2857. The Uber Crash Is Just the Start: How the Gig Economy Threatens the Future of Work

By Anthony Gabb, Truthout, March 26, 2018

Taxi drivers protest agains Uber in Berlin, Germany, June 11, 2014.

Uber, the embodiment of the sharing economy, was once again propelled into the spotlight on March 19, 2018, after one of its self-driving cars struck and killed a pedestrian in Arizona. This has resulted in renewed debate over the safety of Uber's driverless cars, as well as over its illegal and unethical tactics of skirting regulations, which are in part responsible for the company's rapid growth.

Since the end of the post-WWII economic expansion in the 1970s, capitalism has been struggling with slow growth and flat wages. The gig economy, actuated by technological innovation, is a restructuring response to cut labor costs and increase profits. It is not a solution for unemployment, inequality and forced migration, yet estimates show that the gig economy will soon account for over 40 percent of the US workforce. Simultaneously, capitalism manufactures both wealth and unemployment (thereby inequality and misery), which is necessary for its own existence. Immigrants are not the cause of unemployment, and the gig economy is not the solution.The gig economy is the future workplace, once associated with less industrialized countries in the 1970s, where temporary, unstable employment is commonplace and companies tend toward hiring employees who are all but in name performing the work of permanent workers but are denied permanent employee rights. It is glamorized by some, but the truth is, it undermines the traditional economy, and will aggravate unemployment, poverty and immigration. The "gigzombie" is the alienated gig employee whose vitality has been sapped by rapid technological advancements that are changing the nature of work and increasingly threatening job security.

Forces Giving Rise to the Gig Economy

To understand the need to restructure the future workplace to boost the corporate bottom line, it is important to understand the economic forces that have brought us to this point. As such, the Marxist theory of the accumulation of capital (wealth) assumes that "labor is the source of all value." The drive for profits gives rise to technological change. Labor and machines working together create more wealth.

The problem is that in order to create more wealth, workers are replaced by machines, which tend to cause more unemployment, torment and migration. As unemployed workers move into and out of the workforce, they are used as a lever to discipline the already employed by destroying unions, depressing wages, making it easy to lay off workers without notice and replacing them with temporary and part-time employees, destroying the social safety net, and keeping production costs down. When the number of displaced workers plus the increase in population is greater than the number of jobs created, the result is mass unemployment and poverty, which triggers migration to places where people think there are jobs. Immigration laws, which are anti-labor laws, are used to manage the ebb and flow of the global reserve army of the unemployed, by opening or closing the immigration spigot to make cheap labor available.

The point is that capitalism is unable to create dignified work with livable wages and benefits for everyone who wants to work. The system manufactures unemployment; it is a necessary outcome of the accumulation of wealth, and a tool used to perpetuate the existence of the system by pitting employed and unemployed workers, and US-born and immigrant workers against one other, making them compete for a limited number of jobs. As such, capitalism creates obscene levels of inequality; the rich get richer and the poor get poorer.

The Future Workplace

The workplace is rapidly transitioning from the traditional 40-hour workweek with benefits, to the gig economy, where there is a race to reduce labor cost, and at the same time, creating an environment where immigrants are an instrument of control due to the schism (the false notion that immigrants are taking our jobs) between them and the US-born workforce.

Technological innovations give employers the ability to identify, calculate and monitor how much employees produce wherever they are. In this increasingly automated workplace, digital technology enables employers to manage the workplace from afar, allowing them complete control over workers; the machine incorporates and absorbs the worker who is the appendage within it, and extracts wealth from it. Already, more than 34 percent of the workforce is employed as temporary part-time precarious employees and expected to soon grow to 43 percent of the total workforce.

The state plays a critical role in the transition to the gig economy by dismantling unions using "right-to-work" laws and re-writing tax laws that suggest people can get rich from becoming independent contractors. Under provisions of the Taft-Hartley Act that require unionized workplaces to become "open shops," employees must be allowed to work whether or not they join the union or pay dues. This makes it more difficult for workers to form unions. About 28 states in the US are right-to-work states. In part, right-to-work laws have devastated organized labor. Unionized workers on average are paid 27 percent more than non-union workers. If you want a raise, join a union is fast becoming a thing of the past. In the absence of union representation, labor costs decrease at the expense of workers, by reducing wages and benefits.

The recent tax law passed by Congress and signed by Trump gives $1.5 trillion to corporations and the wealthy. Some believe that tax cuts for small businesses offered by the new tax law will increase the pace to form independent contractor small businesses in order to take advantage of these tax cuts. This, however, comes at a cost, as employers shift the cost of wages and benefits -- once hard-fought for by unions -- onto employees.

The Future Workforce

As population grows and automation displaces millions of workers in farming and manufacturing, the levels of unemployment and the number of workers looking for work in the service sector increase. As the tendency toward mass unemployment and the transition from union to non-union, and full-time permanent status to temporary part-time independent contractors, consultants and freelancers increase, so too, has migration, the widening inequality gap and poverty.

The spectrum of the workforce, according to Marx, (the proletariat) spans from those who are working, to the mass unemployed (reserve army of the unemployed), to those who have lost their class identity -- people who are very poor and disenfranchised (the lumpen proletariat). The actively employed are distributed among the primary, secondary and tertiary sectors. The reserve army of the unemployed includes the floating, latent and stagnant unemployed. During the last 40 years, while there has been an increase in the number of the actively employed, due to automation and an increase in the working-age portion of the global population, there has also been a significant increase in unemployment.

During this period, the number of workers displaced by automation, plus the increase in population has far outpaced the number of jobs created, both in the US and global economies. During the four decades beginning in 1977, from Presidents Carter to Obama, the US economy created 69.8 million jobs (Carter 10.5 million, Reagan 15.9 million, G.H.W. Bush 2.6 million, Clinton 21.5 million, G.W. Bush 2.1 million, and Obama 17.2 million) -- an average of 1.7 million a year. The workforce grew an average of 1.6 million a year, and the number of yearly unemployed people ranged between 5.6 and 1.5 million. From 1980 to 2014, the number of people living in poverty in the US increased from 29.3 to 46.7 million. From 1990 to 2010, the size of the global workforce increased by 40 percent, or 1.3 billion people to 4.5 billion people. The global industrial reserve army of the unemployed is projected to be 215 million, with only 40 million new jobs added; more than 60 percent of those who are employed are in precarious employment. By 2030, not accounting for population growth, an additional 400 to 800 million will be displaced by automation. These changes in the size of the reserve army of the unemployed tend to create downward pressure on wages and exacerbate unemployment, migration and inequality.

The primary sector includes all non-manufacturing workers in the extractive industries like mining, farming and fishing; the secondary sector includes all industrial/manufacturing workers; and the tertiary sector includes service workers in the public and private spheres. The service sector has expanded as more workers have been displaced by automation in farming and manufacturing. Since 1960, the portion of the workforce in manufacturing decreased from 25 percent to about 8.5 percent of the total workforce in the US. About 80 percent of US workers are now employed in the service sector.

At the other end of the workforce spectrum is the mass unemployed, which includes the floating, latent and stagnant unemployed. The floating unemployed is the most mobile and moves more easily (than those displaced in the farming sector) into and out of manufacturing jobs, depending on whether the economy is expanding or contracting. As automation increases, workers in this sector are expected to increase the number of the precarious independent contractors, consultants and freelancers employed in the gig economy. More than 57 million workers in the US are already employed in the gig economy, most of them in temporary, part-time, low-paid jobs, without any job security or benefits.

The latent unemployed, generally less mobile than the floating unemployed, includes workers displaced from the farming sector, who migrate to urban areas where they compete for precarious employment with unemployed manufacturing workers. The stagnant unemployed, the least mobile and fluid sector, includes both those who are able to work and those who cannot work, such as the elderly and the disabled. As deindustrialization of the economy becomes more acute, the floating and latent sectors will increase the ranks of the poor.

In 2016, the United Nations reported an "unprecedented 65 million people displaced by war and persecution in 2015" and over 160 million others living outside their countries of origin. In 1970, there were 9.6 million immigrants in the US, or 4.7 percent of the population; in 2016, there were 43.7 million, or 13.5 percent of the population. Due to economic plight in the less developed world, immigration has continued to shape the US and global workforces.

The rise in global unemployment driven by innovation, which exacerbates economic plight, as well as natural and human-made disasters like wars, all impact migration patterns. As immigrants impact economic, social and cultural dimensions of host countries, what drives the discourse on immigration in host countries are issues of joblessness and the "threat" immigrants pose to their "values" and customs. The solution proposed by many is to demand that governments do more to manage immigration.

A circumspect review of immigration data dispels these myths about immigrants. The truth is that immigrants inject new energy into the economy, academia, arts and sciences, and technological innovation. As political and economic conditions in the US change, however, many immigrants no longer see the US as their first destination. In fact, the 2016 US census reported that citizens who have chosen to live outside the US have more than doubled from 4 million to 9 million between 1999 and 2016.

Toward Radical Change

As attacks on immigrants and labor unions continue, wealth has become more concentrated in the hands of a few billionaire oligarchs. The richest 42 people on the planet control more wealth than the poorest 50 percent of the world's population. In 2017, 57 percent of Americans had less than $1,000 in savings; less than 50 percent  of them have less than $400. In 2015, The American Institutes for Research and National Center on Family Homelessness reported that in the US, there were over 2.5 million homeless in 2012 and between 13.4 million and 16.5 million children living in poverty. Most of Walmart workers earn less than $25,000 last year.

Over the past 40 years, the global economy has followed similar trends. The world's population increased by 3.4 billion and there has been a significant shift toward the service sector, which is also under pressure from automation. The availability of cheap labor as well as high levels of unemployment and the lack of unions in the less industrialized world have maintained and intensified temporary part-time employment that is now trending in many industrialized economies. Twenty percent of organizations globally with more than 1,000 employees have a workforce that is made up of 30 percent or more contingent workers and 162 million people in the US and Europe are engaged in independent work. The US accounts for 53 million. As the gig economy expands, globally, more than 3 billion people live on less than $2.50 per day, and 1.3 billion live on less than $1.25 per day in extreme poverty.

Many retired elderly people employed by Amazon, who gave the best years of their lives to their jobs, now live nomadic lives, in makeshift refugee trailer encampments, which they set up serendipitously in parking lots of big box warehouses where they work. Because many of these people's social security checks are generally less than $1,000 a month, they supplement it by working at Amazon and Walmart warehouses, making sub-standard wages in exchange for robotic 10-hour workdays. They can be fired without notice and don't get paid extra if they take longer than the prescribed time to complete their assigned work. Many of them have said that they work sometimes under horrible workplace conditions without any air conditioning or heating. At the same time they are complimented for their work ethic, they are discouraged from talking to union organizers. It has been reported that Amazon warehouses have set up "Li'l Medics" stations and "Urine Color Charts" outside bathroom walls for workers to check the color of their urine to monitor dehydration and to convey the feeling that the company cares about them.

Sadly, these elderly workers, who are made to compete with younger "gigzombies" in their prime working age, have been known to say that they are happy with what they can get, the opportunity to subject themselves to such humiliation. The working conditions in the gig economy is reminiscent of the horrible working conditions experienced almost a hundred years ago, in the 1930s, by San Francisco longshoremen. There is a well-known example of a reported incident after a 700-pound load accidently dropped on the foot of a longshoreman and broke several bones. Employers placed the worker on the no-hire blacklist because they said he had weak bones.

As economic crises become more frequent and acute, and unemployment, migration and inequality reach unacceptable heights, critics have called for a greater role for government. But these trends are systemic and ubiquitous and, as such, a greater role for government and the gig economy are not solutions to these problems. Mass unemployment is the necessary outcome of the accumulation of wealth. Capitalism is an economy driven by profits, which hampers the development of humanity; when profit investment ventures dry up, the system shuts down. A collectivized system where the fruits of human labor are available to all will set free the forces of labor for the benefit of everyone, not just a few.

Workers -- the creators of wealth -- want dignified and creative work, with a shorter workweek and a livable wage with benefits, not a gig economy that is automated and stacked with robotic "gigzombies."

In this respect, there are important lessons to learn from the revolutionary tradition in the US. This tradition has a long history that has inspired subsequent generations to demand a world free of misery, impoverishment, exploitation, oppression and class distinctions. They understood that radical change is not just a thing of the past, but that it requires international solidarity, since the alternative is a life of abject poverty.