Everything we thought we knew about the gig economy is wrong


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The gig is up.

The new contingent worker data threw everyone for a loop:

The Labor Department's report concluded that more than 15 million Americans were working as independent contractors, on-call workers, temporary workers and for contract companies as of May 2017. That's equal to about 10.1 percent of the American workforce, down slightly from 10.8 percent when the government last conducted the survey, in 2005.

That conclusion contradicts a body of academic research that has found a significant increase in what economists call "alternative work arrangements." Two leading economists, Lawrence Katz and Alan Krueger, found in a 2016 study that the number of people in alternative work had risen by more than 50 percent in 2015 from a decade earlier, to 23.6 million.

That's right, the share of Americans in contingent and alternative work arrangements is falling, not rising, according to the latest data from the US Bureau of Labor Statistics. It fell for independent contractors, on-call workers, and temporary help and agency workers, at least since the last time the BLS compiled its contingent work supplement, in 2005. As I've always said, we know very little about the gig economy, but now we know that we knew even less than we'd thought. Gig work doesn't look like the future, much less the present.

Two notes on the data. One, the BLS measured what workers did for their main job, i.e., the job where they logged the most hours. That means it missed everyone who uses independent contracting to supplement a traditional job, for example, a schoolteacher who spends 10 hours on weekends assembling furniture through TaskRabbit. A lot of gig workers fall into this supplemental category, and they aren't showing up. UC Berkeley's Annette Bernhardt has more on this.

Two, the overall decline in independent contractors (to 6.9% from 7.4% in 2005) hides "important industry-level patterns," as Thumbtack economist Lucas Puente pointed out. From 2005 to 2017, the decrease in independent contractors in percentage terms was greatest in manufacturing, wholesale trade, retail trade, and agriculture. The single biggest swing in either direction, on the other hand, came in transportation, which grew by 50%, or an additional 200,000 contractors (we see you, Uber).

It's easy to be seduced by narratives, especially in the absence of good data, and the gig economy has always been strong on narrative. There is "be your own boss" and "set your own schedule," but also the constant posting of Craigslist ads and papering of subway car walls that give the impression the gig economy is all-encompassing (my commute has currently been bought out by TaskRabbit). There is the cheerleadery research by gig and gig-affiliated companies, finding that freelancers will "become the US workforce majority within a decade"; that the gig economy "will double in four years"; that the change "is largely being driven by millennial workers." There is Uber, the gig poster child, with its ever-growing US headcount, now approaching 1 million drivers.

To be sure, we had reason to doubt. In 2016, the JPMorgan Chase Institute, which has done some of the best available work on the gig economy, found that growth in both gig economy participation and wages had plunged, and that worker retention was abysmal. JPMorgan Chase also estimated that a mere 0.4% of American adults were working gigs—jobs on online platforms—in any given month, a figure that roughly matched Larry Katz and Alan Krueger's estimate that the gig economy represented 0.5% of the US labor force.

And yet the gig economy narrative flourished because it conformed to American ideals. Uber and TaskRabbit and companies like them sold a new American dream, one with "no shifts, no boss, no limits," as Uber wrote in an early ad. The message resonated, especially in the wake of a recession that had destroyed millions of traditional jobs, and 10 years later it has proved hard to shake. "At the root of this is American obsession with self-reliance," Jia Tolentino observed in the New Yorker in May 2017, "which makes it more acceptable to applaud an individual for working himself to death than to argue that an individual working himself to death is evidence of a flawed economic system." The idea of the gig economy outgrew the gig economy itself.

Curtis and Kristy.

Elsewhere in narrative seduction, my colleague Sarah Kessler's book, Gigged: The End of the Job and the Future of Work, is out today. It follows the stories of five people involved in gig work—Abe, an Uber driver in Kansas City; Curtis, a programmer in New York; Kristy, a Mechanical Turker in Toronto; Terrance, a teacher in Dumas, Arkansas; and Gary, one of Terrance's students—as well as Dan Teran, co-founder of office management startup Managed by Q.

What I like best about Sarah's book is that it refuses to fall into a single narrative of the gig economy. Curtis thrives as a freelance programmer—"for him, Silicon Valley's utopic description of the gig economy seemed completely true"—while Kristy becomes a slave to Mechanical Turk, the Amazon-owned marketplace for cheap piecemeal labor:

Kristy didn't feel like she could leave her apartment, or even her computer, lest she miss out on an opportunity to work on good tasks. Unlike an employee at a fast-food restaurant or a cleaning company, she didn't get paid for any downtime, and she could earn more money by working smarter and faster. The psychology was that of a game that required her to be constantly on alert. In a way, that psychology kept her going: She'd set a goal for $100 per day, and, cent by cent, she often met it.

Sarah started covering the gig economy in 2011, long before anyone had called it the gig economy, and Gigged is at its best when she lends that perspective to its writing:

The more I learned, the more I understood that the startup "future of work" story, as consoling as it was, was also incomplete. Yes, the gig economy could create opportunity for some people, but it also could amplify the same problems that made the world of work look so terrifying in the first place: insecurity, increased risk, lack of stability, and diminishing workers' rights. The gig economy touched many people. Some of them were rich, some poor, some had power, and some didn't. Its impact on each of them was different.

Go check it out.

Almost famous.

Brian Reynolds is a guy in Chicago Ridge who sometimes rents out his condo on Airbnb. On May 31, he rented the one-bedroom to a woman who said she was in town for a graduation party. Then he got a phone call from a neighbor:

"…he says 'you maybe need to check out what's going down at your place,'" Reynolds said.

Reynolds raced over to his condo and found the parking lot filled with cars and film production trucks.

"I walked through my front door, they had food catering, a bunch of cast members out there. My front door was open half way so I walked in and my whole place was filled. About 30 people in there. I couldn't believe it. I've never had that many people in my place,” Reynolds said.

There were lights, cameras, and plenty of action. The crew had been shooting in the shower and bedroom, making Reynolds fear his condo was about to become the site of a porno. (It turned out to be a music video.) Reynolds told the people to leave. They said they had one more scene left, that would take 45 minutes. "I said no, you guys gotta get out of here," Reynolds says. He reported the entire incident to Airbnb, which texted him that "…the content reported as being filmed in your listing is not a violation of our terms of service."

I have so many questions! For starters, who looks for a place to shoot a music video and thinks, oh, you know what would be perfect, this random guy's condo that I can book on Airbnb. How did all of those people even fit in Brian Reynolds' one-bedroom condo? If they were professional enough to have cameras, lights, and various other film equipment, why didn't they get a proper site to film? Ah, life's great mysteries, played out one weird booking at a time on Airbnb.

Elsewhere in Airbnb, a Montreal borough may tighten restrictions on short-term home rentals. Airbnb is foiling short-term rental enforcement in New Orleans. And Airbnb policy chief Chris Lehane is "puzzled" by Japan's request that it cancel existing bookings for hosts that have yet to properly register their homes with the government.

Fixed prices.

Big news out of Hawaii:

(Reuters) - Honolulu could become the first U.S. city to limit fares ride-hailing companies can charge when demand spikes, following a city council vote on Wednesday, the Honolulu Star-Advertiser newspaper reported.

The city council approved a bill to cap surge pricing for ride-hailing companies by a 6-3 vote. It still needs to be signed by the mayor, whose administration reportedly opposes the measure, to become law. The council could override a veto by the mayor with six votes.

The bill was backed by traditional taxi companies, the Star-Advertiser reported, and staunchly opposed by—you guessed it—Uber and Lyft. "If implemented, this bill will restrict innovation, limit consumer choice, and put the availability of Uber service on Oahu at risk," said Uber Hawaii senior operations manager Tabatha Chow. She hit most of the company's favorite talking points though I am somewhat surprised she failed to go with the "innocent driver" angle. You know, something like, "If implemented, this bill will harm the drivers who work hard to be their own bosses and make sure Uber riders can get a ride when they most need one." But what do I know, I am not in comms.

There have been relatively few conversations about capping surge pricing since Uber in 2014 agreed to place its own restrictions on dynamic fares during official emergencies. Uber made the call nationwide after agreeing to adopt similar policies in New York through discussions with then-state attorney general Eric Schneiderman. That followed Uber charging exorbitant rates as high as 7.75 times the typical fare to riders in a snowstorm in December 2013.

Perhaps the more relevant point is that it's hard to know what a cap on surge pricing would look like in Honolulu. Once upon a time there were rides with surge pricing and rides without surge; now everything is dynamic all the time. Uber's pricing methodology has become much harder to devise ever since it moved to the "upfront" system of having passengers agree to a fare when they book a ride. In theory, those prices are still based on time and distance, but Uber itself has admitted to charging based on other factors, such what it thinks you'd be willing to pay. If we can't separate surge from fares in the first place, how can we even begin to think about regulating it?

Other stuff.

Boz leaves Uber after just one year. Gett raises $80 million led by VW at $1.4 billion valuation. Bird seeks funding at $2 billion valuation. Ofo is getting into scooters. Lyft and Uber seek permits for scooters in San Francisco. Uber expands ebikes to Europe. Uber weighs takeover offer for bikeshare provider Motivate. Uber files patent for technology that identifies drunk passengers. Uber to spend up to $500 million on ads in 2018. Uber is starting to look nervous in London. Uber leaves Abu Dhabi over "prohibitive" regulations. Uber CEO calls for fee on ride-hailing to help out taxi drivers, slams driver who kicked out lesbian couple for kissing. Record 139 taxi medallions to go on sale at bankruptcy auction. Denver Uber driver charged with murder of passenger. Uber rolls out stripped down Uber Lite for developing countries. Inside the Dollar Van Wars. Fleet mode for Uber Freight. Ford's 'Self-Driving' Postmates Test Actually Has a Driver at the Wheel.