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  • The Perils of the Gig Economy
    Updated On: Sep 06, 2016

    The Perils of the Gig Economy

    Printed in the Concord Monitor on Sunday, September 4, 2016

    As we approach Labor Day, it seems an appropriate time to reflect on the status of the twenty-first century worker.  Advances in technology and communications have revolutionized the modern workplace, but new trends in employment are making it more difficult for some workers to enjoy the protections for which our forefathers and foremothers fought so hard.

    Many of the changes are positive and contribute to worker productivity and a better quality of life for all of us. Of concern is the fissuring of the employer-employee relationship that jeopardizes the gains in worker protection and safety of the past 100 years. The "gig" economy, best exemplified by Uber drivers, is an example of the workplace ambiguities faced by modern employees. But Uber is simply the most recognizable example of the fissuring currently in place that is making modern workers less safe and is contributing to depressed wages and unfair competition for employers who value their employees.

    Other examples of this fissuring include the widespread use of temporary labor over direct hiring, forcing employees to become private contractors, and outsourcing. Dr. David Weil, administrator of the US DOL Wage and Hour Division details a surprising example of this outsourcing: "for example, when you walk into the lobby of a hotel these days operating under a well-known brand name, there’s a high probability that the workers who greet you at the desk or clean your room are likely not employed by the hotel chain of that corporate brand. Instead, the management of that hotel property has actually been contracted out to another business offering this service. In fact, many more of the services provided on site – cleaning companies, landscapers, food service providers, etc. – have also been contracted out to providers of these services. Employees are often unaware for whom they actually work."

    It seems employees are no longer valued for their knowledge and the skill and ability they bring to their work. Instead the people who work for a business are reduced to an expense to be minimized.  I wonder how good the service is at the above mentioned hotel. If the cleaning staff notices a health hazard, say bed bugs in a room, to whom do they report it? Assuming these outsourced employees are cheaper than direct hires, who gets the money once spent on employee wages? How much is it worth to know the housekeeper has someone to tell if she sees a bed bug?

     The "gig economy" is not empowering workers by making them mini-entrepreneurs. It is simply downshifting risk to the employees and customers. Next time you hire an Uber driver, ask if he or she has workers compensation insurance should they be injured in an accident, or better yet ask if they have liability insurance in case YOU are injured in an accident. This is a danger of sub-contracting: it is not transparent and often shifts risks that non-fissured companies insure themselves on to society. If you hire a contractor to work on your home and she sub-contracts part of that work to someone else, who pays if one of them is injured while working on your home? Do you have enough homeowners' insurance if the injury  results in a permanent disability? Workers' compensation insurance is expensive, but so are injuries. The contractor who provides workers comp to his employees is charging you a rate that covers that risk, but the one who doesn't is putting that risk on you, the customer. If they are willing to cut corners when it comes to employee risk, what other corners are they cutting when working on your home? Suddenly that lower price to clean your gutters isn't so low.

    If you have a regular full-time job, should you worry about this fissuring? In her article, "The Future of Work: Diving into the Data", Sharon Block, principal deputy assistant secretary for policy at the US Department of Labor, quotes a study that suggests that alternative work arrangements represent more than 15 percent of the labor market − and that they account for between 80 and 100 percent of the net employment growth since 2005. In the recession of 2008, millions of workers lost their jobs only to find a new and unfamiliar labor market. Fissuring is the new outsourcing - instead of moving jobs to less developed countries where workers will accept lower wages and fewer benefits, we have become the workforce who will do more for less. The recovery from the great recession mirrors the trends in the modern workforce. The stock market is back to pre-recession levels, but many of the workers whose labor generates stockholders' profits are still struggling. This Labor Day, the state of the twenty-first century workforce should concern all of us who work for a living.

  • New Hampshire Coalition for Occupational Safety and Health

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