As the ‘gig economy’ gains momentum what does it mean for workers?

Nov 30, 2018

A recent article in CuencaHighLife focused on local taxi drivers fighting the internet-based gig economy as represented by Uber, Cabify and InDriver. On a larger scale, the taxistas’ fight reflects a worldwide conflict that leaves many to ask what this “gig” business model means for workers.

The seeming inevitability of gigs overrunning the countryside, even into the pristine Andes, is clear. Local forces are at work reshaping the business and employment landscape. Global forces with the same mission are emerging that are no longer dependent on governments or answerable to the will of the people.

Traditional civil norms and customs are increasingly under threat, deemed unnecessary, even antiquated, in an age where the quest for global business success is paramount.

It is clear why taxi drivers in Cuenca — and more recently in Quito — are opposed to the gigs: the cost of an official taxi medallion is nearly $40,000, almost as much as the taxi itself. This is an extraordinary investment for the average Cuencano. The threat of their investment being undercut by “independent contractors” who carry none of the responsibilities required of licensed cabbies, and only the expense for a vehicle, is very real, for the drivers, their families, and the many services that support them. So, you might be surprised to read the following comment by “Doobie” in response to the CHL article.

“We need Cabify or Uber available in cities other than Quito or Guayaquil. Let the cabbies cry. You can’t stop progress!!”

Go figure.

Besides the painfully coarse indifference towards others and selfish nature of “Doobie’s” “Let them eat cake,” attitude, the question begs to be asked. Is the emerging gig economy really progress?

Research suggests something quite different — and something very disturbing.

The gig economy may affect more jobs in the future.

More and more businesses are exploiting what is known in the U.S. as the “1099 worker loophole” — hiring workers as “independent contractors” instead of as regular full-time employees. In some cases, companies have laid off all or most of their regular workers and then hired them back, but as independent contractors.

Merck, one of the world’s largest pharmaceutical companies, has been a pioneer of this strategy. In 2008, it sold its Philadelphia factory to a company that fired all 400 employees and then rehired them as contractors, paying them no health care, sick leave, vacation or Social Security benefits. Merck then contracted with the same company to carry on making antibiotics for them, using the exact same employees.

Arizona public-relations firm, LP&G, fired 88 percent of its staff and then rehired them as freelancers working out of their homes, essentially off-loading the expense of office space, utilities, health care and retirement funding.

And Out Magazine, the most-read gay monthly in the U.S., laid off its entire editorial staff and then rehired most of them as contractors who received none of their previous employee benefits.

By hiring contractors instead of regularly employed workers, businesses can reduce labor costs by nearly 30 percent, according to the Bureau of Labor Statistics.

Progress indeed.

Now comes the so-called “gig economy.” Companies like Uber, Airbnb, and Upwork are allegedly liberating workers to become “micro-entrepreneurs,” who are “able to seamlessly integrate work with life,” as TaskRabbit founder Leah Busque put it in an interview for Huffington Post. In reality, these workers have ever-smaller part-time jobs (“gigs” and “micro-gigs”), with low wages and no benefits or job guarantee, while the companies profit handsomely.

Uber generated $2.95 billion in revenue in the third quarter of 2018.

Upwork is a job brokerage firm based in San Francisco that employs a mere 250 regular employees at its home office but oversees a web-based workforce of nearly 10 million freelancers around the world. A vast range of workers can be found on Upwork, including architects, engineers, lawyers, website and app designers, translators, software developers, and graphic designers. None of them receive benefits from Upwork.

Under the terms set forth by Upwork, U.S. workers bid for jobs alongside workers from India, Thailand, Philippines, and elsewhere. Thus, Upwork represents a new low in globalization. The workers auction themselves off, underbidding each other in a global race to the bottom.

The gig economy takes us back to the days of the piecemeal wage economy, which was more prevalent in previous centuries. Rebecca Smith, Deputy Director, National Employment Law Project, says working for gig economy businesses is like going back to the exploitative labor system popular in 19th century England, in which workers were paid not by the hour or month but based solely on production.

Companies like Upwork, TaskRabbit, Postmates, and Uber, she says, talk as if they are different from old-style employers simply because they operate online. “But in fact, they are operating just like farm labor contractors, garment jobbers, and day labor centers of the eighteenth and nineteenth centuries,” she says.

To suggest that an employee who must pay his or her own operating expenses, such as an automobile, smartphone and an internet connection, simply to be qualified to compete for a “gig” that provides no benefits is a travesty. If dehumanizing the value of workers and making it difficult for workers to advance is considered progress, I’ll take the old-time religion of, “Do unto others, as you would have them do unto you” anytime.

The statement, “Let the cabbies cry” is selfish, callous and astonishingly uninformed. Unfortunately, this me-first attitude is typical of too many gringo expats who are unable to let go of the apron strings of their childhood and now resort to chest-beating and jingoistic claptrap while pretending to be living in a U.S. suburb. What a shameful display of entitlement, arrogance, and ignorance.

Ecuador’s storied tradition of open borders for refugees, moral condemnation of human trafficking, and social acceptance of gays and people of different religious faiths is to be applauded and serves as a model for good citizenship not only for this country but for the world.

The skulduggery endemic in the gig economy is powered by greed. Such shenanigans, while popular in the U.S., have no place in Ecuador.

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