The gig economy and the future of work

by John Quiggin on February 3, 2018

One of the things I do from time to time is write submissions to public inquiries, mostly those of our Senate, which has a committee system loosely modelled on that in the US. I’ve had a run of them lately, appearing (by teleconference) before two of them this week and making a submission to a third. The first two, on the Northern Australia Infrastructure Facility (a slush fund that may be used to finance coal projects) and one on the problems of vocational education

In addition, i completed a submission to the inquiry into the Future of Work and Workers, which is now available on the inquiry website. The submission is about the way in which technology and labor market institutions have interacted to generate the “gig” economy of insecure employment, continuously threatened by technological disruption. The key point is that decades of anti-union and anti-worker legislation and state action have created a situation where technological change is likely to harm rather than help workers. A summary is over the fold

Summary

  • Job losses and disruptive changes to working life arise from an interaction between technological change and labour market structures. To understand, and more importantly to improve, the future of work and workers it is necessary to understand both of these factors and the way they interact
  • Technological change has taken place consistently over the 250 years since the beginning of the Industrial Revolution (commonly dated to the invention of the spinning jenny by James Hargreaves in 1764). There is no evidence that the pace of technological progress has accelerated, but technical change is increasingly associated with information and communications technology (ICT)
  • Technological change has been beneficial on the whole, but there have been many occasions where the interaction of technological change and labour market structures has harmed workers
  • Changes in the structure of labour markets and in labour market law since the 1970s have predominantly had the effect of weakening unions and reducing protections available to workers
  • The adverse effects of these changes are not always apparent immediately, but are felt in periods of disruption, such as those arising from rapid technological change. In such periods, the weaker position of workers means that they receive few of the benefits of productivity growth, but rather face the loss of jobs and of established working conditions.
  • The shift of the balance of bargaining power to employers has contributed to poor work life balance. The period from 1850 to 1980 saw steady reductions in standard working hours and more flexibility in the choices available to workers. Since 1980, the decline in full-time working hours has been halted and partially reversed, while employers have gained flexibility at the expense of workers.
  • The ‘gig economy’ is not new, and is the predictable outcome of enhanced employer power. Technological disruption simply acts as a catalyst, breaking down existing patterns of work, and facilitating a shift towards arrangements more favorable to employers.

  • The potential social benefits associated with technological innovations will only be realised if policies are changed so that a fair share of these benefits goes to workers
  • Full realization of the benefits of technological progress would require a situation where paid work is a free choice rather than, as at present, either a necessity or (in situations of high unemployment) an impossibility. The policies required to achieve this goal should include a Jobs Guarantee and some form of Participation Income. In the longer term, these could be extended to an unconditional Guaranteed Minimum Income or Universal Basic Income.


{ 25 comments }

1

nastywoman 02.03.18 at 3:21 am

The Summary for ”Predominant Producing Countries” -(like Germany, Japan or China) has to look quite different as the summary for Predominant Consuming Countries -(like the US or Australia?) As economies with a strong manufacturing base – still (have to) offer their workers ”stable and secure” jobs – in order to produce successfully.

And so the gig-economy – with it’s truly ”a-social” and ”insecure” job markets was mainly created by the changes of once pretty well balanced economies with a high percentage of manufacturing – to economies where the service industry plays a far too important role in creating terrible gig-jobs.

It’s like joking that one day every American will be an Uber-Driver – driving other Americans around in cars the Producing Countries supply.

And for sure decades of anti-union and anti-worker legislation and state action have in the US and the UK -(and Australia) created a situation where technological change is likely to harm rather than help workers – BUT economists who propagated – that ”producing” or ”manufacturing” in the future should be left to countries wich could produce ”cheaper” than US are nearly as guilty – or perhaps more so – as they broke a lot of proud workers back.

And about some ”Full realization of the benefits of technological progress” – used by sophisticated workers) – that would require for every -(anti-manufacturing) economists to at least once visiting a factory for sophisticated Coffee Machines or the Urus Factory in Sant’Agata in Italy.

2

Karen 02.03.18 at 3:51 am

One aspect of the gig economy that’s often overlooked is the long term impact on superannuation. Since contract workers have no mandatory superannuation guarantee contributions, they are more likely to have inadequate super balances at retirement. A shift away from traditional employment could result in increased reliance on the Age Pension.

3

John Holbo 02.03.18 at 5:03 am

Needs a soundtrack:

4

John Quiggin 02.03.18 at 5:32 am

@3 Great! If the CT collective can provide backing vocals, this gig will really rock.

5

John Holbo 02.03.18 at 6:10 am

Maybe there’s an app for that? for hiring local people to sing Pink Floyd covers on a moment’s notice? There could be congestion pricing – or, rather, vocal chord tension pricing. Higher tension, higher price. So it’s pretty cheap to get someone to sing some simple old Syd track like “Lucifer Sam” or “I’ve got a bike”. But it would cost a lot for a cover of “Gig” in the gig economy.

6

Layman 02.03.18 at 10:53 am

One thing worth considering is the ongoing tug-of-war within large US corporations over who is management and who is labor. In recent decades organizations have sought to define the boundary down, shifting people from hourly rates to salaries for the purposes of extracting more hours of work from them at no additional cost. I recall countless examples from my own career where HR and finance would debate the nature of the work being done for the purposes of determining whether it ought to be classed as salaried work or hourly work. Why are employees who write code salaried rather than paid an hourly wage? When did data center operators become management? You only have to look at the differences in hours worked by management vs. labor to see why.

http://news.gallup.com/poll/175286/hour-workweek-actually-longer-seven-hours.aspx

7

Lee A. Arnold 02.03.18 at 11:05 am

John, you write, “There is no evidence that the pace of technological progress has accelerated…” Do you have any pointers to the literature on the velocity of technological progress?

8

nastywoman 02.03.18 at 12:48 pm

@3
”Needs a soundtrack”

Yeah!
The sound of the Collaborative Screwing System!!
(youtube/Lamborghini Factory In Sant’Agata Bolognese/)

9

Glen Tomkins 02.03.18 at 3:10 pm

Layman @6,

We’re all Stakhanovites now! You too can win the coveted medal for being a Hero Manager of the Corporate Hegemony, but only by putting in 20-hour workdays, seven days a week.

Never accuse the Hegemony of failing to learn from all historical examples. Hero Owners!

10

bruce wilder 02.03.18 at 4:25 pm

It is an interesting rhetorical straddle JQ has going: on the one hand, agency is assigned to innocent and diffuse abstractions: “technology and labor market institutions have interacted to generate the “gig” economy of insecure employment” and on the other hand, the operation of political power has something to do with it: “decades of anti-union and anti-worker legislation and state action have created a situation where technological change is likely to harm rather than help workers.”

The proposed “solution” is a policy of abstract technocratic purity — a jobs guarantee combined with participation income evolving to a universal basic income. No word on where the spirit of pro worker laws is to come from, but never mind that detail, never mind any detail of how income, wealth and power is distributed by the operation of a complex, financial and hierarchical and technological economy. A technocracy will send everyone a check, that will upend bargaining in the mythical “labor market”, problem solved.

“Markets in everything” and trust the technocrats — isn’t that the same style of neoliberal prescription that got us to the insecurity of the gig economy? Are we to vote for the lesser evil until welfare as we never knew it stages a spontaneous comeback?

I am not unsympathetic to the position JQ finds himself in here. He is asked, as an expert (hence an academic representative of the Technocracy) to address problems already deliberately framed to obscure their nature as a political struggle over the distribution of income. He is not a new John Bunyan choosing Accelerating Technological Change as the reified Agent and Architect of the New Economy of Inequality for a 21st century allegory. This allegory is the premise adopted by his inquisitors, politicians who fumble and bumble the legislation that enables the diversion of income upward. And, his uncomfortable straddle is the result of trying to step away from this preposterous premise of his inquisitors toward reality, where policy matters and has consequences.

Still, although JQ nods in the direction of reality with acknowledgement of “decades of anti-union and anti-worker legislation and state action”, he ends by offering the blue pill.

Those decades of neoliberal policy changing countless details of the economy’s institutional structure to send income to the 0.1% are not going to be reversed by a deus ex machina of redistribution downward without a political revolution to take command of the state, assuming states even have sufficient power today — an increasingly dubious assumption as neoliberalism transitions toward neofeudalism. And if We The People did command the state, why wouldn’t we tackle the detailed restructuring of the institutional economy? Isn’t that what is necessary? If that is what is necessary, and we do not have the imagination or experts to do what is necessary in detail, then aren’t we trapped by that poverty of imagination and expertise? We have to ask for the blue pill, because we can not handle the red pill?

I see an uncomfortable parallel between the attractions of an UBI as a policy salient and proposals for carbon pricing schemes as an approach to solving the problems that are leading to catastrophic global warming. The abstract idealism is similar, and the faults that flow from it are similar: the unwillingness to confront the essential problem of organizing political power and making power work.

11

peter 02.03.18 at 6:40 pm

@nastywoman:

It is not obvious to me that all gig economy jobs are terrible. The insecurity of tenure of partners in commercial law firms or barristers in shared chambers strike me as gig economy jobs that have been around a few centuries. When not out of work, such people may do very well indeed.

12

John Quiggin 02.04.18 at 1:09 am

“agency is assigned to innocent and diffuse abstractions:”

Say what? I named specific anti-union laws and policies, and the leaders of the governments that introduced them. Or did you just read the summary?

13

bruce wilder 02.04.18 at 2:06 am

JQ @ 12

My comment turned on the juxtaposition of “technology and labor market institutions have interacted” (aka assigning agency to diffuse abstractions) with “decades of anti-union and anti-worker legislation” (aka the definite operation of political power). I attributed the former frame to your inquisitors and the latter to your own hand and endorsed the latter. I don’t know what you think you have found to complain about.

14

John Quiggin 02.04.18 at 3:13 am

BW@13 Due to an editing problem, the link to the full submission was obscured. It’s there now. If you read it, I think you’ll see the grounds of my complaint.

15

nastywoman 02.04.18 at 5:15 am

@11
”It is not obvious to me that all gig economy jobs are terrible.”

that is true – as just two days ago I met this lawyer whose favorite ”gig” it is – to put a dress and a whig on and sing: ”I will survive” in a bar on SoBe – BUT if ”the future of work” for the majority of workers is one ”gig” after another -(without music) it’s truly ”terrible” and everybody who still wants to have a ”decent, steady and secure job” -(with real ”unlimited working contracts”) – might have to move to countries – where there are still plenty of those… NOT GIGS are around?

16

J-D 02.04.18 at 5:38 am

bruce wilderIt is comical to find you complaining about somebody else’s deployment of diffuse abstractions, deploying (as usual) diffuse abstractions as you do so.

17

Faustusnotes 02.04.18 at 10:52 am

Bruce wilder, once you seize the state how are you going to solve global warming? Please explain without abstractions.

18

Omega Centauri 02.04.18 at 4:31 pm

In the tech world, the gig as trial employment has become popular with employers, so much so that many compSci graduates spend their first six months as a contractor, and may or may-not be offered a permanent position afterwards. It has become a way for employers to shed some of their hiring risk.

Even those who get well-paid gigs, there is still a level of insecurity, usually when a firm goes into a workforce shrinking mode, it is the contractors who go first. And if you are looking for a home to buy, or an apartment to rent, the first thing lenders or rentiers look for is proof of secure income, so you can be left out in the cold.

19

nastywoman 02.04.18 at 4:39 pm

And as the economies of the ”Predominant Producing Countries” are booming – and their ”future of work” is currently threatened by the inability to find or educate enough ”experienced workers” – some ”unwillingness to confront the essential problem of organizing political power and making power work” might have to do with the fact that the workers in such countries are far to busy to ”produce stuff”?

Which could bring us to ”psychological” problem of ”an unconditional Guaranteed Minimum Income or Universal Basic Income”.

It’s a great idea – if it would solve at the same time the problem that ”workers” -(and even I – ME) seem to need some type of… purpose?… or should we call it ”a GREAT jobs” -(and NOT some f… nerve-wrecking gigs) – in order NOT to swallow too many pain pills or to avoid some ”opioid epidemic”.

And so – the goal of including a Jobs Guarantee -(of GREAT jobs) – or some form of Participation Income sounds like… ”the best deal”?

20

nastywoman 02.04.18 at 4:55 pm

And for all the ”amateur socialists” on CT -(including Mr. Wilder??) – please never ever forget that it was a ”philosophy” of the ”Helden der Arbeit” – which celebrated ”Arbeiter” workers and their work -(aka ”producing good stuff”) – and which made sure – that countries like Germany never forget to honor it’s manufacturing and industrial base and where – still to these day to be a ”Bosch” or ”Daimler” or ”Porschearbeiter” can be a far more respected line -(or future) of work than hanging out in a bank – and gambling with ”the dough”?

21

Collin Street 02.04.18 at 8:33 pm

And if you are looking for a home to buy, or an apartment to rent, the first thing lenders or rentiers look for is proof of secure income, so you can be left out in the cold.

See, nobody’s acting “wrongly”, is the point. Structural problems are de-located like electrons in benzine; they exist, but at no specific point.

[people who sign up for the Right are people who can’t conceive of problems that can’t be sheeted home to specific individualised failure; they can’t solve systemic issues because they can’t see how they can happen]

22

Collin Street 02.05.18 at 7:15 am

I started to look at the fields that currently people make decent money in gig-economy work, and…
+ speciality lawyers, engineers, computer people
+ performers of all sorts, including sportspeople
+ event planners
+ designers of some but not all sorts
+ the building trades generally
+ various sorts of maintenance and mechanical-repair work
+ medical fields of all sorts

There’s two commonalities I can see:
+ they’re all extremely skilled; multiple years of training and a need for constant practice
+ they aren’t things that get needed constantly.

I’m not sure what this means, exactly. Maybe I’ll think of something later.

23

TM 02.05.18 at 11:07 am

Layman 6: “In recent decades organizations have sought to define the boundary down, shifting people from hourly rates to salaries for the purposes of extracting more hours of work from them at no additional cost.”

It’s also relevant that this increasingly meaningless distinction between salaried and hourly workers is often used to define the “working class”. The left shouldn’t fall into that trap.

Also, I hope people remember that Obama tried to restore the right to overtime pay to millions of American workers. And remember who blocked it: Republican state governments, the Chamber of Commerce, and Trump.

24

Collin Street 02.06.18 at 2:10 am

Aha. Fields where gig-type work is established/profitable are those where people aren’t reasonable substitutes for one another. Specialist lawyers etc don’t actually compete.

(See anime animation, where the model that delivers living wages for the stars delivers pin-money to the less distinguished)

25

Stephen 02.06.18 at 8:40 pm

Collin Street@24

So you think one carpenter, bricklayer, mechanic can’t substitute for another? Sometimes of course they can’t. I remember one building site where there was a very tricky piece of bricklaying and work was held up till the local man who could do it was free. But in general …

And are there really aspects of law where there’s only one lawyer who could do it? No competition even in specialised fields?

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