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Envisioning Government’s role in the Gig Economy

-- By MarvinGalloway - 16 Apr 2021

Status Quo

The recent vote by Alabama based Amazon workers to not form a Union, as well as the enaction of Proposition 22 in California has raised questions regarding the role that Government should play in regulating jobs created by internet platforms. Proponents of utilizing the current industry standard, independent contractor type relationships for workers of the platform economy, have advocated that numerous positives are facilitated by such.

Efficient Allocation

Near endless matching opportunities allow for a much more efficient allocation of time, resources, and labor for both service providers and customers. While customers are able to access a large pool of talent for various kinds of undertakings, ranging from mundane tasks to the solving of complex problems. Workers also enjoy increased flexibility in choosing the type of work to do, where to complete it, and when to do so. The formation of loose teams that work on microtasks can facilitate collaboration in ways that have not been observed before due to the relative ease in which individuals are connected and resources allocated. Furthermore, these loose teams can be broken up and reassembled depending on the tasks and nature of work without requiring extensive training or contracting as was traditionally the case in larger corporations where workers served as employees and could not collaborate with such ease.

Worker's Rights

Contrary to these sentiments are the critics of platform-based independent contractor status for service providers. Some fear that the value of the actual work being done may be lessened by breaking up tasks and disassociating workers from the actual product or nature of the work. In terms of transportation or delivery-based services in particular, power imbalances between the intermediary and the providers are often a source of concern. While Uber and Lyft driver for example are able to choose when and where to work, they rarely receive any type of training and usually no form of benefits. Furthermore, they are unable to negotiate their own prices as the intermediary possesses unilateral control over fee structures. The intermediaries in a way surveil the work of the drivers with little transparency and no broad legal protections when it comes to de facto terminations of the work relationship, namely account deactivations.

Where does it lead?

Thus, a main concern discussed in academic and popular discourse is the apparent creation of a new type of labor class, focusing on the tasks that wealthier constituents tend to outsource, that allows for little social mobility. Some have even dubbed the Gig economy, or on-demand economy, the “delivers to the rich economy.” The use of standardized labor combined with extensive control over the work and work product may seem not too dissimilar from regular work in employer-employee relationships, but the crucial point here is that independent contractors lack most if not all of the rights and benefits afforded to employees.

Reforming the Gig Economy

To combat this development, some have suggested the creation of a new category for workers, settled somewhere between employee status and independent contractor status. This proposed new status would assign some of the protections and rights that employees traditionally receive to these types of workers without forcing employers to grant them more burdensome benefits. The status of independent worker has gained some traction as a policy proposal even though its implementation has been derailed by the recent referendum in California. However, because of Proposition 22’s prominence, and the shift of the discussion into the national spotlight combined with the relative growth of platform-based contracting, it could gain some momentum once again.

A new status

The proposed new status suggests that independent workers would be those that control when, where, and how long they work, additionally to controlling the manner in which they do so. It would cover many of the new jobs created by the gig economy while also applying to some traditional workers, primarily those that retain control over their work without being able to partake in arms-length bargaining with the intermediary or the customer. The proposal would also give these workers certain protections and collective bargaining rights as well as some sort of contributions for Medicare programs and social security purposes. It would, however, not force the intermediary to pay minimum wage or unemployment insurance as they would still lack significant control over the independent workers time and efforts.

Sober optimisim

With an increasingly connected global economy, a more digitalized business landscape, and the availability of a much larger talent pool all around the world, corporations and individuals will without a doubt look towards outsourcing many complex and difficult problems to platforms that allow them to connect with highly skilled experts or lower-skilled low-cost laborers. It may then be of significant importance to reconcile the increased flexibility that platform-based contracting provides with the fears and concerns that accompany this development. A balanced approach allowing for increased collaboration, efficient allocation of resources, and incentives for innovation, paired with mindful opportunities for workers in areas such as benefit accumulation and participation then has the ability to shape the future of work as we know it and modernize the business landscape of the twenty-first century.

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