The gig economy is quietly undermining a century of worker protections

Gigging in Paris.
Gigging in Paris.
Image: Reuters/Charles Platiau
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No kid ever dreamed of growing up and driving for Uber or styling for Stitch Fix. In part, that’s because none of those companies existed when most of today’s adults were young. It’s also because, besides its much-touted “flexibility,” the gig economy isn’t much of a place to build a career. Instead, over the course of less than a decade, the self-described “tech companies” that connect people to gig work have managed to erode hard-fought labor protections in place for a century.

In Hustle and Gig, to be published in March by University of California Press, sociologist Alexandrea Ravenelle interviews 80 gig workers who are struggling, striving, and succeeding. She analyzes their stories in the context of US employment history and concludes that “for all its app-enabled modernity, the gig economy resembles the early industrial age…the sharing economy is truly a movement forward to the past.”

Although gig work was initially seen as a way to maximize worker freedom and create opportunities, it has, in its short history, proven corrosive. Ravenelle notes that a small percentage of people are making lots of money via side hustles, but they tend to be those who need it least. For example, she speaks to independent hoteliers in New York renting out rooms and apartments via AirBnB, including a corporate lawyer and a man with a chain of laundromats. Because they already had capital, have steady sources of income apart from their side gigs, and are willing to skirt rental laws, these two individuals are able to invest heavily in their “gigs” and create lucrative businesses.

Sadly, those who most need to work can find themselves trapped in a cycle of struggle. Ravenelle interviewed men and women signed up to do tasks on Task Rabbit—prior to its acquisition by IKEA—and who drove for Uber, for example. They were not employees and so had no health insurance, workers’ compensation protections, employer contributions to Social Security and payroll taxes, paid time off, family leave protections, discrimination protections, or unemployment insurance benefits.

Sometimes, this gig work also requires an initial outlay of capital. (My own neighbor just traded in her old vehicle for a new car, taking on thousands of dollars in debt so that she can make extra money driving for Lyft.) At the very least, a potential worker needs a smartphone and wi-fi service. Ravanelle’s book boasts an image inside of a young man in a park panhandling for $30 to activate his phone service so that he can start picking up work.

Workers take gigs as they come and can’t afford to be too picky, despite the supposed liberty of being your own boss in the sharing economy. Platform algorithms are designed to downgrade those who aren’t always available, making it ever-harder to pick up gigs. All this ends up putting workers in dangerous situations, working for strangers without any protections from their employers. Uber, for example, offers email communications to drivers, a service that is not nearly as responsive as the taxi cab dispatcher, say.

The workers Ravenelle spoke to were hit on at work while in a stranger’s house; injured after taking strenuous moving jobs; found themselves delivering questionable packages containing illegal substances; and drove passengers involved in shady activities, fearing that a protest or refusal would end in violence. In all of these awkward situations, these “independent contractors” were forced to choose between a slew of bad options. They could turn down work when they needed the money and risk finding themselves scrambling more. They could take questionable tasks and hope that it all worked out, which it sometimes did. But that meant exposing themselves to the risk that they would end up hurt and financially responsible for their on-the-job injuries, which would also mean needing unpaid time off.

The availability of cheap labor also hasn’t escaped the notice of companies in need of a quick fix. Ravenelle spoke to workers who were doing manual labor, like filling coffee bags for a high-end roaster, that they picked up on an app. In other words,  businesses are also advertising tasks through the supposed peer-to-peer platforms, getting their temps through the new, cheaper system, rather than hiring workers directly. When Ikea acquired TaskRabbit in 2017, it was only making official a relationship that had been developing for years, as furniture buyers hired individuals to put together their Ikea designs.

The costs of worker misclassification

Companies can make more money and incur a lot less liability classifying workers as independent contractors, so they do. Technically, by issuing a 1099 to a gig worker instead of a W2 to an employee, the business is financially and socially distanced from the worker. It’s cheaper and easier than employing everyone who works.

But in the long run, Ravenelle argues, we will all lose as a result of this new structure. She notes that the government, and society as a whole, lose billions of dollars annually to worker misclassification, and writes:

In a cruel irony, workers in the sharing economy—hailed as the height of the modern workplace—find themselves without any of the worker protections enjoyed by their great-grandparents. Although workplace protections still exist for full-time and part-time employees, gig workers as independent contractors, are outside the social safety net of basic workplace protections.

From California to Massachusetts, Uber and Lyft drivers, among others, have sued to be classified as employees. A California case was stymied in September when the Ninth Circuit Court of Appeals ruled that Lyft drivers had agreed by contract to settle disputes through arbitration, meaning the court didn’t even need to reach the classification question. Worker status was outside the court’s purview, it found, because Uber created a contract that made it that way.

But some drivers have opted out of the arbitration clause, and their cases may proceed. If they succeed in convincing the court they are employees and not contractors, this may signal the beginning of a much-needed reckoning with tech companies that have used the dated letter of the law to generate great profits at a cost to all.

How the gig economy creates economic insecurity

There’s a hidden tax that corporations using contractors are paying for their cheap labor, so some companies see the upside of providing benefits. Ravenelle also speaks to founders who either switched from hiring contractors to employing workers, like the New York cleaning service MyClean, or decided doing so was the right thing to begin with, like the Hello Alfred errand-running service in Manhattan, which attempts to anticipate customer needs and therefore relies on a relationship between workers and consumers.

These companies argue that taking care of workers is good for business, although it does mean more administration and initial outlay. Loyal employees are happier, healthier, and do better work. They please customers and don’t need to be replaced or trained as often, which means business improves.

But these are rare examples, and their success is threatened by the existence of the many companies who abuse the system. Venture capitalists are more likely to pour money into businesses that can avoid employee liability, which makes it more difficult for responsible employers to compete. As Ravenelle notes, the “gig economy” is profoundly disrupting the deal between workers and businesses in the US, increasing economic insecurity and worker vulnerability and incentivizing investors and businesses to be bad social actors. She calls this “poor quality progress” that hides its regressive tendencies in friendly, unimpeachable language, terms like the “sharing economy.”

It’s an empty promise, the sociologist argues: “The disruption offered by the sharing economy is simply a hustle.”