By Conor Gallagher
The Biden Labor Department released a proposal on Oct. 11 that could force regulators and courts to reclassify gig workers as employees rather than independent contractors.
The stakes are high – not only is the gig economy devastating its workers, but there are ongoing efforts to expand the model to nearly all American workplaces. The good folks at McKinsey estimate that 36 percent of the workforce (58 million Americans) are gig, contract, freelance, and temporary workers – up from 27 percent in 2016. And the numbers are only growing as inflation forces people to take on a second or third job in order to make ends meet.
Here’s a rundown of some of the latest from the gig economy, as well as reasons to be doubtful about ‘Amtrak Joe’s’ efforts to rein in the abuses.
The Gig Economy and Homelessness
It wasn’t that long ago that gig workers, especially grocery and take out deliverers, were declared heroes back when people still cared about the COVID-19 pandemic.
While wealthier people placed orders online and stocked up, it was low-income people delivering their food items and exposing themselves to do so. (Not to mention that low-income people also had to shop in-person and regularly because they couldn’t afford to stock up.)
Predictably, none of that hero rhetoric ever materialized into any concrete benefits, and the gig economy continues to destroy the lives of many who are forced to partake in it.
A few weeks back, I wrote about the ongoing criminalization of homelessness in the US, and what one notices when reading accounts of struggles to stay housed is how often gig work is a culprit in the tragic stories. The COVID-19 pandemic exacerbated many of these trends with some gig workers’ infections (some of which become Long Covid) first taking their health, then their financial stability, and finally their homes. From Rolling Stone:
“We are only beginning to scratch the surface of [understanding] the effects of long Covid on folks’ financial well-being — including their housing security, or lack thereof,” says Megan Ranney, M.D., the associate dean for strategy and innovation at Brown University, and co-leader of the School of Public Health’s Long Covid Initiative. “Unfortunately, for much of America, living with long Covid is enough to put folks over the edge financially, with very limited safety nets.”
One thing we do know about long Covid is that it encompasses a wide range of symptoms and severity. So while some people living with long Covid are able to continue working without a problem, others — especially those with physically demanding gig-economy jobs — don’t have that option.
“Our country does not do a great job of supporting people in ways that allow them to continue to work and take care of their families while living with chronic medical conditions,” Ranney explains. “There’s obviously a knock-on effect: If you can’t work and can’t get disability, at some point you’re going to lose your house.”
While the data catches up to reality, anecdotal evidence shows an already dire situation plumbing new depths. From The Bold Italic:
Outside a 24 Hour Fitness in San Mateo, side-saddling a commercial office space and a tiered parking structure, a swath of strategically tinted cars sit parked, veiled by thin layers of condensation coating their windshields. It’s obvious that people have spent the night inside them, presumably cocooned somewhere either in the back seat or the spacious hatch. Many attempt privacy measures — some using towels or sheets or other fabrics stuffed under the windows to block out wandering eyes.
Most display a shared vocational decal: Lyft or Uber. While most don’t associate hailing a rideshare with the notion of stepping foot inside someone’s home, that’s exactly what some passengers are doing.
Veena Dubal writes the following in the LPE Project:
Like millions of app-deployed workers in the United States during the terrifying months of lockdown, my friend Hope found herself in a particularly dire situation. Her employer, Lyft, treated her as an independent contractor—a micro-entrepreneur who didn’t have any control over how much she charged per fare or what fares she was allocated. And the state of California, despite a recent law (AB5) clarifying her status as an employee, had neglected to enforce her rights. As a result of the technology industrialists’ refusal to abide by the basic rights accorded workers, and the state’s refusal to care, she was rendered essentially dispossessed: rhetorically celebrated for her labor while disproportionately exposed to poverty, disease, and death.
Hope had recently been evicted by her new landlord—a developer in gentrifying Sacramento. And because of her erratic income as a Lyft driver and the tight housing market, she hadn’t been able to find a new home. When the pandemic hit, she was sleeping in state campgrounds. And when those shut down, Hope had ended up in her abusive father’s home. On the evening of March 28, 2020, nine days after California’s Covid-19 lockdown orders had been issued, he had kicked Hope out, in an unprovoked violent rage, and took the keys off her keychain.
Here is another:
Cardell Calloway, a 68-year-old DoorDash delivery worker from Lancaster, Calif., who said he has been living in his car for about a month after his RV was towed away, relies on SNAP benefits. When his church was offering food, he would also go there, he said.
Calloway does deliveries eight to 12 hours a day at least five days a week and makes about $500 a week, he said.
No wonder credit card debt is skyrocketing as everything becomes more expensive, including the interest rates on those cards.
Debt is the only way working people survive now. Because the rich have taken everything from us. https://t.co/i6Y5TU9ttA
— Hampton Institute (@HamptonThink) November 10, 2022
Looks like it’s time for Americans to pick up a “side hustle” or two. On Nov. 1 Uber’s Chief Executive Dara Khosrowshahi said that more than 70 percent of drivers noted that inflation played a part in their decision to sign up to work. What’s good for Uber is bad for workers, of course. Higher prices due to supply chain issues and the war in Ukraine are only making working class people more desperate, and gig workers are bearing the brunt of the costs. As the American Prospect reports:
These days, any rest time is a bonus. To reach her daily earning target of $250 to $300, the 44-year-old mother of four now has to drive until 4 or 5 p.m., rush home, do the housework, and check on her children’s homework, before she goes to bed exhausted—six times a week.
“It puts a strain on me,” said Payero-Diarra, who has been driving for Uber and Lyft since 2019. That couple of hours driving instead of resting could be a matter of life and death for workers like Payero-Diarra. But she has little choice. One of her daughters is a senior in high school, leaving her worried about impending college bills. Gas prices for two days’ worth of rides have nearly doubled to $80 from $45 at the start of the year, she said. Plus there are groceries to worry about: Food prices in New York spiked by more than 9 percent in June compared to the previous year.
A June national survey of gig workers from the Economic Policy Institute found the following:
- 29 percent earned less than the state minimum wage that would be applicable if they were a W-2 service-sector worker.
- 62 percent lost earnings because of “technical difficulties clocking in or out,” compared with 19 percent of W-2 service-sector workers.
- One in 5 gig workers went hungry because they could not afford enough to eat. 30 percent used the Supplementary Nutrition Assistance Program, twice the rate of W-2 service-sector workers.
- 31 percent did not pay the full amount of their utility bills in the month prior to the survey.
Gig Work and Mental Illness
It might come as a surprise that studies are needed to confirm that precarious work controlled by cruel algorithms that doesn’t pay enough in order to afford life’s essentials would be harmful to someone’s well-being. (Then again, maybe academia is waking up to the “gigification” of higher education.) Nonetheless, the results are clear according to a recent study from the University of Texas Health Science Center at Houston School of Public Health.
Researchers found that gig workers reported a 50 percent increase in poor overall health compared to those who earned a salary. The research was conducted using pre-COVID-19 data, leading researchers to conclude that the health outcomes have likely deteriorated further. Furthermore, the researchers wrote:
The longer-term economic burden will ultimately be passed onto the U.S. consumer as we see increases in worker shortages, increases in prices from gig companies, and increases in unreimbursed health care utilization. It is reasonable to project that the U.S. taxpayer will pay more for uninsured chronic morbidity care of uninsured U.S. workers who are paid an insecure income.
Another Canadian study found that platform workers report higher levels of psychological distress than wage workers and the traditional self-employed due to constant financial strain.
Obviously, this is nothing new. Adam Smith wrote all the way back in 1776 that “Workmen… when they are liberally paid by the piece, are very apt to overwork themselves and to ruin their health and constitution in a few years.”
Something to keep in mind as the rollback of hard-won worker rights and transformation to a complete gig economy is the goal of the neoliberal hive mind.
Efforts to expand the gig framework to all workers
Representative Henry Cuellar (D-TX) introduced a bill earlier this year, the Worker Flexibility and Choice Act, that would accelerate the transformation of all workers into gig workers.
Decided that they would set schedules using algorithms & incentives instead of providing secure hours WOULD NO LONGER HAVE TO PROVIDE A WAGE FLOOR or OVERTIME. 2/
— Veena Dubal – @email@example.com (@veenadubal) July 27, 2022
As Uber, DoorDash, and Instacart have already done to their workforce, it would empower employers to force workers to work long and hard to eek out a living. The everyday gamble, insecurity, & stress of gig work would extend beyond these sectors… 4/
— Veena Dubal – @firstname.lastname@example.org (@veenadubal) July 27, 2022
You might remember Cuellar from his closely watched primary contest against progressive challenger Jessica Cisneros. Democrat leaders like Nancy Pelosi, Jim Clyburn, Hakeem Jeffries, and Steny Hoyer backed Cuellar despite him being anti-labor, the most anti-choice Democrat in the federal government, and a fossil fuel industry stooge.
Cuellar ended up beating Cisneros by 289 votes.
Regardless of whether Cuellar’s legislation ultimately becomes law, the gig economy is already sniffing out new opportunities. The Chalkbeat Colorado reports:
HopSkipDrive — a rideshare service similar to Uber or Lyft that specializes in transporting children — now contracts with more than a dozen Colorado school districts, as well as human services agencies, to provide rides for vulnerable children: homeless youth, those in foster care, and students with disabilities whose specialized education plans include transportation.
But as a rideshare company, HopSkipDrive hasn’t been regulated like other companies that also provide rides for at-risk students. Those companies have to follow Colorado Department of Education rules that ensure drivers have certain training and vehicles meet safety requirements.
Elsewhere, efforts are underway across the country to “gigify” nursing care. For example, Bergen New Bridge Medical Center, New Jersey’s largest hospital and a clinical affiliate of Rutgers, just announced a partnership with the tech platform CareRev, which says it will “bring support and flexibility to New Jersey healthcare workers.” How will they do that?
With CareRev, Bergen New Bridge can identify and hire local qualified nurses, certified nursing assistants, and technicians per diem to accommodate fluctuating patient volumes…
Of course these per diem nurses would not enjoy the same benefits as full time employees, but that’s the point. And it’s happening across the country.
Take the case of the University of Minnesota paying gig workers more than its employees. The Minnesota Reformer reports:
Full-time employees at the university, who are unionized with the Teamsters Local 320, have better benefits than temp workers — quality health insurance, a pension and paid time off. But temp workers at the university have leap-frogged full time workers in terms of hourly pay, which has aggravated tensions between the university and its service employees.
The gig workers essentially function as non-strike scabs. In this case, even paid 35 percent more, the gig workers cost the university contractor less than unionized workers because they don’t receive any benefits.
And TechCrunch describes how gig work is infiltrating the hospitality industry:
With Qwick, [co-founder Jamie] Baxter sought to build a platform that connects service industry workers with food and beverage shifts in real time. Qwick uses a matching algorithm that takes into account factors like distance, the availability of “VIP” workers and supply to fill gigs for hospitality businesses, including stadiums, senior living facilities and corporate catering.
“The hospitality industry has been plagued with reputations of low retention rates, low wages and poor management and working conditions for decades,” Baxter told TechCrunch in an email interview. “Qwick aims to combat the issues of working in the industry and reshape what it means to work in hospitality by creating value for its professionals and offering them a livable wage.”
To sign up for Qwick, workers have to complete a profile and watch a five-minute virtual orientation. Once they’re vetted, they receive notifications for open shifts.
Stuck Between a Rock and a Hard Place
Two years ago California voters approved Proposition 22 that excluded many app-based workers from foundational labor laws. Proponents of ballot initiative (Lyft, Uber, DoorDash, etc.) spent over $200 million on that campaign.
California gig workers are now trying to unionize, but they are at the mercy of a court challenge to the constitutionality of Prop 22 and the Biden administration.
That’s because while unions of employees can bargain over benefits and pay, those made up of contractors cannot. From the San Francisco Chronicle:
“They can unionize, but they cannot, if they’re properly characterized as independent contractors, bargain for wages and conditions of employment,” said William Gould, professor of law emeritus at Stanford Law School and a former chairman of the National Labor Relations Board.
That is because of antitrust laws.
For example, a truly independent contractor like a plumber could agree to a fee with a client to fix some broken pipes. But if a group of independent plumbers unionized and began setting rates, it would be considered a form of price fixing.
The California Gig Workers Union could still fund litigation in an effort to improve working conditions or try to get legislators elected who are sympathetic to them, but it’s a long climb.
It remains to be seen what the final form of the Labor Department’s proposals will be. There are reasons to be skeptical that it will provide strong protections for workers. From the Christian Science Monitor:
Whatever the final version of the rule – there’s still a public comment period, and it’s likely to get challenged in court – it will serve more as guidance than a binding rule, legal experts say. Courts don’t have to follow it. States have their own rules and laws, which won’t be affected by the federal guidance.
And the Biden administration remains cozy with the gig companies, even taking money from three of them (DoorDash, Shipt, and Instacart) as part of its $8 billion in “new commitments” from more than 30 businesses to end hunger in the US.
The day the proposed new rules were released shares of Lyft fell 12 percent, while Uber dropped 10 percent and DoorDash lost 6 percent, but they have all since recovered. One would expect as much, what with all the expert economic advice they’re receiving. From The Economist:
Silicon Valley is increasingly turning to economics for insights into how to solve business problems—from pricing and product development to strategy. Job-placement data from ten leading graduate programmes in economics shows that tech firms hired one in seven newly minted phds in 2022, up from less than one in 20 in 2018 (see chart). Amazon is the keenest recruiter. The e-emporium now has some 400 full-time economists on staff, several times as many as a typical research university. Uber is another big employer—last year the ride-hailing firm hired a fifth of Harvard University’s graduating phd class.
Expecting the Biden administration to anything about gig work also ignores the fact that Democrats, by and large, are of one neoliberal mind with Silicon Valley. They soak up more than 85 percent of the
bribes political contributions from tech, and the revolving door is constantly moving.
Dozens of officials from the Obama administration were rewarded with cushy positions at Uber, Lyft, Airbnb, Amazon, Instacart, etc. And now dozens of current Biden administration staffers have professional ties to Big Tech. It would be shocking if they turned around and blew up the exploitation model that their friends and their potential future landing spots rely on.
Speaking of that model, Instacart just agreed to pay a $46.5 million settlement with the city of San Diego regarding a claim that workers in California were improperly classified as independent contractors rather than as employees. While celebrated by the San Diego Attorney’s Office, the settlement reflects no admission of wrongdoing, and Instacart said it will have no impact on its California operations. From Supermarket News:
Instacart noted that the San Diego City Attorney of San Diego filed its suit against the company before California voters approved Proposition 22 in November 2020. The ballot measure, supported by companies such as Instacart, Uber, Lyft and DoorDash, reaffirmed the independent contractor status of app-based gig economy workers and offset California Assembly Bill 5, signed into law in mid-September 2019, which had classified them as employees receiving full benefits and labor protections.
That $46.5 million fine paid by Instacart is 0.35 percent of its $13 billion valuation and covers roughly 308,000 workers. That’s $151 per worker.