By Robert
Reich
As Labor Day looms, more Americans than ever don’t know how much they’ll be earning next week or even tomorrow.
This varied group includes independent contractors, temporary
workers, the self-employed, part-timers, freelancers, and free agents. Most
file 1099s rather than W2s, for tax purposes.
On demand and on call – in the “share” economy, the “gig”
economy, or, more prosaically, the “irregular” economy – the result is the
same: no predictable earnings or hours.
It’s the biggest change in the American workforce in over a
century, and it’s happening at lightning speed. It’s estimated that in five
years over 40 percent of the American labor force will have
uncertain work; in a decade, most of us.
Increasingly, businesses need only a relatively small pool of “talent” anchored in the enterprise – innovators and strategists responsible for the firm’s unique competitive strength.
Everyone else is becoming fungible, sought only for their
reliability and low cost.
Complex algorithms can now determine who’s needed to do what and
when, and then measure the quality of what’s produced. Reliability can be
measured in experience ratings. Software can seamlessly handle all transactions
– contracts, billing, payments, taxes.
All this allows businesses to be highly nimble – immediately
responsive to changes in consumer preferences, overall demand, and
technologies.
While shifting all the risks of such changes to workers.
Whether we’re software programmers, journalists, Uber drivers,
stenographers, child care workers, TaskRabbits, beauticians, plumbers,
Airbnb’rs, adjunct professors, or contract nurses – increasingly, we’re on our
own.
And what we’re paid, here and now, depends on what we’re worth
here and now – in a spot-auction market that’s rapidly substituting for the old
labor market where people held jobs that paid regular salaries and wages.
Even giant corporations are devolving into spot-auction
networks. Amazon’s algorithms evaluate and pay workers for exactly what they
contribute.
Apple directly employs fewer than 10 percent of the 1 million workers who design, make and sell iMacs
and iPhones.
This giant risk-shift doesn’t necessarily mean lower
pay. Contract workers typically make around $18 an hour, comparable to what they earned as
“employees.”
Uber and other ride-share drivers earn around $25
per hour, more than double what the typical taxi driver takes
home.
The problem is workers don’t know when they’ll
earn it. A downturn in demand, or sudden change in consumer needs, or a
personal injury or sickness, can make it impossible to pay the bills.
So they have to take whatever they can get, now: ride-shares in
mornings and evenings, temp jobs on weekdays, freelance projects on weekends,
Mechanical Turk or TaskRabbit tasks in between.
Which partly explains why Americans are putting in such long
work hours – longer than in any other advanced economy.
And why we’re so stressed. According to polls, almost a quarter of American workers worry they
won’t be earning enough in the future. That’s up from 15 percent a decade ago.
Irregular hours can also take a mental toll. Studies show people who do irregular work for a
decade suffer an average cognitive decline of 6.5 years relative people with
regular hours.
Such uncertainty can be hard on families, too. Children of
parents working unpredictable schedules or outside standard daytime working
hours are likely to have lower cognitive skills and more behavioral problems,
according to new research.
For all these reasons, the upsurge in uncertain work makes the
old economic measures – unemployment and income – look far better than
Americans actually feel.
It also renders irrelevant many labor protections such as the
minimum wage, worker safety, family and medical leave, and overtime – because
there’s no clear “employer.”
And for the same reason eliminates employer-financed insurance –
Social Security, workers compensation, unemployment benefits, and
employer-provided health insurance under the Affordable Care Act.
What to do? Courts are overflowing with lawsuits over
whether companies have misclassified “employees” as “independent
contractors,” resulting in a profusion of criteria and definitions.
We should aim instead for simplicity: Whatever party –
contractor, client, customer, agent, or intermediary – pays more than half of
someone’s income, or provides more than half their working hours, should be
responsible for all the labor protections and insurance an employee is entitled
to.
Presumably that party will share those costs and risks with its
own clients, customers, owners, and investors. Which is the real point – to
take these risks off the backs of individuals and spread them as widely as
possible.
In addition, to restore some certainty to peoples’ lives, we’ll
need to move away from unemployment insurance and toward income insurance.
Say, for example, your monthly income dips more than 50 percent
below the average monthly income you’ve received from all the jobs you’ve taken
over the preceding five years. Under one form of income insurance, you’d
automatically receive half the difference for up to a year.
But that’s not all. Ultimately, we’ll need a guaranteed minimum
basic income. But I’ll save this for another column.
ROBERT B. REICH, Chancellor’s Professor of
Public Policy at the University of California at Berkeley and Senior Fellow at
the Blum Center for Developing Economies, was Secretary of Labor in the Clinton
administration. Time Magazine named him one of the ten most effective cabinet
secretaries of the twentieth century. He has written fourteen books, including
the best sellers “Aftershock, “The Work of Nations," and"Beyond
Outrage." He is also a founding editor of the American Prospect magazine
and chairman of Common Cause. His film, INEQUALITY FOR ALL is available on
Netflix, iTunes, Amazon. His new book, "SAVING CAPITALISM: For the Many,
Not the Few" is out 9/29.
