is based on the arrogant view that perceived value is “only in that which you contribute, fundamentally eviscerating the person or process that preceded your intervention. In this view—and it is not insignificant—the idea of hacking comes from a position of arrogance.”99
Likewise, Silicon Valley’s favorite phrase, “let’s break shit,” is part of Schumpeter’s “creative destruction,” a theory of economic progress in which new business rises like a phoenix from the ashes of old business.100 Creative destruction has also been described as an early version of Clayton Christensen’s hypothesis of “disruptive innovation,” in which economies flourish when start-ups replace established firms.101 And of course, to disrupt the status quo of established industries is part of the goal of the sharing economy.
When the term sharing economy first entered the public lexicon, the sharing economy itself looked like a step forward. Instead of having to compete with the Joneses and step onto in the “consumer escalator,” workers could end the cycle of “work and spend” by participating in collaborative consumption in which expensive products, like riding lawn mowers, were shared with the community.102 By spending less money, workers could minimize their financial needs and increase their leisure time, spending more time with family and friends and reducing the growing trend of “bowling alone.”103 Sharing would replace spending in a newly collaborative world and further reduce the McDonaldization of everything.104 The sharing economy was a step forward, a way out, a solution to corporate dependency and workers’ loss of workplace autonomy.
But the disruption offered by the sharing economy isn’t about moving forward. Instead of offering a way out, the sharing economy has simply increased economic insecurity and worker vulnerability. Workers go from gig to gig, ostensibly as their own bosses but subject to the whims of platform pivots and deactivations. The sites say that they promote empowerment and entrepreneurship, but workers are subject to complex algorithms that determine their presence (or lack thereof) in site searches and task assignment. Under the guise of trust, workers undergo background checks, online reviews, and continual monitoring in an online panopticon of worker evaluation, even as they find themselves working for unknown individuals, outside standard workplace protections, and exposed to considerable risks.
Another way to think of Christensen’s “disruptive innovation” is “the selling of a cheaper, poorer-quality product that . . . eventually takes over and devours an entire industry.”105 As sharing economy services have grown and proliferated, they’ve successfully subverted generations of financial gains and workplace protections. Workers have been returned to an early industrial age in which protections were nonexistent, their risks were great, and they were under the control of corporations and the elite. As Jill Lepore puts it, innovation is “the idea of progress stripped of the aspirations of the Enlightenment, scrubbed clean of the horrors of the twentieth century, and relieved of its critics. Disruptive innovation goes further, holding out the hope of salvation against the very damnation it describes: disrupt, and you will be saved.”106
The sharing economy offers workers a way to “save themselves” through extra work, but the growth of the sharing economy may only continue to subvert workers’ rights and protections. Hard-won victories for workers’ rights and protections are being hacked and disrupted in the name of a “cheaper, poorer quality” progress that is eviscerating a hundred years of workers’ rights. The disruption offered by the sharing economy is simply a hustle.
APPENDIX 1
Demographic Survey
APPENDIX 2
Interview Matrix
Notes
1. STRUGGLERS, STRIVERS, AND SUCCESS STOR
IES
1. All names have been changed.
2. Lee (2013).
3. Mathews (2014); Botsman and Rogers (2010).
4. Surowiecki (2013).
5. Smith (2016a).
6. Katz and Krueger (2016).
7. On the real growth rate, see Weil (2014: Kindle chap. 1); on the reversal of real income growth, see Krugman (2007).
8. Bricker, Dettling, Henriques, Hsu, Moore, Sabelhaus, Thompson, and Windle (2014:1–2).
9. Leicht and Fitzgerald (2013:74).
10. Leicht and Fitzgerald (2013:76).
11. Morgenson (2008).
12. Mishel, Gould, and Bivens (2015). Middle-wage workers are defined as median-wage workers who earned more than half of the workforce but less than the other half.
13. DeSilver (2014).
14. The definition of millennials is not set by the Census Bureau or any other government agency but, rather, differs by media source. I utilize the definition set by Time magazine in the 2013 cover story “Millennials: The Me Me Me Generation” written by Joel Stein, available online at http://time.com/247/millennials-the-me-me-me-generation/.
15. Kahn (2010).
16. Bui (2017). According to the Federal Reserve’s 2016 Report on the Economic Well-Being of U.S. Households in 2015, more than half of adults under age thirty who attended college took on at least some debt (student loans, credit card debt, and other forms of borrowing) while pursuing their education. As of 2015, the mean student debt load was $30,156 (reflecting large debt loads for some borrowers) and the median was $12,000. See Board of Governors of the Federal Reserve System (2016).
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