The upsurge in uncertain work
As Labor Day looms, more Americans than ever don鈥檛 know how much they鈥檒l be earning next week or even tomorrow.
This varied group includes independent contractors, temporary workers, the self-employed, part-timers, freelancers, and free agents. Most file 1099s rather than W2s, for tax purposes.
On demand and on call 鈥� in the 鈥渟hare鈥� economy, the聽鈥済ig鈥� economy, or, more prosaically, the 鈥渋rregular鈥澛爀conomy 鈥� the result is the same: no predictable earnings or hours.听
It鈥檚 the biggest change in the American workforce in over a century, and it鈥檚 happening at lightening speed. It鈥檚 estimated that in five years聽over聽聽of the American labor force will have uncertain work; in a decade, most of us.
Increasingly, businesses need only a relatively small pool of 鈥渢alent鈥� anchored in the enterprise 鈥� 聽innovators and strategists responsible for the firm鈥檚 unique competitive strength.
Everyone else is becoming fungible, sought only for their reliability and low cost.
Complex algorithms can now determine who鈥檚 needed to do what and when, and then measure the quality of what鈥檚 produced. Reliability can be measured in experience ratings. Software can seamlessly handle all transactions 鈥� contracts, billing, payments, taxes.
All this allows businesses to be highly nimble 鈥� immediately responsive to changes in consumer preferences, overall demand, and technologies.
While shifting all the risks of such changes to workers.听
Whether we鈥檙e software programmers, journalists, Uber drivers, stenographers, child care workers, TaskRabbits, beauticians, plumbers, Airbnb鈥檙s, adjunct professors, or contract nurses 鈥� increasingly, we鈥檙e on our own.听
And what we鈥檙e paid, here and now, depends on what we鈥檙e worth here and now 鈥� in a spot-auction market that鈥檚 rapidly substituting for the old labor market where people held jobs that paid regular salaries and wages.
Even giant corporations are devolving into spot-auction networks. Amazon鈥檚 algorithms evaluate and pay workers for exactly what they contribute.
Apple directly employs fewer than聽of the 1 million workers who design, make and sell iMacs and iPhones.听
This giant risk-shift doesn鈥檛 necessarily mean lower pay.听Contract workers typically make around聽, comparable to what they earned as 鈥渆mployees.鈥�
Uber and other ride-share drivers earn around聽聽more than double what the typical taxi driver takes home.听
The problem is workers don鈥檛 know聽when聽they鈥檒l earn it. A downturn in demand, or sudden change in consumer needs, or a personal injury or sickness, can make it impossible to pay the bills.听
So they have to take whatever they can get, now: ride-shares in mornings and evenings, temp jobs on weekdays, freelance projects on weekends, Mechanical Turk or TaskRabbit tasks in between.
Which partly explains why Americans are putting in such long work hours 鈥� longer than in any other advanced economy.
And why we鈥檙e so stressed. According to聽, almost a quarter of American workers worry they won鈥檛 be earning enough in the future. That鈥檚 up from 15 percent a decade ago.
Irregular hours can also take a mental toll.听聽show people who do irregular work for a decade suffer an average cognitive decline of 6.5 years relative people with regular hours.
Such uncertainty can be hard on families, too. Children of parents working unpredictable schedules or outside standard daytime working hours are likely to have lower cognitive skills and more behavioral problems, according to new聽.听
For all these reasons, the upsurge in uncertain work makes the old economic measures 鈥� unemployment and income 鈥� look far better than Americans actually feel.
It also renders irrelevant many labor protections such as the minimum wage, worker safety, family and medical leave, and overtime 鈥� because there鈥檚 no clear 鈥渆mployer.鈥�
And for the same reason eliminates employer-financed insurance 鈥� Social Security, workers compensation, unemployment benefits, and employer-provided health insurance under the Affordable Care Act.
What to do? 聽Courts are overflowing with lawsuits over whether companies have misclassified聽鈥渆mployees鈥� as聽鈥渋ndependent contractors,鈥澛爎esulting in a profusion of criteria and definitions.
We should aim instead for simplicity: Whatever party 鈥� contractor, client, customer, agent, or intermediary 鈥� pays more than half of someone鈥檚 income, or provides more than half their working hours, should be responsible for all the labor protections and insurance an employee is entitled to.
Presumably that party will share those costs and risks with its own clients, customers, owners, and investors. Which is the real point 鈥� to take these risks off the backs of individuals and spread them as widely as possible.
In addition, to restore some certainty to peoples鈥� lives, we鈥檒l need to move away from unemployment insurance and toward income insurance.
Say, for example, your monthly income dips more than 50 percent below the average monthly income you鈥檝e received from all the jobs you鈥檝e taken over the preceding five years. Under one form of income insurance, you鈥檇 automatically receive half the difference for up to a year.
But that鈥檚 not all. Ultimately, we鈥檒l need a guaranteed minimum basic income. But I鈥檒l save this for another column.
