People call it a lot of different things—the gig economy, sharing economy, 1099 economy—but one thing is definite: While the technology powering companies like Uber and TaskRabbit may be new and pretty cool, the way these big Silicon Valley “start-ups” treat people who work for them is pretty old-school and really not cool.
For as long as we’ve had laws protecting and giving rights to “employees,” bosses have looked for ways to get out of obeying the law is simply calling the people who work for them “independent contractors,” shifting all of the costs and risks of doing business onto their backs—and making it illegal for them to unionize—while the bosses walk away with fat pockets and $60 billion valuations. They did it to newsies way back in the day, and now they’re doing it to the hundreds of thousands of folks looking to make ends meet through this “new” economy. That means your Lyft driver or Postmates courier may be making less than minimum wage, subsidizing their bosses by paying for their own commercial car insurance, and might not be covered by workers’ compensation if they’re hurt on the job. And if they try to form a union, they could be sued by their billionaire bosses.
The labor movement has always believed that all people should be treated with dignity and respect, have safe working conditions, and be paid a fair share of the value they create. While we believe that many people who work in the gig economy are legally employees and should be covered by existing laws, we also believe that all people who work, no matter what their bosses call them, deserve the exact same protections and rights—including the right to join a union.
What is the On-Demand Economy?
The “On Demand Economy” is made up of companies such as Uber, Lyft and Task Rabbit that use digital platforms and digital networks to provide labor services to customers. The people who work for these companies are known as “On Demand workers” or the “On Demand workforce.” Some On Demand companies treat people who work for them as employees, but most treat them as independent contractors. The “On Demand Economy” also includes companies such as Airbnb that use digital capital platforms and digital networks to rent things. Because the “On Demand Economy” is made up of both digital labor platforms and digital capital platforms, it is sometimes called the “Platform Economy.”
The term “Gig Economy,” by contrast, means different things to different people. To some, it just means the “On Demand Economy,” which is still very small. To others, it includes the much larger group of people who do other kinds of insecure work—such as temporary employees, part-time employees, employees supplied by contract firms, on-call employees, and legitimate independent contractors—but have no connection to digital platforms. The lack of an agreed definition makes this term confusing.
The “On Demand Economy” is also tiny compared to the much larger “digital economy,” which encompasses all economic transactions conducted via computers and smart phones. The “digital economy” includes online marketplaces such as Craigslist.com.
Why is the On-Demand economy a labor issue?
The labor movement is committed to raising wages and living standards for all people, including people who work in the "On Demand" economy and other insecure areas such as temporary employees and part-time employees. All people deserve a decent job with decent wages and benefits, strong labor standards, protection against discrimination, workplace safety and union representation.
The current trend of wage stagnation and economic inequality is unsustainable and threatens future economic growth. To restore balance to our economy, we must ensure that emerging forms of work be decent jobs and that people who work in emerging sectors of the economy can join together with their co-workers to negotiate together to improve their lives. If the On Demand workforce and other kinds of insecure work continue to grow, as expected, it will be increasingly important to guarantee rights and protection for these people. We should not allow or encourage businesses to treat their employees as independent contractors in the On Demand economy or anywhere else because this weakens working people's ability to negotiate, lowers labor standards for all working people, and puts good employers at an unfair disadvantage.
How can we use technology to empower working people?
We embrace technological progress and innovation because they make it possible for us to become more prosperous as a society. The gains from technological progress can be broadly shared—as they were throughout the postwar period—but they have not been broadly shared for the past 35 years. We must make smart policy choices to ensure that the gains from progress are once again shared by the many, not just the few. New technologies have always shaped the nature of work, but technology must not be used as an excuse for old-style injustice.
Technology has the potential to connect people and enable them to engage in collective action in new and creative ways. Moreover, working people who were once isolated from one another—such as people who work in the domestic and home care areas—may find new opportunities to negotiate together with the digital platform companies that employ them.
New technologies will make it easier and less costly to monitor compliance with labor standards. New software also offers the possibility of scheduling work hours to prioritize the needs of working people, while still meeting the legitimate needs of employers and consumers.
How can we ensure decent benefits for all working people, regardless of how they work?
All people, regardless of their employment status, should have health benefits that allow them and their family members to get the medical care they need when they need it, be able to look forward to a comfortable and secure retirement, and be protected against the financial risks that are difficult and costly to deal with on their own. To this end, we should ensure that all working people are covered by a strong system of benefits and protections that move with them from job to job. One solution is to broaden and strengthen coverage under existing portable benefits programs such as Social Security, Medicare, Medicaid, Unemployment Compensation, and Workers’ Compensation.
The Affordable Care Act’s (ACA) guaranteed right to buy private health insurance and financial assistance to help pay premiums for individual coverage for people not offered affordable health insurance through their work are another way in which we have addressed the need for portable benefits. Currently, all of these portable benefits are under attack. Another solution is to deliver portable benefits through non-governmental systems, but experience shows that these mechanisms are only sustainable when working people can exercise collective negotiating power and the businesses for which they work contribute towards the funding of benefits.
Collectively bargained health, retirement, and other benefit plans that cover highly mobile construction workers and entertainers, such as actors and musicians, are examples of highly successful non-governmental portable benefit systems. A critical step towards making portable benefits feasible is therefore to ensure that employers treat the people who work for them as employees and engage in collective bargaining with employee representatives. The need for portable benefits must not be used as an excuse to give employers a “safe harbor” to misclassify their employees as independent contractors, or to otherwise make it easier for employers to misclassify.