Upsurge in Uncertainty About Work Income
http://www.truthdig.com/report/item/the_upsurge_in_uncertain_work_20150827/
Posted on Aug 27, 2015
By Robert Reich
Shutterstock
This post originally ran on Robert Reich's website.
As Labor Day looms, more Americans than ever don't know how much they'll 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 - in the "share" economy, the "gig" economy, or, more
prosaically, the "irregular" economy - the result is the same: no
predictable earnings or hours.
It's the biggest change in the American workforce in over a century, and
it's happening at lightning speed. It's estimated that in five years over 40
percent of the American labor force will have uncertain work; in a decade,
most of us.
Increasingly, businesses need only a relatively small pool of "talent"
anchored in the enterprise - innovators and strategists responsible for the
firm's unique competitive strength.
Everyone else is becoming fungible, sought only for their reliability and
low cost.
Complex algorithms can now determine who's needed to do what and when, and
then measure the quality of what's produced. Reliability can be measured in
experience ratings. Software can seamlessly handle all transactions -
contracts, billing, payments, taxes.
All this allows businesses to be highly nimble - immediately responsive to
changes in consumer preferences, overall demand, and technologies.
While shifting all the risks of such changes to workers.
Whether we're software programmers, journalists, Uber drivers,
stenographers, child care workers, TaskRabbits, beauticians, plumbers,
Airbnb'rs, adjunct professors, or contract nurses - increasingly, we're on
our own.
And what we're paid, here and now, depends on what we're worth here and now
- in a spot-auction market that's 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's
algorithms evaluate and pay workers for exactly what they contribute.
Apple directly employs fewer than 10 percent of the 1 million workers who
design, make and sell iMacs and iPhones.
This giant risk-shift doesn't necessarily mean lower pay. Contract workers
typically make around $18 an hour, comparable to what they earned as
"employees."
Uber and other ride-share drivers earn around $25 per hour, more than double
what the typical taxi driver takes home.
The problem is workers don't know when they'll 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.
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 -
longer than in any other advanced economy.
And why we're so stressed. According to polls, almost a quarter of American
workers worry they won't be earning enough in the future. That's up from 15
percent a decade ago.
Irregular hours can also take a mental toll. Studies 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 research.
For all these reasons, the upsurge in uncertain work makes the old economic
measures - unemployment and income - 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 - because there's no
clear "employer."
And for the same reason eliminates employer-financed insurance - Social
Security, workers compensation, unemployment benefits, and employer-provided
health insurance under the Affordable Care Act.
What to do? Courts are overflowing with lawsuits over whether companies
have misclassified "employees" as "independent contractors," resulting in a
profusion of criteria and definitions.
We should aim instead for simplicity: Whatever party - contractor, client,
customer, agent, or intermediary - pays more than half of someone's 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 - to take these
risks off the backs of individuals and spread them as widely as possible.
In addition, to restore some certainty to peoples' lives, we'll 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've received from all the jobs you've taken over
the preceding five years. Under one form of income insurance, you'd
automatically receive half the difference for up to a year.
But that's not all. Ultimately, we'll need a guaranteed minimum basic
income. But I'll save this for another column.
http://www.truthdig.com/ http://www.truthdig.com/
Upsurge in Uncertainty About Work Income
http://www.truthdig.com/report/item/the_upsurge_in_uncertain_work_20150827/
Posted on Aug 27, 2015
By Robert Reich
Shutterstock
This post originally ran on Robert Reich's website.
As Labor Day looms, more Americans than ever don't know how much they'll 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 - in the "share" economy, the "gig" economy, or, more
prosaically, the "irregular" economy - the result is the same: no
predictable earnings or hours.
It's the biggest change in the American workforce in over a century, and
it's happening at lightning speed. It's estimated that in five years over 40
percent of the American labor force will have uncertain work; in a decade,
most of us.
Increasingly, businesses need only a relatively small pool of "talent"
anchored in the enterprise - innovators and strategists responsible for the
firm's unique competitive strength.
Everyone else is becoming fungible, sought only for their reliability and
low cost.
Complex algorithms can now determine who's needed to do what and when, and
then measure the quality of what's produced. Reliability can be measured in
experience ratings. Software can seamlessly handle all transactions -
contracts, billing, payments, taxes.
All this allows businesses to be highly nimble - immediately responsive to
changes in consumer preferences, overall demand, and technologies.
While shifting all the risks of such changes to workers.
Whether we're software programmers, journalists, Uber drivers,
stenographers, child care workers, TaskRabbits, beauticians, plumbers,
Airbnb'rs, adjunct professors, or contract nurses - increasingly, we're on
our own.
And what we're paid, here and now, depends on what we're worth here and now
- in a spot-auction market that's 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's
algorithms evaluate and pay workers for exactly what they contribute.
Apple directly employs fewer than 10 percent of the 1 million workers who
design, make and sell iMacs and iPhones.
This giant risk-shift doesn't necessarily mean lower pay. Contract workers
typically make around $18 an hour, comparable to what they earned as
"employees."
Uber and other ride-share drivers earn around $25 per hour, more than double
what the typical taxi driver takes home.
The problem is workers don't know when they'll 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.
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 -
longer than in any other advanced economy.
And why we're so stressed. According to polls, almost a quarter of American
workers worry they won't be earning enough in the future. That's up from 15
percent a decade ago.
Irregular hours can also take a mental toll. Studies 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 research.
For all these reasons, the upsurge in uncertain work makes the old economic
measures - unemployment and income - 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 - because there's no
clear "employer."
And for the same reason eliminates employer-financed insurance - Social
Security, workers compensation, unemployment benefits, and employer-provided
health insurance under the Affordable Care Act.
What to do? Courts are overflowing with lawsuits over whether companies have
misclassified "employees" as "independent contractors," resulting in a
profusion of criteria and definitions.
We should aim instead for simplicity: Whatever party - contractor, client,
customer, agent, or intermediary - pays more than half of someone's 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 - to take these
risks off the backs of individuals and spread them as widely as possible.
In addition, to restore some certainty to peoples' lives, we'll 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've received from all the jobs you've taken over
the preceding five years. Under one form of income insurance, you'd
automatically receive half the difference for up to a year.
But that's not all. Ultimately, we'll need a guaranteed minimum basic
income. But I'll save this for another column.
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