Is independent work always blissful?

In the video of Kalanick arguing with driver about fares, obtained by Bloomberg showed him in a heated exchange with a driver who told the CEO: ‘I’m bankrupt because of you’ Kalanick stepped down, the new CEO is Dara Khosrowshahi, there are some changes in Uber policy?

Historical aspects.

Historically, much of the labor force was independent until more structured employer-employee relationships became a useful way to organize manufacturing activity in the Industrial Revolution. Although payroll jobs became the dominant working style in advanced economies, independent work remained commonplace in many professions even before the rise of new digitally enabled models.

Four segments of independent workers

We look at whether independent workers earn their primary living from independent work or whether they use it for supplemental income, and we distinguish between those who are independent by choice vs. those who are independent out of economic necessity:

• Free agents derive their primary income from independent work and actively prefer it.

• Casual earners use independent work for supplemental income and do so by choice. Some have traditional jobs, while others are students, retirees, or caregivers.

• Reluctant derive their primary income from independent work but would prefer a traditional job.

• The financially strapped do independent work for supplemental income, but they would prefer not to have to do side jobs to make ends meet.

Digital platforms for independent work are transformative.

Despite their extensive media coverage, digital “on-demand” or “sharing economy” platforms such as Uber, Lyft, TaskRabbit, Upwork, Freelancer.com, Airbnb, and the like facilitate only a small fraction of independent work today.

But these platforms have grown rapidly in the past few years, and 15 percent of independent workers have used them to earn income. Those who sell goods are most likely to do so—in this case, by listing on ecommerce marketplaces such as eBay and Etsy. Between 25 and 40 percent of those who earn independently by leasing assets use digital platforms such as HomeAway, Airbnb, or VRBO. Platforms for offering services, such as Uber, TaskRabbit, and Upwork, were used by only 6 percent of independent earners in the United States and the EU-15.

Digital platforms that create marketplaces for labor services further amplify the benefits of the internet in several ways:

• Larger scale. Digital matching platforms establish huge webs of connected users and create transparent markets

• Faster and better matches from real-time information. Digital platforms accelerate matching.

• Richer information signals and ancillary services. Digital platforms enable workers and clients to share profile data and endorsements.

• Near-zero marginal costs. The cost of adding more participants is negligible for the platforms themselves, and the barriers to entry for new workers to join can be similarly low.

Fissured workers are excluded

MGI (2016) excludes from the definition of independent workers people who are regular employees of a company’s subcontractor. Fissuring is one dimension of the larger trend of companies becoming leaner and hiring externally for certain roles so they can focus on what they do best. Doing so can increase their margins and remove liabilities—but many fissured workers receive lower pay and fewer benefits than what the purchasing organization offers its staff employees. Because most of these workers are traditional employees of subcontracting companies, they do not fit in our definition of independent work.

Efficient, mechanized production.

Starting with Adam Smith’s famous example of a pin factory, the efficient, mechanized production that emerged during the Industrial Revolution depended on standardizing not only machinery and processes, but also the way labor was deployed. Long hours and six- or seven-day workweeks were commonplace as most factory owners sought to keep assembly lines humming and maximize output. The fight for a more humane eight-hour workday became the defining cause of the labor movement in the late nineteenth and early twentieth centuries. Unions engaged in a protracted and sometimes bloody struggle to shorten working hours in both the United States and Europe. Later many types of worker protection were introduced in the developed countries. (First steps were done by Henry Ford in 1926. He strongly excluded trade unions).

Problems with traditional work arrangements. By the 1980s, however, some worker’s protecting policies were faulting the rigidity in certain European labor markets and in US for persistently high unemployment. Many countries took some steps toward deregulation to encourage companies to hire. Atypical work forms were introduced. The odds that a new job will become traditional dropped rapidly.

Parallel processes.

• Financial crisis, increasing unemployment

• Technological innovation, ubiquitous internet

• Rigid policy formation, lots of burden on formal work

• Sudden emergence of independent contractors

• Outsourcing the already outsourced industries