A sharp critic of the gig economy says a “portable safety net” would help today’s untethered workers.
Unlike most experts who pontificate about the gig economy, Steven Hill is actually part of it. The 58-year-old author, formerly a fellow at the New America Foundation, hasn’t worked at a permanent position for several years. In the opening of his 2015 book Raw Deal, he describes seeing more and more of his peers toiling under similar conditions. The subtitle of the book should make perfectly clear how he feels about the trend: “How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers.”
A Princeton study from earlier this year found that “all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.” In fact, much of this new world of work exists apart from the Uber drivers and Airbnb hosts that win so much attention. Most of the growth in these “alternative” jobs has come from contract work and temp agencies.
CityLab spoke with Hill about how we can better prepare today’s workers for this new employment landscape and how policy changes could make the life of a freelancer less uncertain.
I just finished your book and it made me feel anxious. Has anything changed since the publication?
The task, really, is how do we make part-time jobs okay? The economy was built around a full-time job for a single employer. But more and more people have part-time jobs for multiple businesses. How do we make that okay?
I propose the portable safety net [where employers pay into an account attached to an individual worker to allow them to pay for healthcare, retirement, and time off]. People like [progressive billionaire] Nick Hanauer and David Rolf of SEIU are starting to think along those lines. I’m in conversation with the German unions about it too.
The question is: Will it just be making lemonade from lemons or will we really be able to make [the new type of work] good? It might never be as good for the average worker as it was 30 years ago. The pay may not be as high and you may spend a lot more time looking for work. But I don’t really want to make predictions, I just want to talk about what we could do to make it better.
I’m optimistic that more people are having a more informed discussion about things like the portable safety net. The conversation about the future of work was initially just pushed by Silicon Valley. Now Elizabeth Warren called for hearings on Airbnb. Uber is in hot water in all sorts of places. The labor brokerage websites have a lot more scrutiny. When I look at what some cities are doing around Airbnb, it seems like they realize there are real downsides that need to be regulated.
I’m optimistic sometimes, but then I see the European Court of Justice debating whether Uber is a taxi company or some newfangled tech company, and so shouldn’t be subjected to the European taxi laws.
It seems like the gig economy could be fine if the state guaranteed healthcare, childcare, unemployment insurance, and retirement. But that would require a vast social safety net, which is not the direction we are moving toward in the United States. Even in some European countries, you see a retreat from that.
In Raw Deal, I wanted to show what could happen if we don’t get this right. In 20 years, we don’t want to look back and say, “Wow, we really screwed that up. We didn’t understand the ramifications of these new corporations and we didn’t regulate them right.” I wanted to show the really dark repercussions of what could happen. And we just elected Donald Trump, so maybe it’ll be the darker side of what could happen. I’m not prepared to go there. I know what we can do to make this better, so I’m focusing my energy on stoking those efforts.
The types of training they need are in things like record-keeping. How do you keep track when you have income from multiple employers? How do you do your taxes [with multiple 1099 forms]? How do you bill properly? How do you make sure that everyone has access to the internet?
By training workers so they know how to pay their taxes, they’ll know that they are self-employed, and that as a self-employed person there are certain deductions you can benefit from. They are leaving money on the table by not knowing how to do those deductions. Because they don’t have that income, they can’t spend it in local areas.
Cities and even states have an incentive to make sure those workers know how to do this, because they will pay less in federal taxes and spend that money in the local economy. You could make an argument that cities and states ought to be running these sorts of trainings and workshops.
Or it could be helpful to have classes in public schools or public universities about how to do your taxes and how to save for retirement on your own.
They are trying to get more of the universal 401Ks, which are great in principle, but people aren’t earning enough to save. Learning to set up an account, that’d be a good thing to add to this package of skill-building we are talking about. But let’s talk more about how we can do your taxes. If you have a home office, you can write off a percentage of your house, of your rent, of your utilities, of your phone bill.
Some don’t even pay taxes. They think it’s not that much income and they just gamble that the IRS will not audit them. They know they are supposed to do it, but they don’t really know how. What do I do with this income? “I have some form from Uber telling me I made $800 driving for them, but what do I do with it?” This is new for a lot of people and they don’t know what to do.
There are some positive aspects of freelancing, and partisans of the gig economy like to focus on the flexibility it offers. Last year at about this time, there was an Uber-sponsored survey that showed 81 percent of their drivers being happy for that reason.
I’ve heard drivers say, yes, I like it. But I keep in touch with them and I ask again nine months later. Many say it’s not working for them anymore. When they first start, they like the flexibility. Who doesn’t like flexibility in their job? But once they realize they aren’t earning enough income and they have to work all the time, suddenly that doesn’t feel so flexible anymore.
Uber’s own numbers show that half their drivers only last a year on the platform. If the drivers like it so much, why are they leaving in such big numbers? The other thing it shows is that most are only driving for 15 hours or fewer. The more you drive, the longer hours you put in, the less you like it.
Speaking of Trump, I have a hard time imagining him, Congress, or Republican legislatures supporting a lot of the proposals you use to end the book—like the portable benefits policies. So what is to be done?
Some of this can be acted on at the local level or the state level—in fact, most of my suggestions can be. A portable safety net can be done in a city. San Francisco already has a law that created health-care accounts for all workers in the city, so as a business you either have to provide health care or pay a certain amount into an account so that a worker can purchase their own health care.
My proposal simply expanded that idea to other components of the safety net. Unemployment compensation, injured worker compensation. A few days per year of paid vacation and paid sick leave. That can be done at a city level in San Francisco, Seattle, or New York City. We can work on them, sort out the bugs, and then scale them up in states like California.
With vocational training, we should be able to get bipartisan consensus to make sure these workers are trained to really run their own “me-incorporated businesses.” I would think there might be some basis for bipartisanship on that, at least in certain states.
I also talk about German-style co-determination, which are partly worker-elected boards of directors. We can start that at the university level. Try it out in the California system or the University of Pennsylvania. They can start creating more stakeholders and having a degree of economic democracy in running our major institutions. Get it going so it becomes more of a known idea then when the winds are blowing right at the federal level, we can try for bigger legislation along those lines.
I’ve been involved in passing legislation in a lot of different arenas, and the first thing they ask you is, “Where is this being used?”
No one wants to go first. Getting any of this placed at any level is helpful for moving forward.
This interview has been edited and condensed.