How Gig Work Makes the U.S. Economy Look Better Than Americans Feel | Opinion

Uber recently filed its first quarterly report as a publicly traded company. Although it lost $1 billion, investors may still do well because the losses appear to be declining.

Uber drivers, on the other hand, aren't doing well. According to one study, about half of New York City's Uber drivers are supporting families with children, yet 40 percent qualify for Medicaid and another 18 percent for food stamps.

It's similar elsewhere in the new American economy. Last week, The New York Times reported that fewer than half of Google workers are full-time employees. Most are temps and contractors receiving a fraction of the wages and benefits of full-time Googlers, with no job security.

Across America, the fastest-growing category of new jobs is gig work—contract, part-time, temp, self-employed and freelance. And a growing number of people work for staffing firms that find them gig jobs.

Estimates vary, but it's safe to say almost a quarter of American workers are now gig workers. Which helps explain why the standard economic measures—unemployment and income—look better than Americans feel.

The jobs problem today isn't just stagnant wages. It's also uncertain incomes. A downturn in demand, change in consumer preferences, or a personal injury or sickness can cause future paychecks to disappear. Yet nearly 80 percent of Americans live paycheck to paycheck.

According to polls, about a quarter of American workers worry they won't be earning enough in the future. That's up from 15 percent a decade ago. Such fears are fueling working-class grievances in America and presumably elsewhere around world where steady jobs are vanishing.

Uber IPO
Uber co-founder Ryan Graves, right, rings a ceremonial bell as the ride-hailing company Uber makes its highly anticipated initial public offering on May 10 in New York City. While investors in Uber may do well, Uber drivers are struggling, writes Robert Reich. Getty/Spencer Platt

Gig work is also erasing 85 years of hard-won labor protections.

At the rate gig work is growing, future generations won't have a minimum wage, unemployment insurance, worker's compensation for injuries, employer-provided social security, overtime, family and medical leave, disability insurance, or the right to form unions and collectively bargain.

Why is this happening? Because it's so profitable for corporations to use gig workers instead of full-time employees.

Gig workers are about 30 percent cheaper because companies pay them only when they need them and don't have to spend on the above-mentioned labor protections.

Increasingly, businesses need only a small pool of "talent" anchored in the enterprise—innovators and strategists responsible for the firm's competitive strength.

Other workers are becoming fungible, sought only for reliability and low cost. So, in effect, economic risks are shifting to them.

It's a great deal for companies like Uber and Google. They set workers' rates, terms and working conditions, while at the same time treating them like arms-length contractors.

But for many workers, it amounts to wage theft.

If America still had a Department of Labor, it would be setting national standards to stop this.

Yet President Donald Trump's Anti-Labor Department is heading in opposite direction. It recently proposed a rule making it easier for big corporations to outsource work to temp and staffing firms, as well as escape liability if those contracting firms violate the law, such as not paying workers for jobs completed.

On the other hand, California is countering Trump on this, as on other issues.

Last Wednesday, the California Assembly passed legislation codifying an important California Supreme Court decision: For companies to treat workers as independent contractors, the workers must be free from company control, doing work that's not central to the company's business, and have an independent business in that trade.

(The bill is not yet law. It still has to pass the California Senate and be signed by the governor. And businesses are seeking a long list of exemptions—including ride-share drivers and many of high-tech's contract workers.)

Whatever national rule eventually emerges for defining gig workers, they'll need a different system of social insurance than was the case when steady full-time employment was the norm.

Robert B. Reich, former secretary of labor, is chancellor's professor of public policy at Berkeley. He is author, most recently, of The Common Good.

The views expressed in this article are the author's own.​​​​​​​