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.

The New Work: The Individual as Microbusiness

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The genius of Uber is dumbfounding. I’m not talking about what it pays its drivers (not enough), whether it’s putting taxis out of business (it is). I’m talking about the sheer brilliance of unleashing the value stored in the family car. Likewise, Airbnb which isn’t denting the hotels, but is causing tax collectors to go apoplectic.
These Internet companies are unleashing the value that families have had hidden in their driveways and spare bedrooms.What’s next? Your guess is as good as mine. If your guess is right, there are folk over at Google who’d like to talk to you.
Airbnb (which connects people looking for accommodation with those offering it in their homes) may be a tad more exciting than Uber (which puts private car owners in the transportation business) because it is catering to a specific traveler market. Hotels have become so unpredictable in their opportunistic pricing that private travelers are happy to leave them to business travelers who are less price-sensitive.
Then there’s GrubHub, which offers free online ordering from thousands of delivery and takeout restaurants. It may well be the next big thing in the market.
These are three examples of how the Internet, which giveth and taketh away, is reordering the economy. They’re beacons for how the economy might replace the jobs that are being lost to computers. They also offer extra income or full employment for people who don’t have marketable educations: driving a car and keeping a pretty home don’t require college degrees in science.
The nature of work is changing, and one of the consequences is that more of us are becoming self-employed: private contractors.
The Internet enables a large number of artisan skills to be marketed. I’ve just found an online advertisement for a dressmaker. Long before Walmart and “Project Runway,” dressmakers abounded. Women would ask their neighborhood dressmaker to “run up something” for a special occasion or whatever. Mass retailing, plus the difficulty of marketing beyond word-of-mouth, pretty well ended that, but it may come back. Now you may live in Atlanta, but you can order a bridal gown from an Etsy dressmaker in Seattle.
The Red Truck Bakery & Market, housed in an old gas station in Warrenton, Va., sends its Meyer Lemon and other goodies across the country. Artisanal baking meets the Internet.
Years ago, a friend of mine developed a knit teddy bear. It was a beautiful thing; tactile, safe for small children. I don’t recall whether my friend had gotten around to naming her stuffed bruin, but he was a darling — although I don’t know why stuffed bears have to be male.
Anyway the said unnamed, unsexed, stuffed bear didn’t make it into many young arms because of marketing. The big retailers didn’t want it. Things are very competitive in Bear Land, and Paddington Bear and company don’t want other teddy bears crashing their picnic on the store shelves.
That was more than 30 years ago. Today, Bear X could be sold on the Internet. Now I’d wager the big chain retailers would come begging — offering the little thing a whole shelf for itself.
The miracle of today is that it could happen differently. The concomitant fact is that we’re going to need more cottage industry and more self-employed contractors because the jobs of yesterday are disappearing, and the companies are less and less inclined to hire permanent staff.
Years ago, the jewelry business moved offshore; now it’s moved to American homes. It’s possible for a creative person to make jewelry at home and sell it online.
A new age of self-employment is at hand. Recently, I’ve worked with two inspiring millennials. One is a gifted and filmmaker, and the other a computer wizard. Both are making a living, and neither has given any serious thought to getting a job in the conventional way.
It’s not the age of small business, but microbusiness: the individual with something to sell, whether it’s artisanal furniture or a skill. The millennials seem to know this instinctively, the rest of us are learning it.
Want to hire a veteran journalist who works from home? Call me. — For the Hearst-New York Times Syndicate

The Uber Effect on Electricity

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Leon Trotsky said, “You may not be interested in war, but war is interested in you.” The same thing might be said about disruptive technologies.
The U.S.. electric system, for example, may not be interested in disruptive technology, but disruptive technology is interested in it. What Uber and Lyft have done to the taxi industry worldwide is just beginning to happen to the electricity industry; and it could shock consumers – particularly the less affluent – as surely as though they had stuck their finger in an electrical outlet.
The disruptive revolution is not only happening here, but also in Europe, as Marc Boillot, senior vice president at Electricite de France (EDF), the giant French utility, writes in a new book.
Ironically, here in the United States, disruption of the otherwise peaceful world of electric generation and sale last year was a bumper one for electric stocks because of their tradition of paying dividends at a time when bond yields were low.
The first wave of disruption to electric generation has been a technology as benign as solar power units on rooftops, much favored by governments and by environmentalists as a green source of electricity. For the utilities, these rooftop generators are a threat to the integrity of the electrical grid. To counter this, utilities would like to see the self-generators pay more for the upkeep of the grid and the convenience it affords them.
Think of the grid as a series of spider webs built around utility companies serving particular population centers, and joined to each other so they can share electricity, depending on need and price.
Enter the self-generating homeowner, who by law is entitled to sell excess production back to the grid, or to buy on the grid when it is very cold or the sun isn’t shining, as at night. The system of selling back to the electric company is known as net metering.
Good deal? Yes, for the homeowner who can afford to install a unit or lease one from one of a growing number of companies that provide that service. Lousy deal for the full-time electricity customer who rents or lives in an apartment building.
There’s the rub: Who pays the cost of maintaining the grid while the rooftop entrepreneur uses it at will? Short answer: everyone else.
In reality, the poor get socked. Take Avenue A with big houses at one end and apartments and tenements at the other. The big houses — with their solar panels and owners' morally superior smiles — are being subsidized by the apartments and tenements. They have to pay to keep the grid viable, while the free-standing house – it doesn't have to be a mansion — gets a subsidy.
It's a thorny issue, akin to the person who can't use Uber or Lyft because he doesn't have a credit card or a smartphone, and has to hope that traditional taxi service will survive.
The electric utilities, from the behemoths to the smallest municipal distributor, see the solution in an equity fee for the self-generating customer's right to come on and off the grid, and for an appreciable difference between his selling and buying price. Solar proponents say, not fair: Solve your own problems. We are generating clean electricity and our presence is a national asset.
EDF's Boillot sees the solution in the utilities’ own technological leap forward: the so-called smart grid. This is the computerization of the grid so that it is more finely managed, waste is eliminated, and pricing structures for homes reflect the exact cost at the time of service. His advice was eagerly sought when he was in Washington recently, promoting his book.
While today’s solar may be a problem for the utilities, tomorrow’s may be more so. Homeowners who can afford it may be able to get off the grid altogether by using the battery in an all-electric car to tide them over during the sunless hours.
The industry is not taking this lying down: It's talking to the big solar firms, the regulators and, yes, to Elon Musk, founder of electric-car maker Tesla Motors. He may be the threat and he may be the savior; those all-electric cars will need a lot of charging, and stations for that are cropping up. There’s a ray of sunshine for the utilities, but it's quite a way off. Meanwhile, the rooftop disruption is here and now. — For the Hearst-New York Times Syndicate