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The share-the-scraps economy

Robert Reich, professor of public policy | February 4, 2015

How would you like to live in an economy where robots do everything that can be predictably programmed in advance, and almost all profits go to the robots’ owners?

Meanwhile, human beings do the work that’s unpredictable – odd jobs, on-call projects, fetching and fixing, driving and delivering, tiny tasks needed at any and all hours – and patch together barely enough to live on.

Brace yourself. This is the economy we’re now barreling toward.

They’re Uber drivers, Instacart shoppers, and Airbnb hosts. They include Taskrabbit jobbers, Upcounsel’s on-demand attorneys, and Healthtap’s on-line doctors.

They’re Mechanical Turks.

The euphemism is the “share” economy. A more accurate term would be the “share-the-scraps” economy.

New software technologies are allowing almost any job to be divided up into discrete tasks that can be parceled out to workers when they’re needed, with pay determined by demand for that particular job at that particular moment.

Customers and workers are matched online. Workers are rated on quality and reliability.

The big money goes to the corporations that own the software. The scraps go to the on-demand workers.

Consider Amazon’s “Mechanical Turk.” Amazon calls it “a marketplace for work that requires human intelligence.”

In reality, it’s an Internet job board offering minimal pay for mindlessly-boring bite-sized chores. Computers can’t do them because they require some minimal judgment, so human beings do them for peanuts — say, writing a product description, for $3; or choosing the best of several photographs, for 30 cents; or deciphering handwriting, for 50 cents.

Amazon takes a healthy cut of every transaction.

This is the logical culmination of a process that began thirty years ago when corporations began turning over full-time jobs to temporary workers, independent contractors, free-lancers, and consultants.

It was a way to shift risks and uncertainties onto the workers – work that might entail more hours than planned for, or was more stressful than expected.

And a way to circumvent labor laws that set minimal standards for wages, hours, and working conditions. And that enabled employees to join together to bargain for better pay and benefits.

The new on-demand work shifts risks entirely onto workers, and eliminates minimal standards completely.

In effect, on-demand work is a reversion to the piece work of the 19th century – when workers had no power and no legal rights, took all the risks, and worked all hours for almost nothing.

Uber drivers use their own cars, take out their own insurance, work as many hours as they want or can – and pay Uber a fat percent. Worker safety? Social Security? Uber says it’s not the employer so it’s not responsible.

Amazon’s Mechanical Turks work for pennies, literally. Minimum wage? Time-and-a half for overtime? Amazon says it just connects buyers and sellers so it’s not responsible.

Defenders of on-demand work emphasize its flexibility. Workers can put in whatever time they want, work around their schedules, fill in the downtime in their calendars.

“People are monetizing their own downtime,” Arun Sundararajan, a professor at New York University’s business school, told the New York Times.

But this argument confuses “downtime” with the time people normally reserve for the rest of their lives.

There are still only 24 hours in a day. When “downtime” is turned into work time, and that work time is unpredictable and low-paid, what happens to personal relationships? Family? One’s own health?

Other proponents of on-demand work point to studies, such as one recently commissioned by Uber, showing Uber’s on-demand workers to be “happy.”

But how many of them would be happier with a good-paying job offering regular hours?

An opportunity to make some extra bucks can seem mighty attractive in an economy whose median wage has been stagnant for thirty years and almost all of whose economic gains have been going to the top.

That doesn’t make the opportunity a great deal. It only shows how bad a deal most working people have otherwise been getting.

Defenders also point out that as on-demand work continues to grow, on-demand workers are joining together in guild-like groups to buy insurance and other benefits.

But, notably, they aren’t using their bargaining power to get a larger share of the income they pull in, or steadier hours. That would be a union – something that Uber, Amazon, and other on-demand companies don’t want.

Some economists laud on-demand work as a means of utilizing people more efficiently.

But the biggest economic challenge we face isn’t using people more efficiently. It’s allocating work and the gains from work more decently.

On this measure, the share-the-scraps economy is hurtling us backwards.

Cross-posted from Robert Reich’s blog.

Comments to “The share-the-scraps economy

  1. Prof Reich: Every sane human being knows we have problems. But it is time to ask WHY we are not pooling our resources to find solutions.

    My opinion – it is because we are being ARTIFICIALLY divided

    So the FIRST STEP has to be to educate everyone
    a. That we are being divided
    b. How we are being divided
    c. Educate them on how we can overcome our divisions

    Here is one way to do it.

    Then and then only we can find solutions. Read more of my thoughts on the subject here.

    Please can we talk ?

  2. Prof. Reich, I guess what we keep proving is that we live in the Age of Denial, social, political, economic, scientific, religious and intellectual denial.

    We have no leadership to make the right things happen, and we can’t even unite to demand peace, compromise, cooperation and The Golden Rule in order to survive.

    I guess that’s the real answer to the question I asked below.

  3. Prof. Reich, I wish to thank you for dedicating yourself to communicating continuously and worldwide in an effort to motivate the human race to meet the challenges of change.

    Unfortunately, our institutional leaders around the world don’t appear to have the dedication to save our civilization for future generations or something would have been accomplished by now.

    Will and Ariel Durant made that conclusion after over 40 years of historical research, and nothing seems to have changed except that we keep creating more ways to destroy ourselves.

    Prof. Reich, do you know of anyone with solutions we can implement today to prevent the destruction of our civilization?

  4. The professor stubbornly refuses to acknowledge several fundamental facts:
    1. Worldwide all economies have a surplus of workers for available jobs
    2. Worldwide the people who capitalize and manage the businesses reap the large rewards
    3. Constantly complaining about #1 and #2 is redundant
    4. Supporting job creation (entrepreneurs) is the best solution
    5. Question why any risk to any of the 5,000+ species of mammals cancels projects that provide jobs to the one species of mammal aka humans
    6. Raise taxes on high net worth, high income individuals

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