The Gig Companies That Are Trying to Hustle Wall Street…

Nate
Nate
Dec 4, 2019 · 4 min read

…while the real entrepreneurs are hustling for you

A picture of a hand blocking out a face
A picture of a hand blocking out a face

The promise of the gig economy was huge. For consumers, any item or service you could imagine, delivered at the tap of a finger. It seems like everything has been gig-ified: groceries, beer, laundry, taxi rides, dog walking, and even cannabis. For gig workers, the promise was equally compelling. Be your own boss, work whenever you want, and make lots of extra income with your side hustle. For some, they did so well that their side hustle turned into a full-time job, replacing long commutes and cubicles with the freedoms offered by an entirely new way to work.

$100 free delivery coupon from Postmates
$100 free delivery coupon from Postmates

Subsidizing a Broken Model

However, like many things in Silicon Valley, the hype doesn’t always live up to the promise. The gig economy is now floundering, failing to deliver on its lofty promises. We see this story told again and again in recent headlines:

Technology Disruption Is Hard, Labor Arbitrage Is Easy

As a business, why pay for managing your commercial fleet, business and car insurance, gas, vehicle maintenance, or even mobile data plans when you can just have your workers pay instead? Rather, gig companies set compensation for each task, based on supply and demand at a particular moment in time. By hiring independent contractors, they skirt minimum wage laws and pay only the price floor that the local market supports. Since the independent contractors aren’t employees, benefits and time off are no longer a corporate expense to worry about. There’s no fancy technology involved to make that happen, just old-fashioned exploitation.

Further, gig companies only pay workers while they’re actively working a specific task. Their worker classification scheme allows them to avoid paying workers for idle time waiting for the next order. For example, the cost of driving to a more attractive location is borne by workers, even when their apps incessantly beckon them to move to more lucrative areas.

The Cost of “Playing” in Today’s Gig Economy

The hustling by the gig companies is only getting worse. With the first generation of gig companies standing in line for IPOs, including Instacart, Postmates, and DoorDash, they’re looking to put some lipstick on their financial statements. Wall Street is comfortable slinging shares for disruptive tech companies, though not so much for labor arbitrage schemes. Heck, Uber is still claiming that it isn’t a transportation company, just a mobility marketplace. As gig companies look for further ways to drive down costs and transfer costs to their workers, expect to see many more sad headlines about gig companies hustling their workers in new and more exploitative ways.

Dumpling Blog

Dumpling Blog

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