You are on page 1of 24

Published by CQ Press, an Imprint of SAGE Publications, Inc. www.cqresearcher.

com

The Gig Economy


Is the trend toward non-staff employees good for workers?

E
nabled by the digital revolution, employers increas-

ingly are outsourcing work to contractors and self-

employed or part-time workers, many working off-

site thanks to apps and Wi-Fi. Supporters of the

so-called gig economy say it gives workers flexibility and freedom

to work anytime and anywhere and allows struggling companies

to survive and healthy firms to compete globally. But labor unions

say outsourcing exploits workers and undermines the economy by

allowing companies to replace full-time employees with lower-paid

workers without guaranteed hours, income or benefits. And millions

of laid-off workers must cobble together multiple jobs as indepen- Dog walker John Aron has his hands full in Denver’s
Park Hill neighborhood. Today’s gig economy offers a
dent contractors. On-demand gig workers, such as Uber drivers, lifeline to laid-off workers who must take whatever
part-time jobs they can find, while other independent
workers like the freedom of being their own boss.
are protesting their lack of benefits, while Uber lobbies local and

state governments to exempt it from “old economy” wage and labor

laws. Recently, however, some employers have begun hiring full-time

employees with full benefits again, largely because of the high


N
I THIS REPORT
turnover rates and recruitment costs associated with the gig economy.
THE ISSUES ....................267
S
BACKGROUND ................273
I
CHRONOLOGY ................275
D
E
CURRENT SITUATION ........280
CQ Researcher • March 18, 2016 • www.cqresearcher.com AT ISSUE........................281
Volume 26, Number 12 • Pages 265-288
OUTLOOK ......................283
RECIPIENT OF SOCIETY OF PROFESSIONAL JOURNALISTS AWARD FOR
EXCELLENCE ◆ AMERICAN BAR ASSOCIATION SILVER GAVEL AWARD
BIBLIOGRAPHY ................286
THE NEXT STEP ..............287
THE GIG ECONOMY
March 18, 2016
Volume 26, Number 12
THE ISSUES SIDEBARS AND GRAPHICS
EXECUTIVE EDITOR: Thomas J. Billitteri
Contractors Are Biggest tjb@sagepub.com
267 • Is the gig economy good
for workers?
268 Freelance Segment ASSISTANT MANAGING EDITORS: Kathy Koch,
• Is the gig economy good Four in 10 freelancers are in- kathy.koch@sagepub.com,
for companies? dependent contractors work- Chuck McCutcheon,
ing project to project. chuck.mccutcheon@sagepub.com,
• Should the definition of Scott Rohrer, scott.rohrer@sagepub.com
independent contractor be
Flexibility Attracts Most
changed? 269 Freelancers
SENIOR CONTRIBUTING EDITOR:
Thomas J. Colin
They also like being their tom.colin@sagepub.com
BACKGROUND own boss and having the
freedom to choose projects.
CONTRIBUTING WRITERS: Brian Beary,
Marcia Clemmitt, Sarah Glazer, Kenneth Jost,
Gig’s Roots Reed Karaim, Peter Katel, Barbara Mantel,
273 Early jazz musicians played 272 Contractor Workforce Tom Price
Soars
non-jazz “gigs” to earn extra SENIOR PROJECT EDITOR: Olu B. Davis
The share of independent
money. contractors in 10 U.S. cities ASSISTANT EDITOR: Ethan McLeod
grew sharply.
Boom, Bust
276 Rail-riding hobos sought
INTERN: Molly McGinnis
Chronology
gig work during the 275 Key events since 1886.
FACT CHECKERS: Eva P. Dasher,
Michelle Harris, Nancie Majkowski,
Great Depression. Robin Palmer
Co-working Spaces
278 Path to Gig Economy 276 Catching On
The Internet helped businesses Shared offices seek to end
outsource piecemeal work. gig workers’ isolation.

Freelancers Union Fights


CURRENT SITUATION 278 for the Self-Employed
An Imprint of SAGE Publications, Inc.
Founder advocates a “new VICE PRESIDENT AND EDITORIAL DIRECTOR,
The Economy
280 Unemployment has fallen
mutualism” for workers and
communities.
HIGHER EDUCATION GROUP:
Michele Sordi
sharply since 2009, but many
jobless people have stopped EXECUTIVE DIRECTOR, ONLINE LIBRARY AND
At Issue:
looking for full-time work. 281 Is the “gig economy” here to
REFERENCE PUBLISHING:
Todd Baldwin
stay?
The Lawmakers
280 Many states and cities have
Copyright © 2016 CQ Press, an Imprint of SAGE Pub-
lications, Inc. SAGE reserves all copyright and other
not required ride-hailing
companies to address drivers’
FOR FURTHER RESEARCH rights herein, unless previously specified in writing.
No part of this publication may be reproduced
employment-classification electronically or otherwise, without prior written
For More Information
complaints. 285 Organizations to contact. permission. Unauthorized reproduction or transmis-
sion of SAGE copyrighted material is a violation of
The Courts
282 Gig workers have sued 286 Bibliography federal law carrying civil fines of up to $100,000.
Selected sources used.
companies for treating them CQ Press is a registered trademark of Congressional
like employees without ex- Quarterly Inc.
The Next Step
tending benefits. 287 Additional articles. CQ Researcher (ISSN 1056-2036) is printed on acid-free
paper. Published weekly, except: (March wk. 4) (May
Citing CQ Researcher
OUTLOOK 287 Sample bibliography formats.
wk. 4) (July wks. 1, 2) (Aug. wks. 2, 3) (Nov. wk. 4)
and (Dec. wks. 3, 4). Published by SAGE Publications,
Inc., 2455 Teller Rd., Thousand Oaks, CA 91320. Annual
Uncertain Times
283 The future of contractor
full-service subscriptions start at $1,131. For pricing,
call 1-800-818-7243. To purchase a CQ Researcher report
employment policies remains
in print or electronic format (PDF), visit www.cqpress.
unclear.
com or call 866-427-7737. Single reports start at $15.
Bulk purchase discounts and electronic-rights licensing
are also available. Periodicals postage paid at Thousand
Oaks, California, and at additional mailing offices. POST-
Cover: Getty Images/The Denver Post/Kathryn Scott Osler MASTER: Send address changes to CQ Researcher, 2600
Virginia Ave., N.W., Suite 600, Washington, DC 20037.

266 CQ Researcher
The Gig Economy
BY EUGENE L. MEYER

THE ISSUES among other things, free-


lancers, part-timers, moon-
lighters, the self-employed,

D avid Gandy is an
apostle of the “gig
economy,” the brave
new work world in which
people take temporary jobs
“perma-temps” and indepen-
dent contractors.
To its critics, the gig econ-
omy is exploiting workers and
undermining the national econ-
or work for themselves. He omy by allowing companies
sees this growing sector of to replace full-time employees
the economy as a godsend with cheaper part-timers who
because of the freedom it af- do not get guaranteed hours,
fords self-starters like him. income or benefits. But to its
“It’s good all around,” says defenders, the gig economy is
the 48-year-old Florida native, a savior that, besides offering
who has moved from city to workers flexibility and freedom,
city and job to job as an Uber allows struggling companies
driver, a corporate event pro- to survive and healthier firms
ducer, a caterer, a lighting de- to remain nimble in a com-
signer and a disc jockey. He’s petitive economy.

Getty Images/Spencer Platt


worked in Chicago and Wash- Experts differ on the size
ington and plans to move of the gig economy in part
soon to the San Francisco area. because of limited recent data
“As America coins itself as and varying job definitions. The
the land of entrepreneurship, federal government put “con-
this is where a lot of the ben- tingent” employees at 7.9 per-
efits that may not be known cent of the workforce in 2010,
to a lot of people will come or a total of 12.2 million, ac-
to the surface and be utilized,” New York City taxi drivers on Sept. 16, 2015, protest cording to an April 2015 study
Gandy says. In fact, he says, what they call weak regulation of ride-hailing services, by the U.S. Government Ac-
the gig economy will boost which they say gives companies like Uber and Lyft an countability Office. 3 Econo-
unfair competitive advantage. Ride-sharing companies
entrepreneurs and eventually want local and state officials to exempt them from mists Seth D. Harris of Cornell
“break the backs . . . of these “old economy” wage and labor laws, but many of and Alan B. Krueger of Prince-
big-box chains and corporate their drivers are demanding benefits and ton estimated there were be-
overlords.” worker-protection laws. tween 600,000 and 1.9 million
But for others, part-time workers providing services
gigs are not a choice but a painful Unable to land anything steady, Gowder through an on-demand company or an
necessity. Diane Gowder of San Pedro, became an independently employed eye- online enterprise that offers convenient
Calif., used to be a manager for a wear sales representative. “It was a huge access to goods or services. They say
market research firm with a good salary, switch,” she said, because she received such workers represent a small — up
benefits, paid time off and a retirement no health insurance and had to cover to just over 1 percent — but growing
account. But she lost her job in 2005 her own expenses. “I didn’t have a steady percentage of the population. 4
when her firm downsized and has income. It was up. It was down.” 2 In a 2015 survey, the nonprofit Free-
been scrambling ever since. 1 Welcome to the gig economy, in lancers Union, which advocates for in-
Despite sending out hundreds of which individuals take on transient work dependent workers, asserted that nearly
résumés, she said, she hasn’t found — sometimes voluntarily, sometimes not. 54 million people — one-third of the
full-time work. She cites her age as Gig workers run the gamut from laid- nation’s labor pool — do at least some
the reason. “At 55, I was either overqual- off factory workers offering dog-walking freelance work. 5 The survey broadly
ified or they thought I wanted too services to artists delivering food for defined “freelancers” to include tradi-
much money — even though we hadn’t online companies to pay the rent. Econ- tional project-by-project independent
even discussed money,” Gowder said. omists and others refer to them as, contractors, moonlighters, temporary

www.cqresearcher.com March 18, 2016 267


THE GIG ECONOMY
In fact, some temporary workers do
Contractors Are Biggest Freelance Segment qualify for limited benefits, particularly
those hired through job agencies.
More than a third of freelance workers were independent contrac- Snelling Staffing Services, which pro-
tors, or freelancers without a single employer who work project to vides employees to companies in the
project, according to a study of 2014-15 employment trends. More clerical, light industrial and medical
than one-fourth were “diversified workers,” earning small shares of fields, says some contracting firms offer
income from a mix of traditional employers and freelance assign- a 401(k) retirement plan to workers
ments, and about the same share were moonlighters who after 30 days on the job as well as
performed freelance work in addition to their full-time primary jobs. holiday pay and medical, dental, vision
and life insurance. 9
Boosters tout the benefits to both
Percentage of Freelance
workers and businesses of freelancing
Workers, by Type*
in a gig economy, often calling it a
new digital-driven industrial revolution.
Mobility is the biggest benefit, many say,
Independent contractors because work done via the Internet can
be done anywhere with a Wi-Fi con-
Diversified workers
nection. “Mobility is our reality, and this
Moonlighters enabling technology” means employees
Temporary workers are no longer tethered to a physical
Freelance business owners office, says Microsoft, the multinational
software technology company. 10
* Percentages do not add to 100 due to rounding. According to Boise, Idaho-based
Source: “Freelancing in America: 2015,” Freelancers Union, Upwork and TSheets, which helps firms track payroll,
Edelman Berland, September 2015, p. 6, http://tinyurl.com/hjlhkfx the gig economy “simply means more
options and a broader horizon for em-
workers with a single employer and free- “How will that look in the labor ployees. . . . Gone are the days when
lancers who also own a small business. statistics?” Hill asks. “Will we be able ‘self-employed’ was a thinly veiled term
“Freelancing is the new normal,” to count this complexity, using current for unemployment. Increasingly, freelance
write Sara Horowitz, the organization’s methods?” 7 work and self-employment are associated
founder and executive director, and a While experts disagree over the size with greater freedom, flexibility, options,
colleague, summarizing a survey show- and makeup of the gig economy, many new possibilities and a safety cushion.” 11
ing freelancers are integral to the new economists, union leaders and others While recognizing the downside of “fewer
economy. 6 do agree that the 20th-century model protections” for workers, TSheets concludes
“Increasingly,” writes Steven Hill, a of long-term employment with one that the benefits far outweigh the risks.
senior fellow at New America, a left- company is largely history and that, Others, however, view the gig econ-
leaning public policy think tank in in this new world, the risks — and omy as just a new version of 19th-
Washington, “we are going to find that costs — previously borne by employers century piecework, a system that ex-
more and more workers exist simul- largely have shifted to workers. ploited workers and led them to form
taneously in multiple worker categories Highlighting this change, President labor unions. The “new” model is really
— a worker, for example, who has a Obama told Congress in his 2016 State a throwback “from a much older con-
regular part-time job (W-2, but with little of the Union speech in January: “Of course, cept,” in which “instead of working in
safety net), and supplements that with a great education isn’t all we need in this a factory for a wage or a salary, workers
being an Uber driver and/or Instacart new economy. We also need benefits and sewed or assembled goods at home
[food] deliverer (1099 worker, still no protections that provide a basic measure and were paid by the finished item
safety net), as well as other mini-gigs of security. After all, it’s not much of a rather than for their time,” writes Laura
and nano-gigs, and perhaps a second stretch to say that some of the only people Clawson, labor editor of Daily Kos, a
part-time job (temp, freelancer, etc.). in America who are going to work the liberal weblog, quoting journalist Sarah
Many workers already have multiple same job, in the same place, with a health Jaffe. “This ‘revolutionary’ work built out
employers — sometimes within a and retirement package, for 30 years, are of Silicon Valley convenience is not
single day! sitting in this chamber.” 8 really about technological innovation —

268 CQ Researcher
it’s just the next step in a decades-old
trend of fragmenting jobs, isolating work- Flexibility Attracts Most Freelancers
ers and driving down wages.” 12
Schedule flexibility and the opportunity to manage oneself were
Other critics say the gig economy
arose largely from the ashes of the primary motivators for three in four full-time freelancers, according
2007-09 recession, when companies to a study by market research firm Edelman Berland. Freelancers
replaced full-time and hourly work also cited being able to choose a work location and to pursue
with on-demand employment beyond professional and personal passions as top reasons for freelancing.
the traditional temp agency or union
hall hiring environment. This greater
Motivations for Full-Time U.S. Freelancers,
use of part-timers, as well as the out- 2014-August
July 2014 August 2015
sourcing of jobs overseas, is contributing 75% 75% 73% 70% 69% 67% 67% 64%
to the shrinking of the middle class
and wage stagnation, they say. 13
For instance, a 2014 Federal Reserve
Bank of Chicago paper found “a strong
association” between slow real wage Have Be own Choose Pursue Pursue Spend Control Earn extra
growth “and marginally attached workers, schedule boss work professional personal more time own money
particularly those working part time in- flexibility location passion passions with friends/ financial
family future
voluntarily for economic reasons.” 14
Countervailing trends appear to be Source: “Freelancing in America: 2015, Results Deck,” Freelancers Union, Upwork
at work, however. Some employers are and Edelman Berland, September 2015, slide 14, http://tinyurl.com/hdqmdqo
moving away from part-time workers Is the gig economy good for shows how valuable an individual is.
in favor of using full-time employees. workers? Many companies now look to these
Hello Alfred, a New York City company After the 2007-09 recession, the stars ‘ultimate professionals’ to solve problems
that provides a range of personal butler- seemed aligned, or crossed, depending their full-time teams can’t. Or they save
type services to clients, pays employees on one’s job needs. Unemployment money by hiring ‘top-tier experts’ only
$18 an hour, plus benefits, to those peaked at 10.1 percent, not counting for particular projects.”
working at least 30 hours weekly. Com- so-called “discouraged” workers who While recognizing the challenges,
pany officials say full-time workers are had given up looking for work. Layoffs Horowitz of the Freelancers Union notes
better able to build a sense of com- were rife, and job prospects were grim in her book, The Freelancer’s Bible, that
munity and customer loyalty. 15 for many people, including new college “freelancing is a fluid work medium
Munchery, an on-demand company graduates. that rewards nimbleness and flexibility.
that prepares and delivers food in San On the other hand, the resulting When it’s working well, there’s no better
Francisco, Los Angeles, Seattle and gig economy seemed like a great op- feeling.” It’s all about opportunity —
New York, formerly classified its drivers portunity for those needing work. As and of security and sustainability (savings
as independent contractors, with no technical consultants, freelance writers, on clothes and meals, for example),
overtime, unemployment insurance, dog walkers or temp workers stocking leverage (freelancers banding together)
workers’ compensation or other ben- warehouse shelves or answering and camaraderie in having a community,
efits. But in 2013, it reclassified them phones, they could earn cash and per- she writes. 19
as employees to stanch turnover and haps develop entrepreneurial skills Gig proponent Gandy, too, cites the
ensure a steady workforce. 16 while enjoying flexible hours and more benefits of independent work. “A lot
And with unemployment falling and freedom than a traditional 9-to-5 office of traditional benefits we get [from
the labor market seemingly tightening, job offered. companies] in a lot of ways are holding
some employers, notably Walmart, are “Today, consulting or freelancing for us back” by stifling the entrepreneurial
raising the wages of full-time employees five businesses at the same time is a impulse. But with tax breaks and write-
to stem turnover and reduce hiring badge of honor,” writes Micha Kaufman, offs offered to business entities such
and training costs. 17 a writer about the gig economy, entre- as sole proprietorships and limited li-
As workers, businesses, economists preneurs and the future of work and ability corporations, he says, “I like the
and others debate the gig economy, the CEO and co-founder of Fiverr, an prospect of what’s going on.”
here are some of the questions under online marketplace for on-demand work- A study for Uber, the ride-hailing
discussion: ers and persons needing services. 18 “It service, also supports the sunnier view

www.cqresearcher.com March 18, 2016 269


THE GIG ECONOMY
of the gig economy. Based on December needs or a personal injury or sickness gig economy — driving Uber cars or
2014 online interviews of 601 drivers can make it impossible to pay the bills. delivering food or other items for Post-
in 20 markets, the study concluded It eliminates labor protections such as mates, a network of couriers — “would
that 78 percent were satisfied with their the minimum wage, worker safety, fam- take a full-time job if they could get
experience, 71 percent reported earning ily and medical leave and overtime. And one. But they are hard to come by.”
more than they did before signing up it ends employer-financed insurance — Georgia native Jenna Payne, 31, also
with Uber and 61 percent felt more Social Security, workers’ compensation, has bounced from job to gig to gig
financially secure than before. Three- unemployment benefits and employer- since moving to New York City in
quarters said they went to work for Uber provided health insurance.” 21 2003. She began as an executive as-
to “earn more income to better support Britta Lunden knows from personal sistant with benefits at a law firm, then
myself or my family,” and 63 percent experience the perils of the gig economy. left for a temporary job that she thought
did so “to have more flexibility in my After graduating from the University of was full-time. She also worked as an
schedule and balance work with my Texas in 2013, she headed to Hollywood executive assistant through a temp
life and family.” Their average pay was with dreams of working her way up in agency. “I ended up barely getting un-
$19 an hour. 20 the film industry. Instead, she has gone employment benefits,” she says. During
In addition, being so-called 1099 from gig to gig, toiling in a series of this time, she took a couple of film
workers (for the IRS wage statements temp jobs, including a stint at a digital- workshops and produced some short
films, using Kickstarter, a crowdfunding
platform, and her credit cards to finance
the effort. She also waited tables.
Payne worked briefly in Florida, then
moved back to New York and, finally,
to Los Angeles in 2010 as an independent
Getty Images/Los Angeles Times/Gary Friedman contractor working in films, “living pay-
check to paycheck and supporting myself
with credit when I needed to.” Now,
at last, she has a regular job for a small
film production company, and she just
received her W-2 for 2015, along with
four 1099s from other gigs. But neither
she nor her employer is able to provide
for her retirement or health insurance.
“Worker well-being is often ignored
in discussions that emphasize produc-
tivity, profitability, economic growth
and similar concerns,” wrote Jeffrey
Pfeffer, a professor of organizational
behavior at Stanford University’s Grad-
Rapper Michael Olmos makes short videos at his home studio in Alhambra, uate School of Business. 22 Indeed,
Calif., for clients using rapping puppets. When his business began to grow, the leader of the world’s estimated
he hired additional workers through Fiverr, an online marketplace for 1.2 billion Roman Catholics, Pope
on-demand workers that lets freelancers bid on jobs.
Francis, says global capitalism’s failure
they receive from clients during tax media company that, she says, included to create fairness and dignified liveli-
season) enables the savvy self-employed “no benefits, no health insurance, no hoods for the poor is the primary
to deduct their business expenses. paid time off, no vacation,” despite her economic challenge of this era. 23
However, not everyone views the putting in 40-hour weeks.
1099 lifestyle as a plus. The job-hopping, Lunden says, has Is the gig economy good for com-
“This trend [of on-demand work] taken a toll. “You don’t know at any panies?
shifts all economic risks onto workers,” point if you’ll have another gig,” she The increasing use of temporary or
former U.S. Labor Secretary Robert Reich says. “I feel like I’m constantly looking part-time workers, independent con-
wrote in his blog. “A downturn in de- two weeks out.” And, she says, a lot tractors, freelancers and consultants has
mand, or sudden change in consumer of her friends who are working in the been a boon to corporate bottom lines,

270 CQ Researcher
allowing employers to cut costs and the exact same employees,” according relationship, to avoid problems stem-
boost profits, say supporters. Shedding to an account of the transaction. 27 ming from high turnover and rehiring
employees, they say, has made for Similarly, LP&G, a public relations and retraining costs.
stronger and more nimble companies, firm in Tucson, Ariz., let go 88 percent Other on-demand companies, such
relieving them of the responsibility for of its staff and then brought them back as San Francisco-based Instacart, are
providing a range of benefits, some as freelancers working out of their adopting a blended model. The online
mandated by law, others by tradition. homes, with no benefits. 28 food delivery service determined its ex-
“Companies typically pay part-time Other examples abound. In a Cali- clusive use of independent contractors
employees an hourly wage and can fornia survey of 300,000 contractors, was resulting in poorer service. In 2015,
schedule them for whatever number two-thirds said they had no “direct em- after three years in business, it joined
of hours the company desires,” says ployees,” so labor-related costs — such with supermarkets to embed full-time
the website Small Business. 24 as payroll taxes or workers’ compen- employees in stores to do the shopping
The reported benefits extend far be- sation insurance — were reduced by while the contractors made deliveries.
yond U.S. shores. “There is a huge army 30 percent. 29 “We’ve seen a cadre of workers who
of well qualified people out there who Such cost-cutting permits companies are better, have fewer issues than we
would be prepared to work, and to to satisfy shareholders and boost stock used to see before in terms of missed
work hard, if they could only work on values and executive compensation, items, bad produce,” said Nikhil Shanbhag,
a flexible part-time basis,” says Duport,
a British firm that advises businesses
on such matters. 25 “In fact, it is not un-
common for part-time workers to do as
much in their shorter day or week than
a full-time worker on the same staff.”
In the traditional model that pre-

Getty Images/Bloomberg/Emile Wamsteker


vailed into the middle-to-late 20th cen-
tury, employers guaranteed pensions,
paid all or most health insurance pre-
miums and absorbed the costs of paid
vacations, holidays and overtime pay.
In addition, employers and employees
split the contributions for Social Security
and Medicare, which the self-employed
must cover entirely.
In the gig economy, however, com-
panies benefit from flexibility in hiring
because they no longer have to keep
full-time workers on the payroll for
entire production cycles when demand To cut costs, the pharmaceutical giant Merck sold a plant in Pennsylvania to a
company that fired the 400-person workforce and then rehired them all as
for workers may fall. According to a independent contractors. Merck then contracted with the company to
U.S. Bureau of Labor Statistics report, continue making antibiotics, “using the exact same employees,” according to
workweek cuts are companies’ “initial an account of the transaction. Above, a Merck facility in Summit, N.J.
response to sagging product demand”
during a recession. 26 but it forces many displaced workers an Instacart vice president. “They are
And sometimes, it’s just plain cheaper to join the on-demand gig economy. getting more and more efficient.” 30
to replace regular employees with con- Yet, for many companies, the gig Similarly, DoorDash, another food-
tract workers. Merck, the pharmaceutical economy comes at a cost, including delivery startup powered by a digital app,
giant, sold its factory in Philadelphia to loss of institutional knowledge, high faced high turnover among its drivers be-
a company that got rid of the entire turnover, lack of loyalty and greater cause they were independent contractors
400-person workforce and then hired hiring and retraining costs. who often adhered to their own schedules.
them back as independent contractors. Some online startups have aban- As a result, the firm has had to spend
Merck “then contracted with the company doned the independent gig worker for some $200 per worker in recruitment and
to carry on making antibiotics . . . using the more traditional employer-employee referral bonuses to keep drivers. 31

www.cqresearcher.com March 18, 2016 271


THE GIG ECONOMY
Etsy — the peer-to-peer commerce
Contractor Workforce Soars website — and a host of other on-
demand companies.
Independent contractors made up a growing share of the workforce
At the same time, union officials and
in 10 major cities between late 2013 and mid-2014, according to other pro-worker groups insist the issue
research by Gusto, a cloud-based platform for payroll, benefits and is not one of definition but of enforcing
human resources. The share of contractors — those earning at existing laws and regulations to force
least $600 and filing a Form 1099 with the IRS — more than companies to adhere to traditional values
doubled in Austin, Dallas, Los Angeles and Orlando. of equity and fairness in the workplace.
The most egregious violation, critics say,
Independent Contractors in Urban Workforces, occurs when a company misclassifies
(Percentage) Q4 2013 and Q3 2014 an individual as an independent con-
25%
tractor even though the company de-
20 termines hours, pay and conditions of
15
employment — the legal criteria for clas-
sifying someone as an employee rather
0
10
than a contractor — in order to avoid
5 paying benefits to the worker.
At the root of these questions is the
0
Austin Chicago Dallas Houston Los New Orlando San Seattle Tampa extent to which these on-demand, dig-
Angeles York Francisco itally based businesses should be regu-
Source: Joshua Reeves, “The Rise of the 1099 Economy 2013
lated in an economy that depends on
[Infographic],” Gusto.com, Dec. 11, 2014, http://tinyurl.com/gq9qloj. 2014 the availability of self-employed contrac-
tors so companies can reduce labor costs.
Yet another company, the butler ser- If carried to its logical conclusion, Some economists propose what they
vice Hello Alfred, has on-demand em- automation would make the gig econ- describe as a “middle way.” Notably,
ployees who, if they work more than omy seem like a quaint relic of a gentler economists Harris and Krueger argued
30 hours a week, receive benefits. time, when self-employed independent in a December 2015 report for the
“Turnover in this kind of industry is very contractors could at least make a buck Brookings Institution’s Hamilton Project,
high,” says Marcela Sapone, CEO and or two as they hustled from task to “New and emerging work relationships
co-founder. “There should not be a dis- task in the on-demand gig economy. arising in the ‘online gig economy’ do
connect between the success of a com- Uber CEO and co-founder Travis not fit easily into the existing legal de-
pany and the success of its workers. We Kalanick has already endorsed the need finitions of ‘employee’ and ‘independent
believe treating our employees as our to develop driverless cars, which would contractor’ status.” They call for “a new
primary customer is how we can best reduce the number or even eliminate legal category, which we call ‘inde-
satisfy our end users. It can become dif- Uber drivers. “Are we going to be part pendent workers,’ for those who occupy
ficult to achieve this with the 1099 clas- of the future?” he asked. “Or are we the gray area between employees and
sification, because it inherently distances going to resist the future, like that taxi independent contractors.” 35
the worker from the company.” 32 industry before us? For us, we’re a Harris and Krueger see independent
Ultimately, for both workers and man- tech company, so we’ve said, let’s be workers more as independent busi-
agement, the gig economy is a mixed part of that. It’s a super exciting place nesses than employees, although the
bag. Further complicating the picture is to be.” 34 companies, which they call “interme-
the growing use of automation. diaries,” exert some control by setting
As artificial intelligence advances Should the definition of indepen- fees and “firing” workers. The econo-
and robots become increasingly sophis- dent contractor be changed? mists suggest that independent workers
ticated, more corporations see automation The growth of the gig economy in receive some but not all benefits ac-
as a way to save money, according to recent years has prompted calls by corded to traditional employees. These
some experts. Unlike humans, robots some economists, academics and free- would include “the freedom to organize
don’t need days off or health insurance; lance advocates for a new definition [with other independent workers] and
nor do they get tired. But they do for independent contractors, one that collectively bargain, civil rights protec-
need maintenance and large upfront accommodates the less regulated busi- tions, tax withholding, and employer
investments. 33 ness models exemplified by Uber, Lyft, contributions for payroll taxes.” 36

272 CQ Researcher
Other experts call for “portable
benefits,” an extension of a practice
long common in the union trades.
Gig economy critic Hill suggests creating
Individual Security Accounts (ISA), into
which every business hiring an inde-
pendent worker would pay. The worker
then would use the ISA “to buy that

Getty Images/Bloomberg/Daniel Acker


safety net,” he says.
Others argue that no new definition
of independent contractor is needed and
that traditional regulations should not
apply because rules stifle profit and quality
of services. “After all, profit is a much
more powerful driver for quality than
regulatory compliance,” argues Aran Sun-
dararajan, a professor at New York Uni-
versity’s Stern School of Business, in an
essay in Wired.com. “Many of today’s
regulations were right for their time, and
An employee prepares for Black Friday at a Walmart in Chicago on Nov. 25,
contributed to the safe and efficient growth 2015. Even with the gig economy growing, some employers — faced with a
of services over the last century. But tightening job market — are moving away from outsourcing work and
emerging digital institutions have already back to using full-time employees. Walmart has raised the wages of
started to make them obsolete.” 37 full-time employees to stem turnover and reduce hiring and training costs.
The use of perma-temps has led to
a spate of union grievances and lawsuits have passed bills to enforce labor laws for full employment and enforcement
— and settlements in which companies on both staffing agencies and their of consumer, tax and labor laws.
have reclassified individuals and paid client companies. 41 “The problems are far larger and
out millions of dollars in settlements. But temporary workers hired through long-standing than the gig economy,”
In 2000, Microsoft agreed to a land- staffing agencies tend to have “a core Lawrence Mishel, the institute’s president,
mark $97 million settlement in a class- safety net” that includes some legal pro- said in a paper last October. 43
action lawsuit brought by perma-temp tections, such as anti-discrimination laws,
workers who contended they were il- which contractors and freelancers do
legally denied benefits. Many had been
hired through “temp” agencies but had
worked at Microsoft for more than two
not, says Hill of New America.
Misclassification of employees as in-
dependent contractors — not a redef-
BACKGROUND
years. 38 inition — is the primary problem, argues
Perma-temp work accounted for the National Employment Law Project,
3.4 million jobs in 2013, or about 2.3 a progressive think tank, because it “ex- Gig’s Roots
percent of the national total; between acts an enormous toll on workers, law-
2008 and 2012, these jobs increased by
41 percent. 39 Looking at it on a weekly
basis, temp job growth has far outpaced
abiding employers and our economy.”
For instance, the group pointed out,
when competitors misclassify workers,
W hen it comes to work, there is not
much new under the sun, only
different iterations of how labor, commerce
overall employment growth rates since it “hurts law-abiding employers who and compensation are structured. Through-
the recession, rising from a weekly play by the rules but are under-bid and out history, society has reorganized or
average of 2.2 million jobs in 2009 to out-competed.” 42 “reinvented” work according to available
3.2 million in 2014, according to the The Economic Policy Institute, a pro- technologies and economic models.
American Staffing Association. 40 labor think tank in Washington, questions Even the word “freelance” harkens
This increasing use of temporary the notion that the number of self- back to another time. “Free lance was
workers has led to a call for more employed in the gig economy is growing. coined during the Industrial Revolution
stringent protections. From California Moreover, the institute’s diagnosis and of late eighteenth- and nineteenth-
to Illinois and Massachusetts, legislatures prescriptions are more expansive, calling century England, when factories and

www.cqresearcher.com March 18, 2016 273


THE GIG ECONOMY
machines were changing how people mentary on NPR. 46 what they regarded as unfair labor
lived and worked,” writes Horowitz of To some, today’s gig economy jobs practices and inadequate pay, conduct-
the Freelancers Union. She notes that bring to mind pre-Industrial Revolution ing more than 20,000 strikes. 48 Some
Sir Walter Scott first used the term in piecework, when workers were paid were marked by violent confrontations
his 1820 novel Ivanhoe: “I offered [King] on a piece-by-piece basis. Then the between management and labor, most
Richard the services of my Free Lances,” 19th-century Industrial Revolution led notably the Homestead Strike of 1892,
Scott wrote, referring to knights not to creation of large corporations and a when thousands of armed steelworkers
bound to any feudal lord who would Gilded Age for the titans of industry. clashed with 300 company-hired se-
offer their services for a fee. 44 Work was plentiful and labor was cheap, curity personnel in Homestead, Pa. 49
Use of the word “gig” also is not allowing industrialists to increase work- The confrontation dealt a setback to
new, though it long had a strictly musical ing hours while keeping wages low. the national labor movement.
connotation. According to jazz historian Horrendous working conditions and The Progressive Era (1890s-1920s) led
Robert S. Gold, the word may have poor pay led to the formation in 1886 to reforms in working conditions and
originated from the Old French word of the American Federation of Labor legislation to curb corporate monopolies’
gigue, “a lively dance form of Italian (AFL), which organized unions of craft powers over prices and wages. Unsafe
and hazardous working conditions were
a major focus of reformers’ efforts.
In 1911, at a conference on industrial
safety, U.S. Secretary of Commerce and
Labor Charles Nagel said, “It takes the
government to establish the rules of
the game” to ensure fairness and to
protect workers. The Triangle Shirtwaist
Getty Images/Bloomberg/Tim Rue fire on March 25, 1911, in which 146
women, mostly Italian and Jewish im-
migrants, perished because they could
not escape their locked Manhattan
clothing factory, dramatized the risks
of unregulated industry. 50
Observing the fire from a nearby
park, President Franklin D. Roosevelt’s
future secretary of Labor, Frances
Perkins, the first female Cabinet mem-
Shipping containers are loaded onto driverless trucks during tests at California’s
Long Beach Container Terminal. The automated cargo-handling system is ber, became convinced that “something
scheduled to go into use this year. As artificial intelligence advances and robots must be done,” she later recalled. “We’ve
become increasingly sophisticated, more corporations see automation as a way got to turn this into some kind of
to save money, potentially eliminating employees and forcing more workers into victory, some kind of constructive ac-
the gig economy. Uber CEO and co-founder Travis Kalanick, for one, tion.” She and others lobbied success-
supports the development of driverless cars, which would
reduce the number or even eliminate Uber drivers. fully for the adoption of new workplace
safety standards in New York state. 51
origin. . . . According to jazzman Eubie workers to bargain collectively. AFL Technological innovations during this
Blake, bandleader James Reese Europe leader Samuel Gompers was no radical period also brought changes that would
used the term in its jazz sense as early — he championed capitalism, purpose- dramatically alter the workplace and
as c. 1905.” Gig is also defined as a ly excluded low-skilled workers from society. One of the most important was
“single engagement” and as “a non-jazz his organizing efforts and did not en- Henry Ford’s introduction in 1913 of the
job reluctantly taken by a jazzman for gage in political campaigns for dramatic moving assembly line at his Highland
purely monetary reasons.” 45 change. But he helped get the union Park, Mich., automobile plant. This revo-
Linguist Geoff Nunberg cited “gig” as movement off the ground. By the turn lutionary innovation cut the time needed
his word of the year for 2015. “It’s the of the century, more than 500,000 to produce one car from 12 hours to
last chapter in the life of a little word tradesmen would be members. 47 about 90 minutes and also made the
that has tracked the rise and fall of the During the last two decades of the automobile more affordable. 52
great American job,” he said in a com- 19th century, workers rebelled against Continued on p. 276

274 CQ Researcher
Chronology
1952 stock exchange to soar before the
1880s-1913
The union movement emerges.
President Harry S. Truman seizes tech market goes bust, causing
control of the steel industry to avoid numerous companies to close.
a steelworkers’ strike.
1886 2007
American Federation of Labor is 1954 Zimride (later renamed Lyft) offers
formed. Union membership peaks at 34.8 per- on-demand rides with drivers who
cent of nonfarm U.S. workers. own their cars and bear gas and
1892 other expenses.
Violent steelworkers strike in 1955
Homestead, Pa., deals blow to CIO and American Federation of 2007-09
labor movement. Labor merge to form AFL-CIO, rep- Steep recession spurs layoffs and
resenting some 15.5 million workers. downsizing at many large corpora-
1913 tions, forcing formerly full-time
Henry Ford introduces the auto • workers to enter the “gig economy”
assembly line. in search of short-term jobs.

• 1980s U.S. economy


sputters and recovers.
2009
UberCab, which connects customers
and drivers through a cellphone app,
1929-1939
Unemployment soars during
1980
To tame inflation, Federal Reserve
is established in San Francisco.

the Great Depression. Board raises interest rates to 20 per- •


cent, helping trigger a severe re-
1933 cession; unemployment peaks at
Unemployment peaks at 25 percent. 10.8 percent in December 1982. 2010-Present
New online platforms connect
1935 1987 workers to on-demand jobs.
National Labor Relations Act recog- Wall Street crash hits stock prices
nizes workers’ right to unionize and and corporate profits, but gains from 2010
bans child labor. . . . Social Security subsequent rebound lead companies Fiverr website allows freelancers to
Act is passed. . . . Committee for In- to be judged by their quarterly bid on jobs starting at $5 a task.
dustrial Organization (CIO) is formed. bottom lines. To cut costs, businesses
replaced traditional pensions while 2014
1936-37 increasingly shifting health insurance California Uber drivers sue to be
Autoworkers demanding union costs to workers. reclassified as employees with un-
representation begin strike at Gen- employment and other benefits. . . .
eral Motors plant in Flint, Mich., • Affordable Care Act allows self-
transforming United Auto Workers employed workers to purchase
into a major union. health insurance on exchanges.
1990-2009 Com-
panies accelerate outsourcing of 2015

work to contractors or foreign Seattle City Council allows Uber
plants and increase hiring of and Lyft drivers to unionize, setting
1945-1970 Post-
war boom creates large middle
part-time or temporary workers. national precedent. . . . Drivers of
luxury Uber cars in Dallas success-
class, with employers providing 1995 fully force the company to retract
long-term employment and Freelancers Union established in its demand that they accept the
health and pension benefits. New York City. lower-fee Uber X customers. . . .
California judge grants Uber drivers
1947 1995-2000 class-action status, allowing their
Taft-Hartley Act restricts union ac- Boom in digital commerce causes claims to be decided in a single
tivity. technology-dominated Nasdaq case.

www.cqresearcher.com March 18, 2016 275


THE GIG ECONOMY

Co-working Spaces Catching On


Shared offices seek to end gig workers’ isolation.

W hite-collar “gig” workers, toiling away in a cramped


back bedroom or at a crumb-dusted table at the
local Starbucks, need be lonely no longer.
They now can rent a “co-working” space where they’ll find,
at the minimum, a seat at a shared table, a cubby or locker,
reduced office-space needs in the digital age.
“Nowadays, almost everybody emails documents, reads on
a laptop, and there is not as much need for a computer printout.
Every industry in the world has adapted to a smaller, virtual
way to do work,” Rahbar says.
Wi-Fi, a small kitchen, fresh coffee, conference room and a Moreover, he says, rising rents and budget constraints have
business address that can transform a self-employed worker forced companies to shed real estate. “Companies like ours can
into what is, to outward appearances, a real player in the make up the void,” Rahbar says.
business world. Monthly rent at Make Offices ranges from $75 for a “virtual”
Some 800 locations provided short-term co-working spaces office, which includes a mailing address, mail collection and
nationwide in 2015, up from only 40 in 2008, according to access to social networking events, to $250 and up for a “bullpen”
deskmag, an online industry magazine. 1 desk, and $550 and up for a fully furnished separate office. Its
And the phenomenon is global, with about 7,800 co-working month-to-month leases appeal to self-employed people and
locations worldwide in 2015, up 36 percent from the previous others whose revenues are uncertain.
year, deskmag said. “The co-working movement is undeniably Rahbar’s firm, recently rebranded from Uber Offices (no relation
here to stay,” the publication said. 2 to the ride-hailing service), plans to open two more D.C. locations
“The recession obviously helped it go up the stairway, but in 2016. It also has expanded to Chicago and Philadelphia.
it’s not the sole factor,” says Raymond Rahbar, founder and Creative Colony, a 1,720-square-foot open office in a 1960s
CEO of Make Offices, which started in 2012 in Arlington, Va., high-rise in Silver Spring, Md., adjoining Washington, tends to
and provides work spaces at five Washington, D.C.-area locations. attract what manager Megan Tyson King calls “niche creative
He cites other factors, such as the outsourcing of work and professionals” who find working from home too isolating. Monthly

Continued from p. 274 In October 1929, the stock market two decades later. Autoworkers at the
Ford went further, returning some crashed. By 1932, stocks had lost 80 Flint, Mich., plant of General Motors staged
of his profits to employees in the form percent of their pre-crash value; a year a sit-down strike, setting a precedent for
of the $5 workday, which the com- later, a staggering 25 percent of the peaceful civil disobedience in labor disputes
pany’s website describes as “a signif- nation’s workforce was unemployed, and, later, in the civil rights movement.
icant wage at the time, to enable his as businesses failed and banks closed. The Depression gave rise to Presi-
employees to buy the vehicles they Jobless World War I veterans, seeking dent Roosevelt’s New Deal programs
built. The move created loyalty among accelerated payment of a bonus they and laws intended to provide a safety
Ford workers and is credited with giv- were scheduled to receive in 1945, net for workers. Foremost among them
ing rise to a new middle class of con- marched on Washington in 1932. There were the National Labor Relations Act,
sumers unencumbered by geography, they were routed, their shanty town which guaranteed the right of workers
free to travel the open roads, to live on the Anacostia River flats burned to bargain collectively, and the Social
where they please and chase the Amer- down by Army troops under the com- Security Act, intended to provide a
ican dream.” 53 mand of Douglas MacArthur, who modest retirement annuity to retired
achieved fame in World War II as a workers, funded by employers and em-
general in the Pacific theater. ployees through a payroll tax. Both were
Boom, Bust The Great Depression gave rise to a enacted in 1935.
gig economy of sorts, as hobos climbed The onset of World War II ended

A fter World War I, the Roaring ’20s


lifted the national economy, re-
sulting in low unemployment and ex-
onto railroad boxcars and traveled from
place to place in search of work.
The severe economic conditions
the Depression and brought a boom
in defense spending, as the nation’s
corporations retooled their factories to
pansive growth. The economy seemed prompted eight militant unions to break support the war effort with the pro-
so strong that President Calvin Coolidge away from the AFL in 1935 to form the duction of armaments, ships and planes.
famously said, “The chief business of organization that would later become the With 12 million Americans serving in
the American people is business.” But Congress of Industrial Organizations (CIO); the military, civilian labor shortages led
the good times did not last. the two federations would merge again to widespread employment of women

276 CQ Researcher
AFP/Getty Images/Brendan Smialowski
rates range from $55 to $495, depending on the length of a
lease and what’s included. 3
Its members include graphic designers, writers, photographers,
business consultants and filmmakers. And 24/7 access means
“you can work Christmas Day or at 2 in the morning,” she
says. Creative Colony’s amenities include a social calendar filled
with events and a mock phone booth for private calls.
Melissa K. Smith is renting space in Make Office’s bullpen.
The 36-year-old is CEO of Phoenix Filming, a startup company The Cove co-working space in Washington, D.C., is part
she co-founded last year that deploys drones to make aerial of a growing network of shared office environments
videos. She says she likes “the exposure to different companies spawned by the gig economy.
at different levels of startup, the daily interaction with people,
the great networking.” She has 10 independent contractors scattered As for the future of co-working, Rahbar says, “Everything
around the country working for her remotely. has a ceiling, but that ceiling is a faraway place right now.”
Smith is hoping for a separate office at Make Offices, but
— Eugene L. Meyer
more than 500 people are on a waiting list at the company’s
various sites, according to Rahbar.
1 “A Snapshot of Coworking in America,” Modworks Coworking, April 30, 2015,
Creative Colony, a much smaller operation with about 39 http://tinyurl.com/jce9gmh.
“members,” has no waiting list, but word has gotten around. 2 “First Results of the New Global Coworking Survey,” deskmag, Nov. 20, 2015,
The company has had inquiries from other states on its expansion http://tinyurl.com/htm27kc.
3 Creative Colony, http://tinyurl.com/gqrxrzr.
plans, but right now its focus is local, according to King.

for the first time in what had been Commonly, employers provided a safety Their use also undercut the security
traditionally men’s factory jobs. net of pensions and health insurance for of full-time workers.
With peace in 1945 came the so- long-term employees, many of whom A 1987 stock market crash may have
called peacetime dividend: Pent-up con- spent an entire career at a single company. been a harbinger of harder times to
sumer demand fueled construction of But the huge costs of the Vietnam War come, but its impact was only short-
new homes for returning GIs and the and President Lyndon B. Johnson’s “Great term. During the stock market frenzy
production of cars, televisions and other Society” social programs ignited inflation that took hold after the crash, large
consumer goods. Veterans attended col- and helped lead to economic turmoil in private corporations went public, and
lege in large numbers for free on the the 1970s. profits that formerly rewarded employ-
GI Bill. Women receded from the work- To break the back of inflation, the ees and paid for expansions were di-
force, but unemployment was low and Federal Reserve Board raised interest rates verted to buying back stock to raise
wages were rising. to as high as 20 percent, which helped corporations’ market price.
At the same time, the union move- trigger a severe recession in 1981 and During the extended postwar period
ment suffered a setback in 1947 with ’82. Once again, unemployed workers hit that lasted into the 1980s, writes Jerry
passage of the Taft-Hartley Act, which the road in search of jobs; camps of the Davis, a professor of management and
strengthened the hand of management destitute sprang up, mostly out of sight sociology at the University of Michigan,
in collective bargaining. President Harry — from the outer suburbs of Washington, “American corporations became model
S. Truman chose not to invoke the law D.C., to the outskirts of Forks, Wash., a long-term employers,” serving “a critical
in 1952, when, under an executive order, lumber town fallen on hard times. function in providing pathways to eco-
he seized control of the steel industry This period also saw the rise of nomic security and mobility. . . . A
to avoid a steelworkers’ strike he deemed temporary employment agencies that corporate job was a good job, with a
detrimental to national security while provided on-demand workers to com- chance to move up in the world.” 55
Americans were at war in Korea. 54 panies with short-term or occasional But the pathway came to a crossroads
During this time a robust middle class needs. Some firms used perma-temps, as the 20th century neared its end.
expanded, which helped keep the national a practice unions protested, since these In the 1990s, investors increasingly
economy rolling along into the 1960s. workers lacked protections and benefits. judged companies by their quarterly per-

www.cqresearcher.com March 18, 2016 277


THE GIG ECONOMY

Freelancers Union Fights for the Self-Employed


Founder advocates a “new mutualism” between workers and communities.

T he Freelancers Union isn’t really a union. It doesn’t


bargain collectively for members and it collects no dues.
Instead, its 288,000 members get access to a vast network
of self-employed individuals similarly trying to survive in the new,
on-demand “gig” economy. Anyone working full or part time for
missions help support the union’s operations and expenses.
With Horowitz as its most public face, the Freelancers Union
today is a major player in discussions about the gig economy,
and she is in demand as a panelist and speaker. She has
advocated what she calls a “new mutualism,” in which, absent
themselves can join the organization, whose mission is to ensure more traditional work arrangements, consumers and freelancers
that freelancers get a fair deal from their clients. It also markets create an economic model that works for all. “I want to start
and sells health, life, disability and dental insurance to members. having groups come together to solve problems,” Horowitz
Other features of union membership include interest groups says. In her 2012 book, The Freelancer’s Bible, she explained,
known as “hives,” which bring together like-minded individuals, “We’re returning to a pre-industrial model of human-scaled,
and “Spark” meetings in 18 states. Both are heavily geared to self-caring communities that were the norm in the United States
helping members hone their professional and marketing skills. for generations — but with a new awareness that our solutions
The founder and executive director of the Brooklyn, N.Y.- must be cost-effective in the short term and sustainable in the
based organization is Sara Horowitz, a graduate of the Cornell long term, with technology accelerating the pace, breadth and
University School of Industrial and Labor Relations and SUNY depth of our contact.” 4
Buffalo Law School. In the early 1990s, Horowitz was under the When she speaks or writes about the gig economy, her tone
impression she had a regular job in a law firm, only to discover tends to be boosterish regarding the prospects for success. “As
she was an independent contractor without benefits. 1 “It really a freelancer, you’re a master of new beginnings,” she writes. 5
got me to see what was happening in the world of work, and Further, the cover of her book promises “Everything you need
that work was profoundly changing,” she says. to know to have the career of your dreams — on your terms.”
A New Yorker from a family with strong union ties, Horowitz This promise has drawn some criticism from some who say it
founded the Freelancers Union under the name Working Today doesn’t present the full picture.
in 1995. 2 The group, renamed in 2003, rose in prominence “She’s taken on the tough job of advocating for freelancers [that]
after Horowitz received a MacArthur Foundation “genius grant” no one else was doing,” says Steven Hill, a fellow at the left-
in 1999 and hired the BerlinRosen public relations firm, whose leaning New America think tank. “But she needs to be part of
efforts helped land her on Business Week’s 2011 list of “America’s this fight for jobs, better education and not just accepting the status
Top Social Entrepreneurs.” quo that you’re all going to become freelancers. She’s totally not
Under Horowitz’s leadership, the union has grown into a nonprofit preparing these young people for what they’re facing,” such as
with $22.6 million in assets and $8.7 million in revenue in 2013, long periods without income, the constant need to market and an
the most recent year for which its financial records are publicly inability to qualify for such benefits as unemployment insurance
available. 3 Its revenue comes largely from commissions on premiums and worker’s compensation. A lot of what she says, he adds,
that its members pay on group health insurance policies. The com- “sounds like Silicon Valley happy talk.” Horowitz, in her book, also

formance, pressuring executives to further available only for academia and gov- liferation of startup companies and high-
slash costs. Workers bore the brunt of ernment under the control of the Na- flying investors seeking to profit from
this, as companies replaced traditional tional Science Foundation, was opened the new technology. The boom, during
pensions with “defined” benefits with to individuals and businesses. 56 which the technology-dominated Nasdaq
401K plans, in which workers’ make The Internet “makes it much easier stock exchange index soared from 1,000
pretax contributions to a retirement fund to find and outsource the many busi- to 5,000 in five years, went bust in 2000,
that the employer invests at the employ- ness tasks you need to complete,” ac- but its effect on all but a small class
ees’ direction. Employers also shifted cording to Conversational Receptionists, of high-risk investors was muted. Cellular
more and more health insurance costs a North American firm that provides phones, meanwhile, began morphing
to workers as premiums rose. receptionist services. “Often, when you into “smart” phones, capable of running
outsource, you will pay for the work applications that allowed users on the
instead of paying by the hour or a go to conduct business transactions over
Path to Gig Economy full-time salary for an employee to the Internet.
provide the work.” 57 Otherwise, the economy that had

A nother tectonic shift occurred in


1991, when the Internet, previously
An explosion of digital commerce
led to the “dot-com” boom, with a pro-
prospered during the Clinton admin-
istration in the 1990s continued to do

278 CQ Researcher
addresses the many challenges that freelancers face.
On the political front, however, the Freelancers Union successfully
lobbied New York City in 2009 to roll back its 4 percent tax on
unincorporated businesses for those earning less than $100,000.
Through its “Freelancing Isn’t Free” campaign, the union is fighting
for legislation to protect freelancers from late or unpaid fees owed
them. 6 Horowitz also has advocated a business-funded account

AFP/Getty Images/Nicholas Kamm


to purchase benefits that would follow freelancers from job to job,
assuring them some level of security.
The Freelancers Union “has been a pretty important voice
in this space for quite some time,” says Rebecca Smith, deputy
director of the nonprofit National Employment Law Project,
which advocates for workers. “They have concentrated a lot of
their work on delivering benefits to freelancers.”
The group’s most ambitious undertaking has been in health
insurance. For a time, the Freelancers Union ran two medical
clinics in the city. In 2008, it created the Freelancers Insurance
Co., but it closed in 2014 after the Affordable Care Act (ACA)
went into effect. For members who do not qualify for subsidies Freelancers Union founder and CEO Sara Horowitz
under the ACA, it continues to provide other insurance options appears at a town hall meeting at the White House on
in New York City through Empire BlueCross BlueShield and Care- Oct. 7, 2015. She started the group to help independent
Connect. It also helped three independent health co-ops elsewhere workers get fair treatment from empolyers.
obtain $341 million in low- and no-interest federal loans. 7
1 Freelancers Union, http://tinyurl.com/gl3ruyb.
In defining its constituency, the Freelancers Union casts a 2 “Sara Horowitz,” Freelancers Union, http://tinyurl.com/hduag6h.
wide net. Its 2015 study counted 54 million freelancers nationwide 3 Form 990, Guidestar, 2013, p. 25, http://tinyurl.com/hbzgqps.
— one-third of the nation’s labor force. But that number includes 4 Sara Horowitz, with Toni Sciarra Poynter, The Freelancer’s Bible (2012), p. 301.
full-time employees who also do some freelancing. 8 5 Ibid., p. 464.
“The fact is,” says Horowitz, “that when workers enter the 6 According to the Freelancers Union, 71 percent of freelancers will experience
workforce now, at some point in their lives they are going to late or nonpayment for work during their career. The bill, introduced Dec. 7,
be working freelance.” 2015, can be found at http://tinyurl.com/jqs4cqq.
7 “CO-OP FAQs,” Freelancers Union, http://tinyurl.com/zmg4e2y.
— Eugene L. Meyer 8 “Freelancing in America: 2015,” Freelancers Union and Upwork, 2015,
http://tinyurl.com/hjlhkfx.

so under President George W. Bush rarely seen since the Great Depression. One survey of 10 major urban areas
— until December 2007. In 2009, even as many Americans were found the number of workers receiving
What then-Federal Reserve Chairman struggling to get back on their feet and IRS Form 1099 as independent con-
Alan Greenspan would call “irrational find permanent employment, there was tractors steadily rose from 2013 to 2014,
exuberance” in both the stock and real an explosion of digitally based companies suggesting a growing trend. 59 But oth-
estate markets deflated badly. The re- — such as Uber, Etsy, TaskRabbit and ers questioned what they called the
sulting mortgage and financial crisis Airbnb — that use the Internet, smartphones “race to the bottom” business model
brought corporate mergers, investment and algorithms to connect providers and that produces workers without guar-
house bankruptcies and bank closures consumers. Some hailed their rise as the anteed hours, income or benefits. 60
and bailouts. Millions of homeowners’ new “sharing economy,” promising more Yet, advances in artificial intelligence
mortgages were foreclosed; home values freedom and flexibility for workers eager and algorithms could enable robots to
that had risen sharply during the bubble to become entrepreneurs. replace workers. Automation has already
fell sharply. Families lost their homes “Listen to the optimists, and the Great dispensed with the need for many sec-
and jobs, and their retirement savings Recession and its aftermath sounds like retaries, bank tellers and autoworkers.
evaporated. Unemployment reached a great opportunity,” writes Scott Timberg Some analysts have forecasted a new
10.6 percent in May 2009 — a level in his 2015 book, Culture Crash. 58 industrial revolution of “autonomous in-

www.cqresearcher.com March 18, 2016 279


THE GIG ECONOMY
novation,” in which humans would become “We continue to have a very weak falling labor force participation rate largely
superfluous for many if not most of the labor market,” says Dean Baker, co- to the slow recovery that led many work-
tasks they formerly performed. 61 founder and co-director of the Center ers to become discouraged and stop
for Economic and Policy Research, a looking for work. 65
left-leaning Washington, D.C., think Yet, muddying the picture, some

CURRENT tank. “Really, by every measure, we’re


very, very far from being recovered.
employers say the job market has tight-
ened so much that they are raising

SITUATION It speaks to the fact so many people wages and hiring more workers. “The
are willing to take part-time jobs, casual economy is as strong as it has ever
work, because they don’t have the op- been here,” said Dave Rozenboom,
tion to get a full-time paying job.” president of First Premier Bank in Sioux
The numbers appear to bear him Falls, S.D. “It’s a very tight labor market,
The Economy out. According to the American Staffing and we continue to hire.” 66
Association, although many jobs have

O n the surface, the jobs picture


appears positive. The unemploy-
ment rate has dropped from 10.6 per-
been regained since the 18-month re-
cession and the unemployment rate has
dropped, “the percentage of people par-
The Lawmakers
cent in May 2009 to less than 5 percent
in January 2016. 62
ticipating in the labor force has dropped
to the lowest level in four decades,” to C ity councils and state legislatures
are haltingly confronting issues
raised by the gig economy.
Ride-hailing companies such as Uber
and Lyft have been lobbying hard and
largely successfully for laws and ordi-
Getty Images/The Washington Post/Lexey Swall nances to allow them to operate without
the stringent regulations applied to tra-
ditional taxicabs. Uber has been one
of the most active, hiring at least 161
people and multiple lobbying firms to
influence legislation. 67
The full-court press mounted by Uber
— recently valued at $61.5 billion — has
defeated proposed regulations in state
after state and city after city, allowing
it to operate largely unregulated or self-
regulated. When San Antonio leaders
rejected Uber’s demands last year, the
company ceased service there. But
Earnest Williams turned to collecting scrap metal after losing his job in months later, after the city modified its
Washington, D.C. Laid-off gig economy workers may have plenty of company
in the coming years, according to a study at Oxford University. It predicted that
requirements, Uber returned. 68
“47 percent of total U.S. employment is in the high-risk category” of being In general, the newly adopted laws
automated, possibly within two decades, mostly in low-skill, low-wage jobs. and ordinances allow ride-hailing and
other services to operate legally without
But U.S. Sen. Bernie Sanders of Ver- 62.6 percent in June-August 2015 — down providing redress for complaints by dri-
mont, running for the Democratic pres- from a peak of 67.3 percent in April 2000 vers or other gig economy workers that
idential nomination, told a crowd in and on a par with the 62.4 percent seen are being misclassified as independent
Portland, Maine, last summer that the in October 1977. contractors.
actual unemployment rate was 10.5 per- Currently, the association says, “There In 2014, Colorado became the first
cent, double the then-official rate of are nearly 6 million open jobs, and more state to enact a legal framework autho-
5.3 percent. 63 Sanders arrived at this than 8 million people out of work — rizing “transportation network compa-
figure by including those who have contributing to the longer than anticipated nies” such as Uber and Lyft to operate,
given up looking for work and those recovery cycle.” 64 The nonpartisan Con- but under only limited regulation. 69
working part time. gressional Budget Office attributes the Continued on p. 282

280 CQ Researcher
At Issue:
Is the “gig economy” here to stay?
yes

STEVEN HILL DEAN BAKER


SENIOR FELLOW, NEW AMERICA; AUTHOR, CO-DIRECTOR, CENTER FOR ECONOMIC
RAW DEAL: HOW THE ‘UBER ECONOMY’ AND POLICY RESEARCH
AND RUNAWAY CAPITALISM ARE SCREWING
AMERICAN WORKERS WRITTEN FOR CQ RESEARCHER, MARCH 2016

WRITTEN FOR CQ RESEARCHER, MARCH 2016

t he “gig economy” is here to stay, but its impacts can be


hard to measure. Our understanding of these trends is
bedeviled by a fierce numbers game. The Pricewaterhouse
Coopers consulting company recently estimated that the gig econ-
t
of hype.
he “gig economy” is one of the many trendy revolutions
capturing the news media’s attention. But some simple
realities apply to the gig economy, buried in a great deal

“Gig economy” work is the same sort of casual labor that


omy’s global revenues could increase from roughly $15 billion has always existed. It’s a variation on the day-labor centers
today to around $335 billion by 2025. And in April 2015, the where workers go in the morning in the hope of finding

yes no
U.S. Government Accountability Office said “the size of the work for all or part of a day. The only difference is that the
contingent workforce can range from less than 5 percent to gig economy operates over the Internet and involves workers
more than a third of the total employed labor force.” The Bureau in a wider range of occupations, some relatively skilled.
of Labor Statistics has found little increase in the size of the However, just as some day-labor companies hope to profit
contingent workforce, but Harvard economist Larry Katz cites by evading regulations and cheating workers, many gig econ-
evidence that the bureau’s estimate is “missing a large part of omy companies hope to legally skirt labor laws that apply to
the gig economy.” So, different methodologies are producing other employers.
different conclusions. The survival of gig economy companies depends on the
Yet it is clear that the old New Deal economy and its safety overall state of the economy. It is no accident that the gig
net are crumbling for millions of U.S. workers, both those in economy exploded following the recent steep recession.
the traditional economy and those trying to succeed in the gig More than eight years after the onset of the recession, the
economy. The competitive advantages for a business using economy is still down more than 3 million jobs from trend
such non-regular workers can be substantial: Labor costs can levels.
be reduced by 30 percent or more if a company does not If we pursue policies designed to weaken the labor market,
have to pay workers benefits. such as higher interest rates from the Federal Reserve Board,
Even many regularly employed, part-time workers are being we likely will continue to see large numbers of workers des-
subjected by employers to various tactics aimed at reducing perate for employment from Uber, TaskRabbit and other gig
labor costs and increasing flexibility. One — known as “just-in- economy companies. In a bad economy, irregular work is
time scheduling” — means that part-timers are basically on-call, better than no work.
subject to job insecurity, low pay and little-to-no safety net. The survival of the gig economy also depends on whether
Given that reality, worker categories should not be defined governments will apply labor laws to gig economy companies.
too rigidly because there is a lot of overlap in terms of work- There is no reason Uber should be exempt from minimum-
ing conditions. We are going to find that more and more wage laws, overtime regulations and workers’ compensation
workers exist simultaneously in multiple worker categories — coverage. If the company’s claim is true — that compliance is
regular part-timers with a weak safety net who supplement too difficult to figure out — then companies that are more
those jobs with various gigs: for instance, being an Uber driver adept with technology will outcompete Uber. But if gig econ-
and/or Instacart grocery deliverer, still with no safety net, plus omy companies are exempt from rules that apply to their
taking on other mini-gigs and perhaps a second part-time job. competitors, gig companies will be allowed to thrive in a very
They might even work in the “gray economy” doing under-the- weak labor market.
table work off the books. We have to begin thinking of “work” Of course, there is a place for the type of casual labor that
for more and more workers as existing along a spectrum of fills gig economy advocates’ stories. There are people who
different types of employment situations. would like to earn some extra money in their spare time. If gig
How will all of this look in the labor statistics? Will we be economy companies can provide more opportunities for such
able to count this complexity, using current methods? We work, that would be great. But there is no reason this cannot
desperately need to figure out better methodologies, because be done in a way that complies with existing labor laws.
these new ways of work are not going away.
no

www.cqresearcher.com March 18, 2016 281


THE GIG ECONOMY
Continued from p. 280 with “unregulated” on-demand companies are required to follow a litany of de-
Last May, after Kansas enacted strin- like Uber. 75 At the same time, Democratic tailed requirements imposed on them
gent insurance requirements and back- candidate Hillary Clinton raised questions by Uber, and they are graded, and
ground checks for ride-hailing drivers, of equity and workers’ rights inherent in subject to termination, based on their
Uber announced it was ending oper- the gig economy. failure to adhere to these requirements.
ations there; the company resumed Obama’s budget submitted to Congress . . . However, based on their misclassi-
service after the state passed a com- in February contained no bold proposals fication as independent contractors,
promise bill. 70 On May 29, Nevada along the lines of the sweeping labor Uber drivers are required to bear many
imposed a 3 percent tax on fares for law reforms proposed by Sanders. 76 In- of the expenses of their employment,
ride-hailing services. stead, Obama proposed improving ac- including expenses for their vehicles,
There have also been hurdles. In cess to 401(k) retirement plans, ex- gas, and other expenses. California law
June 2015, the Office of the California panding Social Security benefits and requires employers to reimburse em-
Labor Commissioner ruled that an Uber supplementing incomes of workers who ployees for such expenses, which are
driver should have been classified as take lower-paying jobs after becoming for the benefit of the employer and
an employee rather than an indepen- unemployed. However, these proposals are necessary for the employees to
dent contractor, and Uber was ordered do not address the problems of self- perform their jobs.” A trial is scheduled
to pay her $4,152 for driving-related employed, on-demand workers. to begin on June 20. 78
business expenses, plus interest. 71 On Jared Bernstein, a former economic Shannon Liss-Riordan of Boston has
June 18, Lyft agreed to pay New York adviser to Vice President Joseph R. Biden, become the go-to lawyer challenging
state $300,000 to settle claims that it said administration officials “have not the on-demand economy, including in
violated state and municipal laws. viewed it as their job to try to change the California suit against Uber. She
In December 2015, Seattle became the underlying shifts in [job] risks.” Rather, has also filed lawsuits against Lyft, Door
the first city in the country to give drivers according to The New York Times, these Dash, GrubHub and Washio, an on-
for ride-hailing firms the ability to union- limited proposals were “a concession demand laundry service, alleging they
ize. 72 Uber and Lyft argued that the that the major macroeconomic trends illegally exercise control akin to em-
ordinance violated federal labor and of the past two generations — particularly ployers without extending benefits. 79
antitrust laws. After its passage, Uber said the loss of benefits that once went with “The Gig Economy Won’t Last Be-
it retained the right to challenge the law formal employment relationships — are cause It’s Being Sued to Death” is the
but also suggested ways to insure the largely irreversible.” 77 headline on a Fast Company article.
fairness of any union election. 73 “This rising legal retribution is a huge
In New York City, the Freelancers threat to the gig economy,” the author
Union successfully lobbied the munic- The Courts writes. “Lose this workforce structure
ipal government to eliminate a 4 percent — either by a wave of class-action
tax on unincorporated businesses for
drivers and other undependent workers
earning less than $100,000. The group
W hile legislatures have been slow
or have refused to act on com-
plaints about the gig economy, the courts,
lawsuits, intervention by regulators, or
through the collective action of dis-
gruntled workers — and you lose the
is also waging a “Freelancing Isn’t Free” especially on the West Coast, are hear- gig economy.” 80
campaign, for legislation to protect free- ing challenges from workers. They are Some gig workers, absent action by
lancers from late or nonpayment of wages, questioning the companies’ position courts or legislatures, are taking matters
by requiring full payment within 30 days that those who use their digital plat- into their own hands. When Uber told
of completion of services and penalizing forms to provide services are not em- Dallas-area drivers for the high-end car
companies that fail to comply. 74 ployees entitled to unemployment com- service UberBlack that they must also
What, if anything, will be done at the pensation, back pay and other benefits carry passengers hailing its lower-cost
federal level is an open question. Income normally accorded to employees. UberX service, the drivers rebelled.
inequality and the gig economy have Lawsuits, most notably against Uber After a three-day standoff at Uber’s
become subjects in the 2016 presidential and other ride-hailing services, question downtown headquarters, the company
race. Then-Republican presidential con- the classification of drivers as indepen- allowed them to opt out.
tender Jeb Bush made a point of using dent contractors when the companies “We started realizing we’re not con-
Uber to demonstrate his support for the determine the fares and schedules. tractors; we’re more like employees,”
new employment model. Democratic A class-action suit in California, filed UberBlack driver Berhane Alemayoh
presidential candidate and U.S. Sen. Bernie on behalf of Uber drivers, argues that said. “They tell us what kind of car to
Sanders said he has “serious problems” they are employees because: “They drive. They kick you out if a customer

282 CQ Researcher
accused you of not having a clean car. Harris and Krueger of Brookings’ However, a 2013 study at Oxford
They started to tighten the rope. Gradually, Hamilton Project, who are former top University predicted that “47 percent
we can’t breathe anymore.” 81 Obama administration officials, have sug- of total U.S. employment is in the high-
gested “a new legal classification” for risk category” of being automated, pos-
independent workers that would provide sibly within two decades. 85 Most are

OUTLOOK more rights and protections without


threatening “online-intermediate work.”
Whether or not they work through an
low-skill and low-wage jobs, the authors
write, and, as technology “races ahead,”
these displaced workers will migrate
“online intermediary,” these independent to jobs “non-susceptible to computeri-
workers would receive some of the ben- zation — i.e., tasks requiring creative
Uncertain Times efits accorded employees, “including the and social intelligence. For workers to
freedom to organize and collectively win the race, however, they will have

I nitial exuberance and hype over the


gig economy have given way to
more critical and complex evaluations,
bargain, civil rights protections, tax with-
holding, and employer contributions for
payroll taxes.” 82
to acquire creative and social skills.”
“Yet,” writes Fiverr’s Kaufman, “there
are glimmers of hope. Slowly but surely,
as advocates for workers make their One proposal being discussed is to a revolution is taking shape — an entirely
case in the courts and legislatures that have companies pay into a fund that different kind of economy. . . . It could
such work can be exploitive. The out- would provide “portable” benefits as be the force that saves the American
look, according to experts, is mixed workers go from job to job, much as worker. . . . [A]s the global economy
and uncertain. trade unionists have done for decades. continues to be disrupted by technology
“The last five years have been like “The real question,” says Horowitz, and other massive change, the Gig Econ-
the Wild West for the gig economy,” says “is what will be the evolving role of gov- omy will itself become an engine of
Horowitz of the Freelancers Union. “In ernment during this period? Will it become economic and social transformation. And
10 years, we’re going to see short-term less involved and let the market and workers everywhere will have something
gigs become the norm, and policymakers, workers fend for themselves, or will it to celebrate again.” 86
business executives and labor leaders nurture worker-oriented groups that have
are going to start planning critical infra- a job in delivering a new social safety
structure around this new economy.” net for this new way of working?” Notes
Says Rebecca Smith, deputy director Technological advances in robotics
of the National Employment Law Pro- are also likely to have a major impact 1 Brian Watt, “Aging workforce finds flexibility
ject: “It’s anyone’s guess whether the on the gig economy, and the world but not piece of mind in growing ‘gig econ-
companies, and many others like them of work in general. omy,’ ” 89.3KPCC, Feb. 1, 2016, http://tinyurl.
that misclassify workers as independent “It might seem like science fiction, com/z498cxq.
2 Ibid.
contractors, will convince policymakers but robots are taking over,” writes a 3 “Contingent Work Force: Size, Characteristics,
and enforcement agencies to affirma- blogger on WTF? (What’s the Future of
Earnings, and Benefits,” U.S. Government Ac-
tively exempt them and/or turn away Work?). “Robots in different forms are
countability Office, April 20, 2015, http://tiny
from enforcement. Or that workers will currently performing tasks as varied as url.com/jsdb7zd.
figure out ways to organize and demand keeping watch, building websites, clean- 4 Seth D. Harris and Alan B. Krueger, “A Proposal
the policy changes that will make gig ing and chatting with customers.” 83 for Modernizing Labor Laws for 21st Century
jobs good jobs. We will all have to This “digital transformation of the Work: The ‘Independent Worker,’ ” Brookings
stay tuned.” world” is being welcomed by both ex- Institution, December 2015, pp. 13-14, http://tiny
The outlook also hinges on whether ecutives and citizens, according to the url.com/jrahgum.
5 “Freelancing in America: 2015,” Freelancers
the overall economy creates more full- 2016 GE Global Innovation Barometer,
time jobs with benefits or whether firms with 68 percent of executives and 64 per- Union & Upwork, 2015, http://tinyurl.com/
continue to hire contractors to do work cent of citizens optimistic about the hjlhkfx.
6 Sara Horowitz and Fabio Rosati, “53 million
formerly done by employees. “innovation revolution,” including au-
Americans are freelancing, new survey finds,”
“There is a limit to how much the tomation. Under the category of “minds
Freelancers Union, — Sept. 4, 2014, http://tiny
gig economy can expand, especially and machines working together,” only url.com/h3jnosr.
if the economy is relatively healthy so 17 percent of executives and 15 percent 7 Steven Hill, “How Big Is the Gig Economy?”
that employers have to compete to of citizens fear “any negative impact The Huffington Post, Sept. 16, 2016, http://tiny
find workers,” says Baker of the Center on employment as a result of the digital url.com/j595rxc.
for Economic and Policy Research. revolution.” 84 8 “President Obama’s 2016 State of the Union

www.cqresearcher.com March 18, 2016 283


THE GIG ECONOMY
Address,” White House, Jan. 12, 2016, http://tiny Economy,” Fortune, July 30, 2015, http://tinyurl. 38 Steven Greenhouse, “Temp Workers at Mi-
url.com/juatdhn. com/jqa6sd7. crosoft Win Lawsuit,” The New York Times,
9 “Debunking the Top Five Myths of Temporary 23 Jim Yardley and Binyamin Appelbaum, “In Dec. 13, 2000, http://tinyurl.com/b4sg25b.
Work,” The Candidate Connection blog, Snelling, Fiery Speeches, Pope Francis Excoriates Global 39 Marc Lifsher, “Rising use of ‘perma-temp’

Oct. 2, 2012, http://tinyurl.com/gn5og4l. Capitalism,” The New York Times, July 11, 2015, workers is stirring up a legislative fight,” Los
10 “The Mobile Workforce: More productive, http://tinyurl.com/q6rsfm5. Angeles Times, May 7, 2014, http://tinyurl.com/
efficient, and healthy,” Microsoft, Nov. 12, 2013, 24 Neil Kokemuller and Demand Media, “Advan- l5qqgy3.
http://tinyurl.com/hhw2rrj. tages & Disadvantages of a Part-Time Employees,” 40 Cynthia Poole, “Steady Growth Continues:
11 “What Is the Gig Economy — and How Chron.com undated, http://tinyurl.com/6nexl6w. Staffing and Recruiting Industry Outpaces the
Does It Impact Employees?” T Sheets, undated, 25 “What are the benefits of employing part- Economy and the Labor Market,” American
http://tinyurl.com/zyaehf2. time workers?” duport, April 2006, http://tiny Staffing Association, September 2015, http://tiny
12 Laura Clawson, “This week in the war on url.com/zrw4wj9. url.com/go6vaz4.
workers: The new piecework economy,” The 26 Philip L Rones, “Response to Recession: 41 Richard J. Reibsteine et al., “The 2015 White

Daily Kos, July 26, 2014, http://tinyurl.com/jlepru5. Reduce Hours or Jobs?” Monthly Labor Review, Paper on Independent Contractor Misclassi-
13 See Steven Greenhouse, “Our Economic October 1981, http://tinyurl.com/j7tasjt. fication: How Companies Can Minimize the
Pickle,” The New York Times, Jan. 12, 2013, 27 Claire Gordon, “How Employers Can Legally Risk,” Pepper Hamilton LLP, April 27, 2015,
http://tinyurl.com/jm5ebv7. Strip Your Job of Benefits,” AOL Jobs, April 27, http://tinyurl.com/h5y68fp (See: V. Legislative
14 Daniel Aaronson and Andrew Jordan, “Un- 2012, http://tinyurl.com/hvy9m7m. Initiatives).
derstanding the relationship between real 28 Brian Pedersen, “Employees Turned into 42 “Independent Contractor Misclassification Im-

wage growth and labor market conditions,” Contract Workers at Tucson PR Firm,” Arizona poses Huge Costs on Workers and Federal and
Federal Reserve Bank of Chicago, October Daily Star, March 18, 2009, http://tinyurl.com/ State Treasuries,” National Employment Law
2014, http://tinyurl.com/h8xreoj. zm99hoa. Project, July 2015, http://tinyurl.com/zw3hnpn.
15 Oscar Perry Abello, “This ‘Gig Economy’ Firm 29 James Surowiecki, “The Underground Re- 43 Lawrence Mishel, “Gigs and robots, oh my!”

Prefers to Have Employees, Not Contractors,” covery,” The New Yorker, April 29, 2013, http://tiny Yumpu, Oct. 29, 2015, http://tinyurl.com/hmf8xc3.
Next City, Aug. 5, 2015, http://tinyurl.com/h2urjjr. url.com/jhx8fms. 44 Horowitz, op. cit., p. 8.
16 Noam Scheiber, “A Middle Ground Between 30 Scheiber, “A Middle Ground Between Con- 45 Robert S. Gould, A Jazz Lexicon (1964),

Contract Worker and Employee,” The New York tractor Worker and Employee,” op. cit. pp. 123-124.
Times, Dec. 10, 2015, http://tinyurl.com/hbz3ce2. 31 Mike Isaac, “Delivery Startups Face Road 46 Geoff Nunberg, “Goodbye Jobs, Hello ‘Gigs’:
17 Sarach Nassauer, “Wal-Mart Broadens Pay Bumps in Quest to Capture Untapped Market,” How One Word Sums Up A New Economic
Increase,” The Wall Street Journal, Jan. 23, 2016, The New York Times, Feb. 12, 2016, http://tiny Reality,” NPR, Jan. 11, 2016, http://tinyurl.com/
p. B1. url.com/hbybahz. hxkv8yo.
18 Micha Kaufman, “The Gig Economy: The Force 32 Abello, op. cit. 47 “AFL-CIO: A Brief History,” The Social Welfare

That Could Save the American Worker?” Wired, 33 For more information, see Patrick Marshall, History Project, http://tinyurl.com/hemrb8a.
September 2013, http://tinyurl.com/jp5qbg7. “Robotics and the Economy,” CQ Researcher, 48 “American Federation of Labor,” USHistory.
19 Sara Horowitz, The Freelancer’s Bible (2015), Sept. 25, 2015, pp. 793-816. org, http://tinyurl.com/8xy8rex.
pp. 2, 10-11. 34 Jillian D’Onfro, “Travis Kalanick says Uber 49 For background, see “The Homestead Strike,”
20 “Uber: The Driver Roadmap” Benenson Strat- needs self-driving cars to avoid ending up like The American Experience, PBS, http://tinyurl.
egy Group, January 2015, http://tinyurl.com/ the taxi industry,” Business Insider, Oct. 21, 2015, com/atcns. Also see “Homestead Strike,” His
gkrjmt8. http://tinyurl.com/pz5fg9h. tory.com, http://tinyurl.com/ccmlska.
21 Robert Reich, “Why the Sharing Economy 35 Harris and Krueger, op. cit., p. 5. 50 “Remembering the 1911 Triangle Factory Fire,”

is Harming Workers — and What Must Be 36 Ibid., p. 2. Cornell University, http://tinyurl.com/z3roruk.


Done,” RobertReich.org, Nov. 27, 2015, http://tiny 37 Arun Sundararajan,” Why the Government 51 “The Worst Day I Ever Saw,” U.S. Occupational

url.com/jle9e9n. Doesn’t Need to Regulate the Sharing Economy,” Safety and Health Administration, http://tinyurl.
22 Jeffrey Pfeffer, “The Case Against the Gig Wired, Oct. 22, 2012, http://tinyurl.com/h2lgd62. com/zgp7zpw.
52 “100 Years of the Moving Assembly Line,”

Ford, http://tinyurl.com/hphfu32.
About the Author 53 Ibid.
54 “Executive Order 10340: Directing the Sec-
Eugene L. Meyer, a former Washington Post reporter and
retary of Commerce to Take Possession of
editor, has contributed reports on media ethics and the rise
and Operate the Plants and Facilities of Certain
of citizen journalism to the Center for International Media As- Steel Companies,” The American Presidency
sistance. In addition, he has written articles for, among other Project, April 8, 1952, http://tinyurl.com/hzp
publications, The New York Times and U.S. News & World mxde.
Report and is editor of the quarterly B’nai B’rith Magazine. 55 Jerry Davis, “Capital markets and job creation

His most recent book, Chesapeake Country — Second Edition, in the 21st century,” Center for Effective Public
was published in March 2015. Management at Brookings Institution, Decem-
ber 2015, p. 2, http://tinyurl.com/go6rm68.

284 CQ Researcher
56 The National Science Foundation, the primary

governing authority over the Internet, did not


officially lift its ban on commercial activity until FOR MORE INFORMATION
1995. See Kevin Kelly, “We Are the Web,” Wired,
AFL-CIO, 815 16th St., N.W., Washington, DC 20006; 888-373-6497; www.aflcio.org.
August 2005, http://tinyurl.com/p2zdsbw. Largest federation of unions in the United States; advocates on behalf of workers.
57 “Why Does Outsourcing Work in Today’s

World?” Conversational Receptionists, http:// Brookings Institution, 1775 Massachusetts Ave., N.W., Washington, DC 20036;
tinyurl.com/guyjgvs. 202-797-6000; www.brookings.edu. Center-left think tank whose wide-ranging mis-
58 Scott Timberg, Culture Crash: The Killing of sion includes fostering the economic and social welfare of all Americans.
the Creative Class (2015), p. 73. Chapter 3, pp. Center for Economic and Policy Research, 1611 Connecticut Ave., N.W., Suite
73-83, “Of Permatemps and Content Serfs” specif- 400, Washington, DC 20009; 202-293-5380; https://cepr.net. Left-leaning think tank
ically addresses the challenges facing “all citizens that promotes democratic debate on the most important economic and social is-
of Freelance Nation.” sues affecting people’s lives.
59 Joshua Reeves, “The Rise of the 1099 Econ-

omy [Infographic],” Gusto.com, Dec. 11, 2014, Economic Policy Institute, 1333 H St., N.W., Suite 300, East Tower, Washington,
DC 20005-4707; 202-775-8810; www.epi.org. Liberal think tank that focuses on the
http://tinyurl.com/gq9qloj.
60 Dartagnan, “The Sharing Economy is Just needs of low- and middle-income workers.
Another Race to the Bottom,” Daily Kos, July 26, Freelancers Union, 408 Jay St., Brooklyn, NY 11201-5150; 718-532-1515; www.free
2015, http://tinyurl.com/zubo6h3, lancersunion.org. Advocates for the self-employed and provides networking oppor-
61 Klaus Schwab, “The Fourth Industrial Revo- tunities for its nearly 300,000 members; also markets health, life and disability in-
lution: What It means, How to Respond,” World surance policies.
Economic Forum, Jan. 14, 2016, http://tinyurl. National Employment Law Project, 1601 I St., N.W., Washington, DC 20006;
com/hmllz82. Also see “The Collaborative 202-887-8202; www.nelp.org. An advocacy organization for low- and minimum-
Economy Sets the Stage for Autonomous In- wage workers.
novation,” Crowd Companies, undated, http://
tinyurl.com/jauzv2v. R Street Institute, 1050 17th St., N.W., #1150, Washington, DC 20036; 202-525-
62 For peak unemployment, see Andrew Sum 5717; www.rstreet.org. A conservative, coalition-building think tank dedicated to
et al., “The Great Recession of 2007-2009: Its
free market solutions.
Post-World War II Record Impacts on Rising
Kansas City Star, May 22, 2015, http://tinyurl. 78 Uberlawsuit.com contains links to complaint
Unemployment and Underutilization Problems
Among U.S. Workers,” Center for Labor Market com/zfxke55. against Uber. See p. 5 of Douglas O’Connor,
71 Megan Geuss, “Uber drivers are employees, Thomas Colopy, Matthew Manahan, and Elie
Studies, June 2009, http://tinyurl.com/hdmtewe.
For January 2016 unemployment, see Nelson California Labor Commission ruling suggests,” Gurfinkel v. Uber Technologies, Inc., http://tiny
D. Schwartz, “Wages Rise as U.S. Unemploy- ArsTechnica, June 17, 2015, http://tinyurl.com/ url.com/hwy6ldj.
htmrzee. 79 Tracey Lien, “Meet the Attorney Suing Uber,
ment Rate Falls Below 5%,” The New York
72 Daniel Beekman, “Seattle first U.S. city to Lyft, GrubbHub and a dozen California Tech
Times, Feb. 5, 2016, http://tinyurl.com/jsow293.
63 Chuck Ross, “Bernie Sanders Says ‘Real’ give Uber, other contract drivers power to Firms,” Los Angeles Times, Jan. 24, 2016, http://tiny
Unemployment Rate Is Actually 10.5 Percent, unionize,” The Seattle Times, Dec 14, 2015, http:// url.com/h6srv62.
tinyurl.com/h5b3jpt. 80 Sarah Kessler, “The Gig Economy Won’t Last
DOUBLE The Official Rate,” The Daily Caller,
73 Taylor Soper, “Uber asks City of Seattle to Because It’s Being Sued To Death,” Fast Com-
with video, July 6, 2015, http://tinyurl.com/
jv3c3gp. follow 4 ‘key principles’ when crafting driver pany, Feb. 17, 2015, http://tinyurl.com/m2b9
64 Poole, op. cit. union law,” Geekwire, Feb. 29, 2016, http://tiny pop.
65 “The Slow Recovery of the Labor Market,” url.com/zs5ou3y. 81 Noam Scheiber, “Uber Drivers and Others
74 According to the Freelancers Union, 71 per- in the Gig Economy Take a Stand,” The New
Congressional Budget Office, February 2014,
p. 2, http://tinyurl.com/h5mh5vc. cent of freelancers will experience late or non- York Times, Feb. 2, 2016, http://tinyurl.com/
66 Schwartz, op. cit. payment for work during their career. The zkqps7p.
67 Rosalind S. Helderman, “Uber pressures bill, introduced Dec. 7, 2015, can be found 82 Harris and Krueger, op. cit.

at http://tinyurl.com/jqs4cqq. 83 “This is Your Life in 10 Years Time,” What’s


regulators by mobilizing riders and hiring vast
75 David McCabe, “Sanders has ‘serious prob- the Future of Work? (WTF?), Nov. 24, 2015,
lobbying network,” The Washington Post, Dec.
13, 2014, http://tinyurl.com/zud4n3z. lems’ with Uber,” The Hill, Aug. 6, 2015, http://tiny http://tinyurl.com/zb8k695.
68 Alison Griswold, “Uber’s Siege on San Antonio,” url.com/hgl7qxm. 84 “GE Global Innovation Barometer,” GE Re-
76 Ned Resnikoff, “Bernie Sanders proposes ports, Jan. 19, 2016, http://tinyurl.com/hur2moj.
Slate, Oct. 16, 2015, http://tinyurl.com/oyq8n2h.
69 Andy Vyong, “Colorado likely first to legislatively sweeping labor law reforms,” Aljazeera America, 85 Carl Benedikt Frey and Michael A. Osborne,

authorize ride-share services,” The Denver Post, Oct. 6, 2015, http://tinyurl.com/oyh2ru4. “The Future of Employment: How Susceptible
77 Noam Scheiber, “Budget Seeks to Ease Economic Are Jobs to Computerisation?” University of Ox-
April 29, 2014, http://tinyurl.com/zfumg26.
70 Bryan Lowry, “Uber is back in Kansas after Fears for U.S. Workers,” The New York Times, ford, Sept. 17, 2013, http://tinyurl.com/oj67kae.
Feb. 9, 2016, http://tinyurl.com/hf2jhql. 86 Kaufman, op. cit.
Gov. Sam Brownback signs bill into law,” The

www.cqresearcher.com March 18, 2016 285


Bibliography
Selected Sources
Books Hiltzik, Michael, “How the Uberization of work is rooted
in the cult of ‘shareholder value,’ ” Los Angeles Times,
Chase, Robin, Peers Inc: How People and Platforms Are Jan. 5, 2016, http://tinyurl.com/zuk68ns.
Inventing the Collaborative Economy and Reinventing A columnist challenges the notion of large corporations as
Capitalism, Public Affairs, 2015. “job creators,” asserting that full-time job security has fallen
The co-founder of Zipcar offers an expansive vision of the victim to a bottom-line mentality.
collaborative economy.
Kaufman, Micha, “The Gig Economy: The Force That
Hill, Steven, Raw Deal: How the “Uber Economy” and Could Save the American Worker?” Wired, 2013, http://tiny
Runaway Capitalism Are Screwing American Workers, url.com/jp5qbg7.
St. Martin’s Press, 2015. The co-founder and CEO of Fiverr, an online marketplace,
A senior fellow with the New America think tank calls the argues that the gig economy will help workers by encouraging
so-called sharing economy the “latest economic fraud” spurred creativity and initiative.
by Silicon Valley technology.
Kreider, Benjamin, “Risk Shift and the Gig Economy,”
Horowitz, Sara, with Toni Sciarra Poynter, The Freelancer’s Economic Policy Institute, Aug. 4, 2015, http://tinyurl.
Bible: Everything You Need to Know to Have the Career com/z2ts2mg.
of Your Dreams — On Your Terms, Workman Publishing, A writer for a think tank affiliated with labor unions explores
2012. how the on-demand economy has shifted economic risk from
The founder of the Freelancers Union offers a prescription management to workers.
for economic survival in a dramatically changed economic
landscape and suggests legislative changes to protect freelance Schieber, Noam, “Solo Workers Unite to Tame Their Gig
workers. Jobs,” The New York Times, Feb. 3, 2016, http://tinyurl.
com/hmmzn3c.
Schor, Juliet B., True Wealth: How and Why Millions of Independent workers in the gig economy increasingly are
Americans Are Creating a Time-Rich, Ecologically-Light, joining to protest what they regard as inadequate compen-
Small-Scale, High-Satisfaction Economy, Penguin Press, 2011. sation and unjust controls over the terms of their app-based
A professor of sociology at Boston College offers an upbeat, services.
early assessment of workers diverging from the “work-and-
spend cycle” to a world of “time, creativity, information and Reports and Studies
community.”
“Contingent Work Force: Size, Characteristics, Earnings
Weil, David, The Fissured Workplace: Why Work Became and Benefits,” U.S. Government Accountability Office,
So Bad for So Many, Harvard University Press, 2014. April 2015, http://tinyurl.com/jq3sta2.
A Boston University economics professor provides an historic Congress’ investigative arm analyzes the size and state of
overview of the reasons for changes in corporate strategies the contingent workforce.
that resulted in greater outsourcing of work.
Davis, Jerry, “Capital markets and job creation in the
Articles 21st century,” Brookings Institution, December 2015,
http://tinyurl.com/jdmpmlr.
Crichton, Danny, “Technology can reduce wage theft A professor of management at the University of Michigan
while making work more flexible,” National Review, argues that the rise of the gig economy is directly tied to
Feb. 23, 2015, http://tinyurl.com/jo27px8. corporate changes that policymakers must recognize in order
A doctoral student in labor economics says widespread to foster job creation.
wage theft — the failure of employers to pay workers what
they are entitled to — can be addressed by reforming labor Harris, Seth D., and Alan B. Krueger, “A Proposal for
laws to reflect the new on-demand economy. Modernizing Labor Laws for Twenty-First-Century Work,”
The Hamilton Project, December 2015, http://tinyurl.com/
Greenhouse, Steven, “Uber: On the Road to Nowhere,” ht56lhm.
The American Prospect, Winter 2016, http://tinyurl.com/ A professor of labor relations at Cornell University (Harris)
p4qny6g. and a professor of economics at Princeton University (Krueger)
A former New York Times labor reporter and current visiting propose ways for independent workers to retain rights and
researcher at the Russell Sage Foundation argues that the benefits.
gig economy is shortchanging workers.

286 CQ Researcher
The Next Step:
Additional Articles from Current Periodicals
Benefits Startup cleaning company Homejoy closed in July 2015
amid a weak investment funding round after four former
Hempel, Jessi, “Gig Economy Workers Need Benefits workers filed separate lawsuits against the company charging
and Job Protections. Now,” Wired, Jan. 4, 2016, http://tiny it had classified them as contractors rather than employees.
url.com/hhc9e8o.
Seattle lawmakers and members of Congress propose legislation Farivar, Cyrus, “Woman sues startup Handy, says she
that would give gig economy workers access to health in- was paid $14 for working over 30 hours,” ArsTechnica,
surance, job benefits and collective bargaining rights. July 9, 2015, http://tinyurl.com/q6du9uf.
Workers for housecleaning startup Handy sued the company
Weise, Elizabeth, “No more independent contractors for in federal court for requiring them to work to pay off initial
this gig economy startup,” USA Today, Jan. 21, 2016, supply costs without classifying them as employees.
http://tinyurl.com/jx4dhdb.
San Francisco-based cleaning company Honor made its Stangler, Cole, “Lyft ‘Dodges A Bullet’ In Worker Lawsuit,
workers, all of whom were independent contractors, full- But Uber May Not Be As Lucky,” International Business
time employees with benefits to create more stable client Times, Jan. 28, 2016, http://tinyurl.com/hcj8apz.
relationships and improve worker training. Ride-hailing company Lyft agreed to pay $12.3 million in
a settlement with drivers who sued the company in federal
White, Jeremy B., “Laborers in modern economy drive court for not classifying them as employees.
legal, political battle over the nature of work,” The
Sacramento Bee, Feb. 8, 2016, http://tinyurl.com/zhnasj2. Temp/Staffing Agencies
A California Assembly member proposed a bill that would
allow gig workers to bargain with companies for benefits, Kessler, Sarah,“A Look At The Temp Agencies Of The Future,”
a proposal that ride-hailing company Lyft has supported in Fast Company, Oct. 16, 2015, http://tinyurl.com/ja67zuj.
part by endorsing “portable” benefits that workers could Staffing startups such as Wonolo and BlueCrew allow em-
retain while working for multiple companies. ployers to hire temporary workers on-demand using smart-
phone apps, rather than through staffing agencies.
Income
Scheiber, Noam, “Labor Department Clarifies Employment
Barker, Tim, “Piecing together a living through the Gig Guidelines,” The New York Times, Jan. 20, 2016, http://
Economy,” The St. Louis Dispatch, Sept. 6, 2015, http://tiny tinyurl.com/jrr2jxn.
url.com/hcp5vg3. The U.S. Department of Labor issued guidance on when a
Americans without full-time jobs who support themselves company working with a temp or staffing agency is liable for
through the gig economy can risk forgetting to save for re- violating labor laws and which entity — the company or the
tirement or pay taxes. agency — must pay for employees’ recovered wages in disputes.

DiStefano, Joseph N., “The gig economy changes work life CITING CQ RESEARCHER
under the radar,” The Philadelphia Inquirer, March 6, 2016,
Sample formats for citing these reports in a bibliography
http://tinyurl.com/jl8matw.
Most people who use apps to rent out their homes or pick up include the ones listed below. Preferred styles and formats
a passenger generate only a small share of income through these vary, so please check with your instructor or professor.
services, according to a report by Wells Fargo’s chief economist.
MLA STYLE
Zipkin, Amy, “The Sharing Economy Attracts Older Jost, Kenneth. “Remembering 9/11.” CQ Researcher 2 Sept.
Adults,” The New York Times, Sept. 25, 2015, http://tinyurl. 2011: 701-732.
com/j4x4xzw.
Many retired Americans are arranging gig work through online APA STYLE
platforms, rather than by taking part-time jobs, to make money
Jost, K. (2011, September 2). Remembering 9/11. CQ Researcher,
or to stay active while maintaining flexible schedules.
9, 701-732.
Lawsuits CHICAGO STYLE
DeAmicis, Carmel, “Homejoy Shuts Down After Battling Jost, Kenneth. “Remembering 9/11.” CQ Researcher, September
Worker Classification Lawsuits,” Re/Code, July 17, 2015, 2, 2011, 701-32.
http://tinyurl.com/pyltu8f.

www.cqresearcher.com March 18, 2016 287


In-depth Reports on Issues in the News

?
Are you writing a paper?
Need backup for a debate?
Want to become an expert on an issue?
For 90 years, students have turned to CQ Researcher for in-depth reporting on issues in
the news. Reports on a full range of political and social issues are now available. Following
is a selection of recent reports:
Civil Liberties Education Health/Safety
Privacy and the Internet, 12/15 Free Speech on Campus, 5/15 Virtual Reality, 2/16
Intelligence Reform, 5/15 Teaching Critical Thinking, 4/15 Vaccine Controversies, 2/16
Religion and Law, 11/14 Race and Education, 9/14 Fighting Cancer, 1/16
Dietary Supplements, 10/15
Crime/Law Environment/Society Doctor Shortage, 8/15
Restorative Justice, 2/16 Racial Conflict, 1/16
The Dark Web, 1/16 Religious Freedom, 1/16 Politics/Economy
Immigrant Detention, 10/15 Transgender Issues, 12/15 Arbitrating Disputes, 3/16
Fighting Gangs, 10/15 Air Pollution and Climate Change, 11/15 U.S.-Iran Relations, 3/16
Reforming Juvenile Justice, 9/15 Housing Discrimination, 11/15 Unrest in Turkey, 1/16
Police Tactics, 12/14 Marijuana Industry, 10/15 Robotics and the Economy, 9/15
Campus Sexual Assault, 10/14 Far-Right Extremism, 9/15 European Migration Crisis, 7/15

Upcoming Reports
Defeating ISIS, 4/1/16 Western Lands, 4/8/16 Disappearing Middle Class, 4/15/16

ACCESS
CQ Researcher is available in print and online. For access, visit your
library or www.cqresearcher.com.

STAY CURRENT
For notice of upcoming CQ Researcher reports or to learn more about
CQ Researcher products, subscribe to the free email newsletters, CQ Re-
searcher Alert! and CQ Researcher News: http://cqpress.com/newsletters.

PURCHASE
To purchase a CQ Researcher report in print or electronic format
(PDF), visit www.cqpress.com or call 866-427-7737. Single reports start
at $15. Bulk purchase discounts and electronic-rights licensing are
also available.

SUBSCRIBE
Annual full-service CQ Researcher subscriptions—including 44 reports
a year, monthly index updates, and a bound volume—start at $1,131.
Add $25 for domestic postage.

CQ Researcher Online offers a backfile from 1991 and a number of


tools to simplify research. For pricing information, call 800-818-7243 or
805-499-9774 or email librarysales@sagepub.com.

You might also like