Technology platforms created the gig economy, promising flexibility and opportunity for workers. But do they really make work better for workers?
As an “old” millennial, I was born into a world where technology didn’t touch every aspect of my life. Yes, the optionality was there, but it wasn’t all consuming. E-commerce was around but I preferred shopping at the mall. I didn’t have a Myspace account until college, and I first joined Facebook when it was a network exclusively for college students. I remember feeling conflicted when access was opened to anyone — not just college students — and then they added the newsfeed.
My part-time jobs in high school and college were in retail sales at Gap and Banana Republic. Occasionally I sold vintage clothes through eBay. The companies that created the gig economy— Lyft, Uber, DoorDash, Airbnb, Poshmark, TaskRabbit — didn’t exist yet. Changes in the structure of work had been at play for years though. We were entering a decade in which technology gave us access to infinitely more options through the gig economy yet the nature of these jobs was inherently transactional and non-committal.
The gig economy is a labor market characterized by the prevalence of short-term contracts and freelance work as opposed to permanent jobs. DoorDash, the food delivery company, boldly offers a future free of micromanaging bosses and the grind of clocking in and out with the slogan “Your time. Your goals. You’re the boss.” In October, the company announced its first retail partnership with Macy’s to power same day shopping nationwide, a move hinting at opportunities beyond the food sector. DoorDash’s stock soared following its early December IPO valuing the company at over $50 billion. A few weeks later, its stock slipped after short seller Citron Research described the food delivery company’s initial public offering as the “most ridiculous of 2020” and said the stock is worth a fraction of its current price. Despite DoorDash’s COVID-induced recent success, thousands of its dashers struggle to make ends meet according to one Los Angeles worker. A Bloomberg article surmises that “Food delivery looks like another gig-economy dead end. There’s no money in bringing meals to consumers.”
A recent Wired article “Get Rich Selling Used Fashion Online — or Cry Trying” details the sheer amount of time and effort it takes to make a meager living selling used clothing on Poshmark, the social shopping app for secondhand clothing. I have sold on Poshmark myself and found it to be a straight forward way to make money on clothes I would have otherwise donated, however the time and effort required was intense. Over the course of 6 months, with part-time effort, I made maybe $2,500. Certainly nothing to complain about, but not going far when paying the bills.
I am originally from a small town called Wooster, Ohio, part of the so-called “Rust Belt”. The term “rust belt” is synonymous with regions facing drastic industrial economic decline, with the expression originating from abandoned factories rusted from exposure to the elements. My grandpa worked for 30 years at the Rubbermaid factory, the largest local employer. The company was founded in 1920 as the Wooster Rubber Company and became a local icon of the industrial age. He started as a maintenance man in 1949 when he was 36-years old, where he worked on the factory floor and was part of the union for about 6 years. Rubbermaid had around 600 employees then and the Wooster location was its only unionized plant. Later my grandpa moved to “management” as a laboratory technician. His job as a laboratory technician was to make sure that the rubber compounds used for the products Rubbermaid produced were formulated correctly. When the union went on strike, which happened 3–4 times over the course of his career, he would make sure the boilers in the factory were working properly.
Rubbermaid first expanded internationally in 1950, when the company began producing goods at a plant in Ontario, Canada. In 1965, the company purchased Dupol, a German manufacturer. Over the years, the company invested and divested of various divisions and sought to diversify its plant footprint in areas outside of union strongholds such as Arizona and Georgia. In 1998, Rubbermaid employed approximately 1,400 people. Five years later, Rubbermaid closed the doors of its Wooster plant, permanently eliminating 850 jobs. The company blamed the closing on intense, low-cost competition, as well as a tornado that ripped through the facility, causing about $20 million in damage and lost production. PBS Frontline’s 2004 special report “Is Wal Mart good for America?” covers the demise of the Wooster Rubbermaid plant. When increasing raw material prices forced a universal price hike, Wal Mart dropped most of its Rubbermaid orders and the company was never able to return to its former strength.
Rubbermaid was an employer that provided a solid middle class lifestyle for the working class. My grandpa worked there at a time when one could realistically expect to work for one company their entire career, and union representation was the norm for non-management positions. Companies were like extended families. If a company needed to reduce its workforce or eliminate wage increases, there was a process. Unions provided stability for working class lives. The relationship between employer and employee was localized, community-based, and involved two-way communication. My grandpa retired in 1978 with a pension and profit sharing plan from Rubbermaid, which provided extra money at retirement. When Rubbermaid left, the good jobs didn’t come back, and people without the education or means to move out of the local area were forced to make do with what work they could cobble together to make ends meet. This included largely low-paying jobs with infrequent hours such as retail and restaurant work, cleaning, and nursing home gigs. Today, the gig economy has increased options but the jobs are relatively commoditized with little differentiation between workers beyond ratings and reviews. Instead of a human, today your boss is an algorithm and your schedule is an optimization model.
The same version of this story has played out in different ways throughout rural communities in the Midwest for the past 20 years, leaving little hope and opportunity for stable employment for future generations. Anne Case and Angus Deaton cover this phenomenon in their book “Deaths of Despair and the Future Capitalism”: “Destroy work and, in the end, the working-class life cannot survive. It is the loss of meaning, of dignity, of pride, and of self respect that comes with the loss of marriage and of community that brings on despair, not just or even primarily the loss of money.”
Do we really need another unprofitable technology platform that promises to make it easier to find low-paying, one-off gig work, effectively paying less than minimum wage with no commitment to the average worker? Workers in the gig economy operate more like entrepreneurs, but making ends meet this way has proven to be difficult. As part of the “informal economy”, there are few safety nets that exist for gig workers today. The mechanisms that have provided us flexibility and infinite choice as consumers have at the same time steadily eroded the American middle class.