Labor in the sharing economy

There is much to like in this article “In the Sharing Economy, Workers Find Both Freedom and Uncertainty” by Natasha Singer.

The best part has to be this quote and parenthetical comment from the author:

“These are not jobs, jobs that have any future, jobs that have the possibility of upgrading; this is contingent, arbitrary work,” says Stanley Aronowitz, director of the Center for the Study of Culture, Technology and Work at the Graduate Center of the City University of New York. “It might as well be called wage slavery in which all the cards are held, mediated by technology, by the employer, whether it is the intermediary company or the customer.”

(Disclosure: For two weeks in the summer of 1988, I had a gig as the au pair for Professor Aronowitz’s daughter, then a toddler.)

Despite getting quotes from a labor economist (though certainly not a mainstream one), the article fails to mention several ideas from labor economics that seem quite relevant to understanding these marketplaces.

1. Most of the work being done through these platforms is paid work that probably would not have occurred without the changes in technology that lowered market transaction costs.

Obviously people have been hiring drivers, getting houses cleaned, having packages delivered, etc., for a long time before these platforms sprung up. However, in earlier times, the transaction costs associated with hiring someone to do this stuff was high. As a result, people wanting these kinds of services either hired a firm if they *really* needed the service—but more commonly, either did it themselves or went without. I suspect that most of the sharing economy labor is “new” work (i.e., the buyers would have gone without or done it themselves) rather than labor that is just shifted around.

2. Wages in these markets are almost certainly determined by supply and demand. 

These are marketplaces where decentralized, individual buyers and sellers make decisions about one-off, spot transactions. We might not like the allocation that results—and the lingering effects of the great recession probably have lead to markets with more supply than demand—but it is useful to appreciate where prices are coming from and regard them as prices. When we think of them as prices, it becomes easier to think about what different policies are likely to do.

3. Wages in these markets are probably artificially high.

Most of these platforms making money by taking some percentage of each labor transaction, they have an incentive to tilt the platform—through policies, recommendations, search algorithms and so on—in favor of the worker.

4. When we observe people making a choice between several options without coercion, it probably means they value whatever option they selected more than their next best option.

When we see someone working as a TaskRabbit, Lyft Driver, Postmates delivery person etc., they value everything about that job, positive and negative, more than their next best option. It would be great if they had a better option—and presumably many people doing this kind of work are looking for or trying to create other options—but you aren’t going to make them better off by foreclosing the option they already have.

5. Workers “pay” for amenities (through lower wages) and are paid for disamenities (through higher wages).

People often fail to see this because sometimes high-paying jobs also come with a nice set of amenities—think free food and pleasant offices at a tech company and low-paying jobs have disamenties—loud, noisy workplaces, irregular hours, shift work and so on. However, these comparisons are deeply misleading, in that they compare very different labor markets.  We can see the point about “paying” for amenities & disamenities by  imagining the same job in the same industry, but varying its attributes. If, for some reason, Google offices absolutely had to have a loud industrial turbine right near where the programmers sat and the office was dusty and hot, Google jobs would pay even more. Similarly, if a fast food place can make the job more valuable (and hence pay lower wages) by letting workers take food at the end of their shift, they will (and do).

6. Workers sort into jobs that offer the collection of amenities and disamenities that are particularly attractive to them. 

Being a Lyft driver sounds like hell to me—I hate driving, have a bad sense of direction and making small talk is not something I enjoy. There are plenty of people that like driving, have a great sense of direction and love chatting/meeting new people. These are the people that will “sort” into being a Lyft driver. Similarly, workers that want lots of flexibility, have a taste for variety in tasks and so are going to be much more open to these kinds of informal work arrangements.