White House Chronicle

News Analysis With a Sense of Humor

The Gig Economy Is the Future and It Is Coming Fast

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You might not know this, but if it has not happened yet, you may be about to become a company of one.

Welcome to the gig (as in a musician doing a gig) economy. It is coming and faster than anyone expected. In fact, it is coming so fast that in 2050 more people will be in gig employment than conventional employment, according to Wired magazine.

I want to stand on my chair and utter three cheers for it. Except I can only muster two cheers.

In the gig economy workers become consultants, contractors, freelancers.

From the worker point of view, it is an end to conventional bosses, burdensome hours and fitting into a corporate culture.

For the firm outsourcing what used to be salary work, it is a freedom from the costs of employing, like healthcare and retirement plans, safety rules and regulations.

The poster example of gig employment is Uber. Let me say, parenthetically, that I love Uber in almost all ways: the convenience, the ride tracking, the clean cars and polite drivers.

Also, I love the idea that the personal automobile, a large capital investment for most, can be put to work.

It works almost as well for the owner of other capital-intense possessions, notably apartments and boats. Get a little back on your sunk investment. What could be better?

Not much, but there are problems. Primarily, the architecture of our society is not ready for the shift from corporate to private, from big to very small.

At the heart of this stage of the gig economy is the internet and its ability to bring the willing buyer, renter, seller and worker together.

Companies that have understood these uses of the internet have gone for the capital-intensive goods: boats, cars and homes. But at the low end, freelance workers are hooking up with customers who are seeking pure service plays like car detailing, dog walking, home computer assistance, house cleaning and repairs of all kinds.

Most of this should only worry the tax man. If you work for one of the ride-sharing services, like Uber or Lyft, the taxman knows all about you.

But if you are in a less-dragooned environment, tax collection halts. Do you withhold taxes from your house cleaner, for example?

One can understand why ride-sharing is beating the daylights out of the taxi business, and so what? Well, the problem is to use ride-sharing you need a credit card and a cell phone. The very poor, or those in temporary difficulties, do not have these. They need taxis.

The law has not caught up with new realities.

The promise of the gig economy is every worker is a contractor protected by a contract. The reality, as with the ride-sharing services, is that the internet company becomes an employer in all but name. The worker has given up the security of a job for the insecurity of entering into a contract he did not write and cannot amend. In weak economic times, the worker is vulnerable to a global system of serfdom.

It is easy to single out Uber, which has greatly improved the quality of life for passengers, and the usage of under-used assets. But what of the drivers? There are laws that govern the old workplace with wage-and-hour standards, workers’ compensation and conditions monitored by the Occupational Health and Safety Administration.

If you are semi-self-employed, say as a delivery contractor, the internet-facilitating company holds the whip hand when it comes to paying the drivers. Nowhere have I read that drivers really can make a living driving. A little extra, yes. The problem is the independent contractors are not so independent if they just have one customer — and that is not the passenger, but rather some ubiquitous computer network.

The gig economy knows and cares nothing about health care, sick leave, Social Security payments, tax collections, vacations and working conditions. It is free, it is exhilarating and it is the future. But it may be exploitative as well.

It Isn’t Your Father’s Workplace Anymore

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One thing we think we know about the Republicans is that they take a dim view of waste, fraud and abuse. So how come the U.S. House of Representatives, in Republican hands, has voted 56 times to repeal or cripple the Affordable Care Act, better known as Obamacare?

They’ve put forth this extraordinary effort despite an explicit veto threat from President Obama. Their repeated effort reminds one of Onan in the Bible, which politely says he spilled his seed on the ground.

It’s a waste of the legislative calendar and the talents of the House members. It’s a fraud because it gives the impression that the House is doing the people’s business when it is holding a protracted political rally. It’s an abuse of those who need health care because it introduces uncertainty into the system for providers, from the insurers to the home-care visitors.

It’s symptomatic of the political hooliganism which has taken over our politics, where there is little to choose between the protagonists.

Republican groups think that Obama is the doer of all evil in the nation – especially to the economy — and the world. Daily their Democratic counterparts gush vitriol against all the potential Republican presidential candidates, only pausing for an aside about the wickedness of Fox News.

Their common accusation is middle-class job woes. They’re on to something about jobs, but not the way the debate on jobs is being framed.

The political view of jobs is more jobs of the kind that we once thought of as normal and inevitable. But nature of work is changing rapidly, and it cries out for analysis.

The model of the corporation that employs a worker at reasonable wages which rise every year, toward a defined benefit pension, is over. Today’s businesses are moving toward a model of employment at will; the job equivalent of the just-in-time supply chain.

While more of us are becoming, in fact, self-employed, the structure of law and practice hasn’t been modified to accommodate the worker who may never know reliable, full-time employment.

The middle-class job market is being commoditized, as the pay-per-hour labor market includes everything from construction to network administration. Sports Illustrated — synonymous with great photography — has just fired all six of its staff photographers. Don’t worry the great plays will still be recorded and the Swimsuit Issue will still titillate, but the pictures will be taken by freelancers and amateurs.

Two forces are changing the nature of work. First, the reality that has devastated manufacturing: U.S. workers are in competition with the global labor pool, and business will always take low-cost option. If unemployment goes up in China, that will be felt in the U.S. workplace. Second is the march of technology; its disruptive impact is the new normal — accelerated change is here to stay.

All is not gloom. The trick is to let the old go – particularly difficult for Democrats — and to let the new in. There will be new entrepreneurs; more small, nimble businesses; and whole new directions of endeavor, from gastro-tourism to cottage-industry manufacturing, utilizing 3-D printing. Individuals will be free in a new way.

Government needs to think about this and devise a new infrastructure that recognizes that the nature of work is changing. The emerging new economy should have simplified taxes and Social Security payments for the self-employed; portable, affordable health care; and universal catastrophe insurance, so that those who are not under an employer umbrella can benefit from the equivalent of workers’ compensation. The self-employed, rightly, fear the day they can’t work.

Rugged individualism has a new face. The political class needs to look and see the new workplace. — For the Hearst-New York Times Syndicate

Forget the Glass Ceiling, What about the Mortar-Board Barrier?

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Every year or so a new study, learned treatise or book comes out which says that we in the United States overdo the college thing; that we are turning out young people with bachelors degrees for jobs that don't require them or that are so poorly paid the luckless worker can't pay off his or her college loans.
 
Yet the pressure to go to college continues. Parents panic that they won't save enough money and high schoolers worry that they'll be judged by which college accepts them.
 
There are only two classes of students who don't worry: those with athletic prowess and those who are so bright that they have their pick of colleges.
 
In his book “David and Goliath,” Malcolm Gladwell makes the case against the pressure for a superschool. He tells the story of a gifted, young African- American woman with clear aptitude for science and math. She makes it into Brown, an Ivy League university, and flounders. With the cultural differences and the preponderance of other brainy students, this star student is soon lost. She ends up switching from science to a less-demanding liberal arts major.
 
Top-tier universities like Harvard, Yale, Stanford and MIT have their own punishments for their graduates. It is a sad syndrome: I went to Harvard (or one of the others), but I didn't do well in my career.
 
I've seen many carry this burden throughout their lives. As Orson Welles said, in an entirely different context, he had started at the top with early success and had nowhere to go.
 
But no punishment metered out by the vagaries of talent and chance compares to the lifelong punishment that a majority of our citizens suffer for not going to college. More than 60 percent of us don't make it into either a two- or four-year college.
 
Although they are a majority, they are treated as second-class, damaged, contaminated, inferior and deserving only of a kind of paternalism, as they paint houses, repair automobiles, bake bread, stock shelves and deliver
parcels. No longer can some of them hope to be lifted into the middle class by union membership. College mania keeps them down.
 
They aren't bumping up against the color bar or the glass ceiling, but they are victims of something as damaging: the mortar-board barrier. Go no further, you have no college degree.
 
I know about the mortar-board barrier: I bumped up against it when I came to the United States 50 years ago.
 
Because I'd left school at 16, I had a jump start in British journalism. When I got to the United States, I thought the fact that I'd been a scriptwriter at the BBC and that I'd been a junior executive on a major newspaper might qualify me for an interview or two. The personnel departments at all three TV networks told me I couldn't be considered because of a lack of college education. At The New York Times I was told that without a college degree, I couldn't be considered as a writer. But as I was leaving, the interviewer actually offered me a job as a copy editor.
 
This reminds me of what I experienced subsequently, when I was flying small airplanes. The most gifted pilot I've ever known – and who saved my life a couple of times in bad weather — hadn't finished college and was repeatedly turned down for an airline job as a result.
 
Then, there was the sad case of the cadaver pilot. There is a cottage industry in flying cadavers, usually through the night, from the place of death to the place of burial. I ran into one such cadaver pilot in the early hours of the morning in Missouri, as he was about to take off into bad weather with his silent passenger — there to remind him of his mortality and danger of flying an old airplane (a Beech 18 with radial engines).
 
Like all pilots, he loved flying, but had given up hope of moving up in aviation because hadn't been to college. Unwisely, he had fallen in love with aviation too young. Just like The New York Times that wouldn't allow a non-college-educated person to try writing for their pages, but would allow that same person to edit its writers, the irony is present in aviation.
 
While airlines and air freight companies insist on a college education, no matter what the proven skill or the number of hours the candidate has flown, air traffic controllers are mostly just high school graduates. College is not a requirement.
 
The college, non-college divide is pernicious and damaging. It is another front in the class war. — For the Hearst-New York Times Syndicate

Life at the Bottom: the Real Minimum Wage Saga

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I once earned the minimum wage not because I needed an entry-level job, but because I needed the money. It was a minimum-wage job or a begging bowl and the street.
 
While I learned some interesting – and some disagreeable — things about life at the bottom, I never met anyone who was there because they were entering the workforce. Instead they were a community of the hapless; some of them on their way down, but more of them just on their way to nowhere.
 
Each day, they were hired through Manpower and were sent where they were needed, if there was work that day. The hiring hall was not a place of despair but of resignation. If you were considered a good worker you would get a semi-permanent assignment. But as with most temp work, employers were prohibited from offering you a permanent job.
 
It was the winter of 1965, and the minimum wage was $1.25 an hour. By the time deductions were taken, take-home pay was about $1 an hour, which was not enough to support a family, or even to think of little things like vacations or getting one's teeth fixed.
 
Teeth stand out in my memory for two reasons. First, because my co-workers had visibly terrible teeth. Second because I once bussed a table at the Horn & Hardart automat on 42nd Street in New York, and a customer had put her false teeth on a dirty plate and I had whisked it away.
 
About an hour later – people who ate at the automat ate there because you could sit for an hour without being bothered — she discovered her loss. The most awful crying and begging resulted. Over and over, she cried, “I'll never have teeth again. I can't afford new teeth.”
 
I went to the manager, who showed me dumpsters piled high with that day's garbage. He was a decent man and we tried to find the woman's teeth. It was hopeless. Utterly hopeless. Her teeth were irretrievably lost and she went out into the night shrieking. She would never have teeth again.
 
I got back into newspapering and moved on and up. Over the decades, though, I have retained an affinity for those who draw the minimum wage, and a certain knowledge that it needs to be higher and linked to the cost of living.
 
Even so, I think the minimum wage is a two-edged sword. I think in times of near full employment, employers use it to hold down what they otherwise would have to pay. But I also think that without it, there would be terrible exploitation at the bottom – sweatshops and the like.
 
I think the minimum wage is part of the social network where those who have not yet risen and those who have fallen in life can find precarious purchase.
 
Sadly the minimum-wage job is under threat not because the Obama administration wants to raise it to $10.10, but because of the computerization of the workplace. Simply, people will be replaced with computer-driven devices no matter what the minimum wage is.
 
A great gale of change is sweeping through the workplace. We get our money from machines; increasingly, we check ourselves out of the supermarket and the drugstore; we buy our airline and train tickets online.
 
The low-wage job as well as some better ones are going. Fast-food restaurants have introduced computerized ordering. Inexorably, business is committed to replacing workers with automation. That is not new.
 
What is new is that all the jobs in the service industries, which were considered exempt from automation, are now going the way of the coal miner, the stevedore, and more than half the people it used to take to make a car or a steel beam.
 
We are having the wrong discussion over the minimum wage. We need to talk about work; all work, including work for those at the bottom — those who cannot even think about dental work, vacations or college.
 
Raising the minimum wage will not drive employers to replace workers with machines. That has already reached flood stage. — For the Hearst-New York Times Syndicate

Is There a Jobs Catastrophe in the Making?

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Disruption is in the air: disruption in Congress, disruption in the workplace, disruption in the well-being of the middle class. History may well term this the Age of Disruption.
 
This need not be all bad.
 
Disruption is only a problem if it is poorly managed, or if forces beyond control devastate existing order. Take the Russian Revolution or the recent tsunamis in Asia. Nowadays, we tend to think of disruption as being uniquely in the province of technology – and it is this disruption that harbors the most future shock.
 
The most serious disruption now getting underway is the disappearance of jobs; not the replacement of old jobs, but the utter disappearance of jobs. Jobs that once were are going into the ether or, call it what you will, to the cloud. Gone for good.
 
For the first time since the Industrial Revolution was ushered in by the substitution of human and animal labor by shaft horsepower derived from a waterwheel or a steam engine, technology is subtracting jobs rather than adding them. This is a disruption that hurts.
 
From Oxford University comes one of the most disquieting studies on the future yet to appear. Two researchers, Carl Benedikt Frey and Michael A. Osborne, predict that 47 percent of American jobs are at risk in the coming years from computerization.
 
Their conclusions are stupefying: nearly half the jobs in the United States could disappear in a few short years. Worse, according to the Oxford University researchers these jobs will affect the great middle reaches of employment, from the white-collar jobs down to unskilled workers.
 
Their study “The Future of Employment: How Susceptible Are Jobs to Computerization?” should have every parent and every policy wonk asking: What should be done? What can we do to save half of the population from not being able to find a job at any level, of being driven to compete for minimum-wage employment?
 
Until now, each leap forward in technology and its corresponding increase in productivity has had two effects:

1. The economic benefits have been shared with the workers. That has ended.

2. New prosperity from automation always led to new demand for more goods and services. This maybe ending. Depressed wages do not lead to new purchases.

In turn, this history has led to a pervasive economic myth that the relationship between automation – even automation using advanced computers – will always lead to more jobs and more prosperity.
 
Yet the market for labor is changing dramatically, and that lockstep has lasted pretty well since the first loom in England substituted shaft horsepower for human labor in the 18th century.
 
That happy union may be broken. The Oxford researchers, in a National Public Radio interview, suggested that the only safe jobs might be those that require a high degree of education and interpersonal skills like the law, teaching and management consulting.
 
My own daily reminder of the world of jobs that is changing is my Kindle. It reproves me. Its value is that I am never without a new book, and it is more portable than any but small pocket books.
 
But I used to publish books and every time I open the electronic book, I think of the long chain of people who were involved in making a book years ago: typesetters, printers, binders, warehouse staff, book wholesalers, and finally the clerks who took your money — all worthwhile jobs with dignity.
 
Books and book stores are not worse hit than many other things, but they are suffering. When did you last speak to a person at your bank, airline, insurance company or utility?
 
A nation that does all of its business online may be efficient in the short term until online leads to the breadline.
 
Disruption is the new normal and we need to understand it. New industries need to be sought. An example of a newish industry that has flourished in recent decades is tourism. A century ago, a few rich people traveled. Now tourism is the world's largest employer.
 
Old remedies for new problems won't do it. The jobs deficit won't be fixed by what we seem to have on the table: lower corporate taxes and less unionism. Less general wealth is the wrong kind of disruption and we are heading that way. — For the Hearst-New York Times Syndicate