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The Gigged Economy: Unemployment Numbers Are Fake News

It's not your imagination. The economy is rigged by those at the top.

I’ve been wondering about how it is that we are reportedly near full employment and yet no one seems to be making more money, no one is getting raises. It doesn’t make sense to me that employers are not increasing salaries hoping to retain employees. Everything about the economics of right now seems off script to me.

Further down the dictionary’s definition of gig is this one: a harpoon-like device used for catching fish or frogs. So I was thinking about the verb To Gig as I read the economy deep-dive email thingie from Axios, which is in many separate parts and altogether tells a story.

More Americans are working than ever before, but a growing number of them aren’t 9-to-5 employees, nor skilled freelancers who negotiate their compensation, Dan and Kia write.

Instead they are your Uber driver, your DoorDash food deliverer or your Rover dog-walker.”

The remarkable unemployment numbers coming from our Vichy gubmint might be hiding that a large part could be to these gig employees:

U.S. employers currently have just two options for classifying their workers: employees and independent contractors. But neither really suits the on-demand economy, Kia writes.

  • Employees are considered to be under the control of their employer, which can dictate when and how they perform their work. It’s antithetical to the flexible design of on-demand economy jobs, while the corresponding liabilities are antithetical to on-demand economy business models.
  • Independent contractors provide goods and services while retaining control over schedule and compensation. But on-demand economy workers clearly don’t have real control over what they’re paid, as evidenced by recent ride-hail driver strikes in Los Angeles after rates were suddenly slashed.

Axios continues:

Why it matters: On-demand jobs have become a central cog in our economic growth engine, providing both entry-level jobs and supplemental incomes. They are to 2019 what fast-food work was to 1989.

Those jobs became full-time work for many people, and a minimum wage was designed to be liveable for a family of three. Republicans have told us, those McJobs were never intended to be careers, but instead were for high schoolers. Republicans said that to justify not increasing the minimum wage.

So these gig workers jobs, the Uber drivers and dog walkers are not expected to be careers and yet…

  • Uber alone reports 3.9 million global drivers, around one-third of whom are in the U.S.
  • For context, the U.S. added 2.6 million jobs in all of 2018.
  • There isn’t broad agreement on how many people are in the on-demand economy, particularly because labor reports often conflate such jobs with more traditional “gig” work like contract graphic design or independent trucking.

So could we conclude that half of all the new jobs in 2018 are Uber drivers? Not exactly, but as a metric it is startling. Axios compares and contrasts:

Here’s how Uber and McDonald’s match up:

Workers

  • Uber: 3.92 million
  • McDonald’s: 210,000 (not including franchises)

Average Salary

    • Uber: $15 per hour
    • McDonald’s: $9 per hour ($11 for shift managers)

Revenue

  • Uber: $11.3 billion
  • McDonald’s: $21 billion

Now, while $15/h is a good wage, and certainly better than $9/hr, but there are no shifts. A Mickey-D’s cook knows his/her wage and how many hours they’ll get per week. An Uber driver has no guarantees of getting fares, and thus has no guarantees of getting paid, and of course carries the cost of operating the car, not Uber.

Axios continues:

America’s employment data is being skewed by the gig economy, according to a recent paper from the Dallas Federal Reserve.

  • There’s been an increase in the number of people working as contractors who mistakenly report themselves as employed.
  • This includes those who should at best be considered underemployed, like the ride-hail driver who only has passengers in the backseat for 30 of his 40 hours in the car.

The bottom line: Government economists haven’t kept up with the changing nature of work, which can play havoc with employment statistics. It also could help explain why America’s low unemployment rate hasn’t been married to significant inflation or faster wage growth.

And of course, Axios has an anecdotal story, not that that’s a bad journalism, to connect the gig economy and the experience of a gig worker:

What they’re saying: For Mark Ferguson, delivering food orders for DoorDash was a means to an end shortly after getting separated and needing extra cash —but he tells Axios it’s “not a career” and “there’s no ladder to climb.”

“On one hand, I do kind of enjoy the change of pace from the typical email and spreadsheets and the 3pm marketing meeting… [But] if you think this is a full-time job and you can make it — you’re fooling yourself. These platforms are here to make money and they will find out the absolute bottom before workers don’t show up.”

The bottom line: “Even though it’s marketed as the height of advancement and app-driven modernity,” writes Ravenelle, “for many, gig work is what happens when there are no other options.”

Here’s the take-away: instead of building a better ladder to greater opportunity, we have added a rung to the bottom of the ladder.

crossposted from Mock Paper Scissors

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