Cut-Throat Capitalism: Welcome To the Gig Economy
Photo Credit: Shutterstock.com
Stay up to date with the latest headlines via email.
The media are all abuzz with the changing nature of work. Exciting words like “creativity” and “adaptability” get thrown around, specifically in connection to the shift away from steady, full-time employment to a gig economy of freelancers and short-term contracts. Proponents of the gig economy, from the New York Times' Thomas Friedman to bright-eyed TED pundits, tout it as a welcome escape from the prison of the standard workweek and the strictures of corporate America. Working on a project-to-project basis will set you free, they tell us. Wired magazine has called it "the force that could save the American worker.”
But when you’re actually stuck in it, the gig economy looks quite different.
Consider the New York Freelancer’s Union: According to a report in the New York Times, 29 percent of the union’s New York City members earn less than $25,000 a year, and in 2010, 12 percent of members nationally received some type of public assistance. Turns out that life with no health benefits, vacation pay or retirement plan is not a rosy picture.
Writing for Fast Company, Sarah Kessler, who went undercover to hustle for work in the gig economy, put it this way:
“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.”
What’s really going on is the desire of businesses to chop wages and benefit costs while also limiting their vulnerability to lawsuits, which can happen when salaried employees are mistreated. The burden of economic risk is shifted even further onto workers, who lose the security and protections of the New-Deal-era social insurance programs that were created when long-term employment was the norm.
I caught up with Gerald Friedman, who teaches economics at the University of Massachusetts at Amherst and has written about the gig economy, to find out how this trend happened and what it means to workers and our increasingly unequal society.
Lynn Parramore: How did the shift away from full-time employment to the gig economy come about? What forces drove the change?
Gerald Friedman: Growing use of contingent workers (in “gigs”) came when capitalists sought to respond to gains by labor through the early 1970s, and in response to the victories capital won in the rise of the neoliberal era. Because contingent workers were usually not covered by union contracts or other legal safeguards, employers hired them to regain leverage over workers lost when unionized workers gained protection against unjust dismissal, and courts extended these protections to non-union workers under the “implicit contract” doctrine.
Similarly, the rising cost of benefits due to rising healthcare costs and government protection of retirement benefits (under the 1974 ERISA statute) raised the cost of full-time employment; employers sought to evade these costs by hiring more contingent workers.
In the early- and mid-20th century, employers created careers and job-ladders to lock valuable workers into particular jobs. Job-lock reduced the danger that low unemployment would lead to competition for workers, wage inflation, and would undermine their control over their workers. (The other side of job-lock, as Richard Freeman among others noted, was the organization of labor unions among workers who could not “exit” from no-longer-agreeable employments, and therefore, engage in collective action to improve conditions.) Reduced market regulation, the opening of markets to international competition, and a shift in macro-economic policy focus from full-employment to price-stability all reduced the danger that workers would quit to gain higher wages or better jobs.