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How to Fix the Gig Economy

It starts with thinking outside the tech bubble

Louis Hyman
Aug 22, 2018 · 7 min read
Photo by Lambert/Getty

The recent election unearthed an enduring debate about American capitalism: What exactly is a good job? For a long time, we need to remember, the very idea of a “good” “job” was a contradiction. Until the 20th century, it was self-evident that there was nothing good about a job. What was good was being independent, which usually meant being an artisan, a retailer, or, most commonly, a farmer.

The longing many Americans feel for owning their own business, the celebration of entrepreneurship in our culture, and our homesteading heritage are not just about money — or buying houses. Yet for several generations, we have made it easy to own a home but hard to own a business. The rise of the new economy, as the last election showed, has left many people, especially rural people, behind. This new reality of our decentralized digital economy, however, offers the possibility of returning to our core American values of security and independence.

If the only answer to rural downward mobility is to turn everyone into software engineers, then there is no hope. The idea that every truck driver or coal miner can, or should, become a member of the modern professional class is closely related to the belief that unless you have those particular skills, you have no value — which isn’t the case. No one wants to feel like they are a waste product or have nothing to contribute.

Right now we are too fixated on upskilling coal miners into data miners. We should instead be showing people how to get work with their existing skills.

Many rural Americans, sadly, don’t realize how valuable they already are or what opportunities presently exist for them. It’s true that the digital economy, centered in a few high-tech cities, has excluded Main Street America. But it does not need to be this way. Through global freelancing platforms like Upwork, for example, rural and small-town Americans can find jobs anywhere in the world using abilities and talents they already have. A receptionist can welcome office visitors in San Francisco from her home in New York’s Finger Lakes region. Through an e-commerce website like Etsy, an Appalachian woodworker can create custom pieces and sell them anywhere in the world. These microbusinesses need capital, they need educational support, and they need respect as “real” businesses.

Americans, regardless of education or geographical location, have marketable skills in the global economy: They speak English and understand the nuances of communicating with Americans — something that cannot be easily shipped overseas. Right now we are too fixated on upskilling coal miners into data miners. We should instead be showing people how to get work with their existing skills.

Everyone has something to offer. We just need to find a way to reach everyone. Technology will make it possible, but what will make it happen is collective will to finally achieve the real American dream. That’s where our legislators come in.

There is more than one path to supporting an independent workforce. One option is radical individualism: Each person has portable benefits that are contracted through private firms, with each temporary employer chipping in, alongside wages. We refresh our laws to account for independent workers who are neither W-2 nor 1099. Another, more collective path would be toward a universal benefits system—like every other industrialized country possesses—where workers could change jobs without worrying about losing their benefits. Risk takers could become entrepreneurs and create jobs for other Americans. A still more radical path would be a citizen’s share. Whatever course we take, we need to make choices. The economy has changed, but our institutions—and our needs—have not.

The Conservative Path

The most powerful tool of the New Deal was its recognition of how to channel private capital for a public purpose. As of May 2017, U.S. banks had a reserve requirement of $127 billion, which sounds like a lot of money sitting idle until you realize that they have another $2 trillion sitting idle on top of that, with nowhere to go. All that capital is money that is not invested. We ought to look to the investment innovations of the New Deal to inspire us to invest in our most basic needs (like the Federal Housing Administration), our infrastructure (like the Rural Electrification Administration), and our futuristic industries (like the Defense Plants Corporation). We need broadband in rural America today, just like we needed electricity in the 1930s. Our far-out technologies that will create millions of jobs (climate jobs, green transportation) need capital.

If the only way to make an Uber job viable is through the use of tax deductions, then we need to make sure all Uber drivers know that.

At the same time, we should empower small- and medium-size businesses that are less sexy but still necessary — like plumbing supply companies. These kinds of firms might not be disruptive, but they still create jobs and growth. The Small Business Administration’s flagship lending program, 7(a), accounts for only 0.65 percent of all small loans. That needs to increase to make an economy of independence work.

The federal government gave away homesteads to create stability and self-reliance in the 19th century. Most Americans today don’t need farmland, but they do need other kinds of support — health insurance, skills education, maybe even a basic income — to take the risks upon which success depends. A minimum safety net enables maximum risk taking, unleashing the true growth potential of capitalism. Rather than thinking of these as the last gasps of a defunct welfare economy, we should instead see them as the first steps toward an independent economy. In place of seeing benefits as a cost to taxpayers, we ought to see benefits as an investment in our collective future. Only with the knowledge that their families are safe can entrepreneurs and inventors recreate capitalism anew. Portable benefits seem like the perfect solution for many of the flexible worker’s needs. Just like the 401(k) divorced pensions from a job, we need to find a way to divorce all other worker benefits from a workplace: health care, childcare, etc.

If the only way to make an Uber job viable is through the use of tax deductions, then we need to make sure all Uber drivers know that. Today there are limits on what kinds of tax services Uber (or any other firm employing 1099ers) can offer its subcontractors without violating labor law. Suggestions for a new legal category of independent worker, combining the qualities of W-2 and 1099, would be a step in the right direction. Such workers are not truly entrepreneurs, and we are deluded in thinking that individuals will find it as easy to be contractors as employees. We need to recognize that workers of the future might not be categorized as employees, but they will still require the protections and empowerments of labor law.

A safety net that allows someone to try to find rewarding work matters much more than, say, helping that person mortgage a house. It can help assure not just material comfort but spiritual success, something that our 19th-century ancestors fought unsuccessfully to preserve as they moved into dehumanizing factories and offices. Many will find they can do nothing particularly impressive, but my suspicion is that there is far more untapped talent than we can imagine.

The Radical Path

At the same time, we could remember that the corporation itself has a history. Before the mid-19th century, the corporation existed as a way to carry out risky but publicly needed ventures: building bridges, founding universities, and trading overseas. Our legislatures had to approve every corporation, because giving individuals the opportunity to act in our society, but without shouldering the full responsibility for those actions, was a special dispensation.

Today, anybody can form a corporation for any purpose, yet we as a society still bear some of that risk and have, through our shared heritage, made that venture possible. When our corporations fail, it hurts us all, yet when they succeed, we do not get compensated for our risks. American corporations, as it is often said, socialize risk and privatize return.

I would suggest that as we synthesize the agricultural and industrial models of capitalism, we also revisit how we think about the corporation. The B corporation is a step in the right direction, highlighting priorities beyond the shareholders. Yet it does not go far enough. Every time a worker is replaced by a machine, that worker gets no benefit, and we, as a society, support that person. What would it be like if every time someone was laid off, we all benefited? Not as much as the corporation itself, to be sure, but in some measurable amount.

Instead of thinking of a universal basic income as just another tax, let’s think of it instead as a citizen’s share. We create a holding company that, whenever stock is issued, gets some fraction of it. Every American, in turn, has one share in the holding company. As our businesses create value, it flows to us all. This model of shared wealth can be seen as an extension of sovereign wealth funds, like the Alaska Permanent Fund. Instead of oil wealth flowing to all of us, it would be our shared heritage of good governance and mutual investment that has allowed corporate capitalism to flourish, even at the expense of our technological and organizational unemployment. This citizen’s share has the advantage of being framed as something we already own, which fits with all of our values, rather than a redistributive tax, which, for many Americans, does not. We all have a right to our national parks—why not our corporations?

Whatever the path forward, we need to stop fixating on propping up a world of security that is tied to a job. In this way, the flexible economy can finally be true liberation: from bosses, from a cubicle, from monotony.

From Temp by Louis Hyman, published by Viking, an imprint of Penguin Publishing Group, a division of Penguin Random House, LLC. Copyright © 2018 by Louis Hyman.

Written by

Economic historian, Cornell University; author of Temp: How American Work, American Business, and the American Dream Became Temporary https://bit.ly/2OP7fZy

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