Taylor Rockhill – The Gig Economy is a New Stage of Capitalism

Traditional mechanisms of regulation and labour organising will not work in the gig economy, which fundamentally alters the nature of work under capitalism.

Taylor D.H. Rockhill, Associate Lecturer and PhD Student in Economics at the University of London, who is researching the impact of the gig economy on wages in Nigeria

This series of articles concerning the Gig Economy in the EU was made possible thanks to the generous support of the Lipman-Miliband Trust  http://www.lipman-miliband.org.uk/logo/logo_files/lmt_logo_picture.png

We base our current valuation of labour on time. As traditions go, this isn’t as long-standing as some would have you believe. In his book, Bullshit Jobs, the late David Graeber points out, as I have in other publications, that time as we conceive it today is a product of the industrial revolution. Namely, the valuation of labour based on hours or years is entirely a product of the new relationship that workers had with factories and offices. Labourers in agrarian Britain, for example, would never have valued their contributions to the farm based on hours or years, and never had considered asking for compensation based on hours or years. In the context of economic history, it is therefore ludicrous to assume that this method of valuing labour based on time would persist forever. It would be considerably more ludicrous to assume that it would remain relevant in the age of the ‘digital revolution’, wherein employers have considerably more data available to them regarding working habits, and wherein labour can be delivered ‘on demand’ from any corner of the globe thanks to the internet. Time is a social construct, or at least our current valuation of it is.

This understanding of the history of labour valuation is critical when approaching the debate around the gig economy, simply because the firms benefiting from the gig economy moved the goal posts and they did not even wait for the emergence of the gig economy as such to do so. A study by the economists Luo et al in 2010 found that as early as the 1990s, firms were already turning to temporary labour firms for workers, rather than hiring through traditional means. This is unsurprising from a neoliberal standpoint, given that temporary labour is seen to be indisputably cheaper than traditional labour. As a firm you only pay for the hours the labourer works on site, therefore sick pay and other benefits are non-existent. In this regard the gig economy is not novel, it is simply to be seen as the automation of a pre-existing process.

The introduction of the liberal paradigm during the industrial revolution valued a labourer simply on their time on site. Keynes provided a brief break from this concept, but the neoliberal paradigm has brought us back where we began, and all it took was informalising labour by outsourcing the hiring process (among many, many other processes as the age of the consultancy expanded). But, as a growing number of publications have pointed out, outsourcing is only the first half of the process of cost-reduction. The ‘management’ consultancies so frequently hired to make internal departments redundant can still cost a considerable penny. Access to software platforms costs considerably less. As a recent study found in India, outsourcing is only half the way to automating. As such, whilst this initial outsourcing might drive up demand for labour in a given industry in the short-term, it is laying the ground-work for automation, in which work will diminish.

The gig economy is the automation and globalisation of the temporary labour process. This fundamentally changes the way labour is acquired, and so it fundamentally changes the way labour is valued. Until now, recruiting temporary labour was still restricted to singular markets. A firm in London requiring temporary labour reached out to a temporary labour firm—also in London—to receive the labour. The temporary labour firm could only draw from London labourers and could only deliver to London firms. Since firms would rarely go through the process for single tasks, they instead sought single positions, and so paid the London labourer an hourly rate in line with London’s minimum wage, £8.72 per hour, as per the current rate. The minimum wage, as you can see, is based on an hourly rate. That is, one tied to time spent labouring. The gig economy changes this.

Yes, it brings us Uber, but it also brings us Fiverr, Amazon’s Mechanical Turk, Deliveroo, et al. Deliveroo automates hiring delivery drivers. Anyone who has ever delivered pizzas for Dominoes will tell you it isn’t glamorous, but it pays minimum wage. Deliveroo doesn’t even pay minimum wage since it doesn’t pay per time spent on call, but on number of deliveries. Deliveroo also doesn’t pay for maintenance of vehicles. Of course, Deliveroo will argue, it also doesn’t employ drivers. They simply connect independent contractors to ready businesses. To date, British courts would agree. Neither Deliveroo nor the restaurants are hiring a delivery driver, they’re simply hiring a willing cyclist to deliver a single meal, not the time spent. It’s up to the driver to accept or deny more deliveries, effectively, in the eyes of the current law, rendering the driver a free agent. This free agency also costs the driver the right to unionise.

This isn’t a practice unique to Deliveroo, this is standard practice for gig economy apps. Graphic designers, coders, journalists, even academics find themselves seeking income on gig economy platforms. Deliveroo, at least, is confined to a city market, but now thanks to Amazon’s Mechanical Turk, anyone who can do their work on a computer finds themselves competing with anyone in the world who can work on a computer. When you consider India, China, Bangladesh, anyone in the world with a computer is quite a large number, and they are all willing to work for much less than £8.72 per hour. As a result, you had Americans in 2016 making $0.40 per hour. Considerably lower than even the US’s pitiful penance of a minimum wage. Worse, if an employer wants to stiff you what low wage you do get, they can simply give you 1 out of 5 stars, and deny you both your current pay, and future employment opportunities. Once again, users of the Mechanical Turk platform aren’t Amazon employees, they aren’t employees of the firm hiring their labour. No, they are ‘free agents’ providing a singular task at an agreed upon rate. Amazon is now one of the biggest lobbyists on the planet, entering ‘big tech’ into a field traditionally dominated by ‘big oil’ and ‘big pharma’.

This all to say, traditional regulation does not fit the gig economy, and it is a fool’s errand to try and make traditional regulation fit at all.

Much like how factories could not be regulated the way farms were before them, nor can the gig economy be regulated the way factories are. Attempting to make minimum wage laws fit gig economy platforms fail because the way minimum wage laws were written simply do not fit the new form of employment. We no longer enter into time-based (or often even geographically based) agreements with employers. And the firms providing current ‘connections’ and employment are often not even based in our jurisdiction. Amazon is an American corporation that doesn’t even play well with most US jurisdictions. The HQ2 debacle, Amazon’s bizarre audition process for cities to create proposals for a second Headquarters, was a thinly veiled hostage negotiation with an emaciated Seattle city council that refuses to stand up in any meaningful way to Amazon. As such, it should not be surprising that Amazon and similar companies don’t respond at all to a British government that refuses to threaten them in any meaningful way. Even boycotting Amazon is a meaningless gesture; they make most of their money on cloud services and web-hosting. When Amazon, Microsoft, Google, Apple, et al hold our very modern infrastructure hostage, fighting for regulation will be difficult.

So, what can workers’ do in the ‘new economy’ to fight for fair wages? What does meaningful regulation look like? Much like the end of the Victorian era and the dawn of the Edwardian, it begins with breaking up monopolies. They’re not our monopolies to break up, but they will need breaking up. Wage regulation will also need a completely new approach. One change of strategy I would recommend is simple. We need to stop fighting for ‘employee’ status. Such status held benefit for a very narrow window in history, and always was bent to the ‘employers’ benefit. There isn’t anything wrong with being an independent contractor, but now we need to fight to make sure such contractors have reasonable protections. Current union laws, minimum wage laws, and health and safety laws are all based on ‘employee’ status, and employers no longer wish to extend such status. Such is fair. Then we fight to make sure that contractors also have considerable rights.

The obvious next question is can contractors unionise? Can contractors use collective bargaining fight for protective provisions in law? The answers of course, are yes. Not only can they, but they must. There is little new to the emergence of this ‘contract’ relationship between gig economy apps and the workers therein. It is not unlike the one that the New York World had with the Newsies of the late 19th century, or the relationship of Guilds of old with the labourers therein. The newsies of New York, despite their young age, illiteracy, and non-employee status successfully went on strike against titans like Pulitzer and Hearst in the years after the Spanish-American War. Contractors must form organisations that can push for parties, such as Labour, to regulate contract platforms. What could that look like? Well, while the ‘gig economy’ is the arrival of informalised labour in the West, the larger picture for informal labour is already global, and so too is labour organising. Hence, the fight must be to push to create voting blocs. We need to end this idea that membership to a union is tied directly to employment in a specific position, and instead is tied to a broader class-wide necessity.

Further, as automation increases, we must start to consider a post-labour economy. An oft touted benefit of automation was freeing up humankind to abandon labour for the sake of labour and instead pursue activities of passion now that labour was no longer necessary for the good of the economy. However, if we are moving towards a post-labour economy, that must mean that we are also moving to a post-survival economy. We need to fight for protections and promises that the necessities of life itself are no longer tied to employment, as the demand for labour continues to decrease, we must fight for the right for people to have the capacity to pursue passion once the necessity for labour is obsolete.

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