The sharing economy birthed by Bay Area startups has grown into an international phenomenon, complete with on-demand workers like those at TaskRabbit, who provide everything from toothpaste delivery to accounting services. Many of these workers, like those in a recent BuzzFeed profile, say they’re living the new economic dream, but the truth of the sharing economy is much darker. The ones profiting from the new economy aren’t young people, but the corporations that profit off them.
Far from being a paradise of easy money earned on your own terms, the 1099 economy, as it’s sometimes called, is in fact a precarious world best suited for those who are naive, young, and healthy. It may be billed to the public as the face of a new economic future, but in many ways, it’s reminiscent of the piecework economy of the late 19th and early 20th century.
As the Guardian’s Sarah Jaffe explains, “It was common in the late 19th and early 20th century that, instead of working in a factory for a wage or a salary, workers sewed or assembled goods at home and were paid by the finished item rather than for their time.” It seems the poor little matchgirl has become the poor little Postmate.
Though on-demand apps, a dizzying array of products and services are only a tap away, but that comes at a cost to the workforce that drives those services—and a potential big cost to society as well. When workers are left without a safety net, their falls are broken by the rest of us. This bright new economic future has no precedent, and the government hasn’t moved to regulate it.
Cheerleaders of the share economy revel in its flexibility, allegedly higher pay, and ability to be performed anywhere. However, the reality on the ground can be quite different. High turnover isn’t unexpected with work that’s clearly designed to be temporary—few project making a long-term future out of this kind of task-based labor—but many workers find themselves leaving sooner rather than later, citing a surprising lack of flexibility and lower pay than advertised. With 34 percent of the working population involved in the freelance and contracting sector, this is not a trivial problem.
Davey Alba at Wired cuts to the heart of the problems with the sharing economy:
Top complaints from workers included not being able to find enough work, not understanding legal obligations and taxes, and being unable to optimize schedules to maximize earnings. Half of the respondents said they planned to stop working for on-demand companies within the year, citing insufficient pay, lack of enjoyment of the work, or simply because they no longer had the need to work the job.
That’s reflected in the demographic makeup of such workers, who are overwhelmingly male, white, and in their early-to-mid 20s. Most are also single with no children, highlighting the nature of the sharing economy as an option really only available to those without ties and obligations. Median hourly wages tend to sit around $18 hourly, which doesn’t necessarily translate into high earnings for people who work intermittently or in expensive areas of the nation like San Francisco or New York.
Lives change, too. Things can happen in an instant, and members of the sharing economy are often ill-equipped to deal with them because they lack savings and the benefits that might be provided through a traditional job. A contract worker who gets in a car accident may have only the most minimal of health insurance plans, as she couldn’t afford a more expensive one and didn’t see the need. Suddenly, she’s facing huge medical expenses and an inability to work.
She likely has no savings, either, as it can be difficult to build savings on subsistence wages. Just short of 20 percent of Americans actually build and maintain savings accounts for events like these, and not many are among the sharing economy masses. Even among those who make enough to be able to put funds aside, many lack financial planning skills or the ability to consult with accountants who can help them manage income and taxes efficiently.
Far from being a paradise of easy money earned on your own terms, the 1099 economy, as it’s sometimes called, is in fact a precarious world best suited for those who are naive, young, and healthy.
Some life events are more predictable but still pose problems for independent contractors, as discussed in a piece at the Economist: “The on-demand economy certainly produces unfairnesses: Taxpayers will also end up supporting many contract workers who have never built up pensions.”
The same holds true for pregnancy, sending children to college, and other events that can get quite costly. Even buying a house, the root of the American dream, is out of reach for those consumed with the basics of staying alive on piecework incomes, especially with skyrocketing real estate prices in markets where the sharing economy thrives. Try affording a two-bedroom apartment in Manhattan on TaskRabbit wages, let alone an actual house.
Effectively, taxpayers and the federal government are subsidizing companies that rely heavily on the independent contractor model by ensuring they don’t have to pay benefits, enroll in workmen’s comp insurance programs, and incur other expenses associated with a regular workforce. The sharing economy is one facet of corporate welfare in the United States, leaving workers and the government holding a bag that companies should be managing on their own.
We need better checks on the sharing economy to protect workers and allow them to build better futures for themselves. One possible example is the model presented by BlueCrew, which provides on-demand labor but pays its workers as employees. The company notes that it avoids potential tax liability and other problems by managing workers as ordinary W2 employees, while workers get stable work and job security in exchange.
For clients, the availability of screened and trained on-demand labor can be reassuring in an era of total strangers arriving on the doorstep to fix the plumbing.
BlueCrew’s approach could be a new model for the on-demand economy, providing the flexibility many have come to expect while protecting the people who provide it. Those who want cupcakes delivered to their loft in the middle of the night can still get them, but the cyclists who bring them could rest easy instead of pedaling desperately from gig to gig.
S.E. Smith is a writer, editor, and agitator with regular appearances in the Guardian, AlterNet, and Salon, along with several anthologies. Smith also serves as the Social Justice Editor for xoJane and will be co-chairing Wiscon 40—the preeminent feminist science-fiction conference—in 2016.