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You are here: Home / Archives for gig economy workforce

Maybe Uber Drivers Can Handle Amazon Deliveries Too

September 9, 2019 By David Griesing Leave a Comment

These days it seems like companies are pawning off as many risks, costs and responsibilities on workers as they can get away with. It’s particularly apparent among new gig-economy workers like Uber and Amazon drivers. The on-going transfer of economic burdens from companies to workers is a principal reason why many (and maybe most) Americans feel economically vulnerable today. 

At its heart, this is an ethical problem. Where do flourishing workers (families and communities) fall on our list of national and local priorities? Until very recently, the answer was “pretty low,” which is a key reason why there was such widespread discontent around the 2016 election and why it continues to unsettle our next one. Too many Americans feel that the economic security they have painstakingly built for themselves is being assaulted from all sides.

Since the 1980’s, government policies have massively favored businesses over workers, families and communities. This is simply a fact.

That preferential treatment includes policies that dictate who (between companies and individuals) pays and does not pay taxes, and how much each one of them pays. It includes lax enforcement policies that have enabled our most innovative companies (like Google, Facebook and Amazon) to achieve marketplace dominance by eliminating their competition and, in effect, operate however they want. It is also explained by the declining counterweight of organized labor and (until this year) by open trade policies that found the cost of an American worker directly competing with the cost a similar worker in China, Vietnam or Bangladesh. 

The net of these (and similar) forces over the past 50 years is that each American worker has been progressively owning a smaller and smaller share of the nation’s wealth given how little she’s compensated for her labor, while also being asked to pay more than she should for many “goods and services” in our consumer-driven economy. In other words, she’s being squeezed at both ends.

It’s hardly a recipe for flourishing workers, or for the families and communities across America that depend on them to thrive. 

Given the on-going, anti-workforce trend, I’m not being entirely facetious when I suggest that Uber drivers could be asked tomorrow to handle Amazon deliveries too. When all that we seem to care about is maximizing an Uber’s or an Amazon’s profits, an additional demand like this on gig-economy workers hardly seems out of the question. Why not pile even more onto them?

No wonder the social fabric feels like it is unraveling on the backs of the individuals (like you and me) whose strength it depends on at least as much as the companies that have organized and rallied us in profit-making directions.

         The Shift of Risks, Costs and Responsibilities to Workers Continues

Recent stories about workers at Amazon and Uber illustrate the exploitation and vulnerability that are all-too-familiar by-products of working in America today. Not only is there little-to-no safety net around these and other gig-economy workers; but more and more economic risk is continuously shoved onto them by companies that champion profits over paying their workers enough to provide the bare necessities for their families.

If you drive for Uber (or for one of the other car service companies) you’re probably no longer surprised when your passenger wants you to take him to the hospital with a medical emergency. According to a recent University of Kansas study and several recent podcasts picking up on it, Uber cars are commonly used as ambulances because in many parts of the country, taking an ambulance to the ER is not covered by health insurance and can run into the thousands of dollars. As a result, Uber drivers are being called upon to shoulder the financial responsibility (as well as the stress) of ferrying people who are often in extremis to emergency rooms across America. Of course, they never come close to recouping these psychological and risk-laden “costs” in their ride-hailing fees.

A mid-August op-ed in the Wall Street Journal describes another way that Uber drivers end up paying in ways they never contemplated. Few of these drivers appreciate that they are failing to recoup anything that even approximates the depreciation in value that comes from using their private cars—an amount the authors calculate at $11 billion a year, and another burden that Uber is off-loading onto its workers.

Once drivers understand that they are liquidating the value of their vehicles, in effect receiving pay-day loans with their cars as collateral, the effects may be significant. Companies like Uber, Lyft, Grubhub and Door-Dash may find it more difficult to recruit and retain drivers unless they raise prices and pay drivers more.

Another recent article decried how Amazon has exempted itself from any financial responsibility for its drivers who get in car accidents while they are making deliveries to Amazon’s customers. It is the delivery-driver’s car insurance (and his rising premiums) not Amazon’s that bear this expense. Under a clause in the driver’s contract, company profits are shielded from liability for personal injuries and property damage during the company’s delivery-related accidents. Of course many if not most drivers fail to realize that they have “accepted” this responsibility until it’s too late.
 
This summer, journalists at the New York Times also focused  on the working conditions at Amazon’s cavernous regional warehouses, where its employees toil side-by-side with increasingly nimble robots to ensure that the book or toiletry you ordered gets into the right box. One terrifying down-side in this “who’s more efficient, the human or the machine?” type of workspace, is the extent to which live employees are monitored down to the minute in the quest for almost robot-like efficiency throughout their shifts. In addition, because many fear that their jobs will be replaced by their robotic co-workers one day, they strive to meet an automaton’s level of performance to demonstrate their continuing value as employees.

Ironically, these Amazon warehouses are called “fulfillment centers,” but certainly not for the men and women who are becoming stressed out and broken down by working in them. Moreover, when considered in light of “morally acceptable work standards,” it seems fair to ask whether “free” deliveries, “same day” deliveries and customer convenience can be justified when the worker (family and community) costs are this high. 
 
Beyond Uber and Amazon, all of us are either moving from work towards retirement or have already retired. That’s what makes the next story—about home health workers—both heartwarming and chilling. 
 
Mostly women and often minority women, home health workers are the caregivers for millions of people who are still living at home but find themselves burdened by illness, disability or advanced age. These are “whatever-is-required” kinds of jobs, including feeding, bathing, administering medication, providing companionship and ensuring their clients’ personal safety and integrity. Home health workers are literally sustaining people’s lives, yet they struggle as a group to receive “a living wage” in exchange for their long hours and humanitarian service. 
 
As more people live to advanced age but want to avoid long-tern care facilities by staying at home, these health workers will be in even greater demand, but even the groups that are most likely to need their services are not calling for them to receive adequate pay. I, for one, would not want to hope that I’ll receive compassion when my caregiver isn’t being respected enough or paid enough to provide it. But still, according to the reporters in this story, most of these home health workers are, in fact, providing it. That means these women are, in essence, receiving pay-day loans with their human decency as collateral so that the health care companies that employ them can make as much money as possible. It’s one more shameful tradeoff.
 
Many American workers are also parents providing for their children. But according to a New York Times story last week, 67% of the 1000 parents surveyed said they had gone into debt to buy their children necessary items such as food, clothes and food, and 69% of them said that they kept these child-related debts a secret. 
 
Part of the reason that the economic insecurity of many (if not most) Americans has stayed below the radar is that many (if not most) Americans are either too proud to talk about it or too embarrassed to admit that they’ve failed to realize the American Dream. But their anxiety is real. It is manifest in our politics, and the full extent of the problem will (quite literally) “come home to roost” when the nation enters more turbulent economic waters or we find ourselves in the next recession.

It’s time to strengthen the social fabric with sound economic policies

While we have been victimized as “workers” and “families” by 50 years of government policies that have mostly favored business, we have also been victimized as “consumers,” right down to today.
 
This country functions on the proposition that we will bring our paychecks home, pay for our families’ necessities, and spend much of the rest buying what our consumer-oriented companies produce. Well, it turns out that in many instances we are overpaying as consumers too.

Because policy makers have largely failed to ensure healthy competition between companies through strategic application of the anti-trust laws, several companies in rapidly growing sectors of the economy have achieved near total market dominance—and the pricing power that comes with it. In other words, in an uncompetitive marketplace, dominant companies can charge consumers more (and sometimes far more) for their goods and services than they could in a more competitive one. This appears to be the case in the market for cell-phone plans.
 
In recent decades, regulators have allowed the cell phone service market in the US to consolidate. As recently as a few months ago, regulators allowed T-Mobile and Sprint to merge, reducing what little competition there had been even further. Well, a Wall Street Journal column this week highlighted a recent study showing that Americans, on average, pay 27% more than their French counterparts for cell phone service. The difference between the US and France is that the French enjoy a far more competitive market for these kinds of plans. On the other hand, when you allow markets to consolidate and grow un-competitive (as the US has done) higher prices are one of the consequences, but not the one one for individuals. As the study’s author notes:

declining competition has raised profit margins [for companies] and prices [for consumers] while reducing workers’ share of national income in the U.S.  By contrast, the labor share [of France’s and the rest of the EU’s economic prosperity] has remained constant in Europe.

What this means is that our piece of the economic pie as workers has also been reduced by the lack of competition at the very same time that the prices we pay as consumers are higher, and sometimes much higher than if there were more, say, telecommunications companies competing for our business.
 
All of this adds up to economically vulnerable and anxious Americans, whether they are viewed as workers, parents, community members or consumers.

While focusing on gig-economy workers in particular, a recent post here argued for “re-bundling” benefits around them to account for their occasional unemployment or uneven income streams, their loss of traditional health and retirement benefits, and their inability to obtain financing without a traditional 9-to-5 job. To the extent that these “new economy” jobs are likely to become even more plentiful as automation replaces “old economy” jobs, the wide-spread absence of a safety net like this threatens social stability and cohesion. But as the stories above suggest, the anxiety and economic insecurity is hardly limited to gig-ecocomy workers. Instead, it affects nearly all but the very richest Americans. 
 
The good news in this troubling story is that the imbalance may finally have begun to right itself.

A New Political Force for Workers and Consumers?

There are reasons for cautious optimism because of a recent action from within the business community. Last month, the Business Roundtable, comprised of the CEOs of America’s largest companies, issued what it called A Statement on the Purpose of a Corporation.

In a sharp break with the past, this Statement expressed a “fundamental commitment” to all of a company’s stakeholders: putting employees, suppliers and communities on a pedestal that once belonged only to the company’s investors (or shareholders). On “investing in employees,” the Statement said:

This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. . . Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.

If a core group of America’s most prominent business leaders (181 of them, in fact) makes good on this Statement, it will not be for altruistic reasons alone. A comment at the time in Axios which was called “CEO’s Are America’s New Politicians” lists several of the reasons that following through with corrective policies would be in these companies’ best interests too and not just a paternalistic gesture. Among other things:

–  Millennial employees demand their employers stand for something beyond profit;
 
–  It is getting harder to recruit and retain talent, especially tech talent, if profit is the only objective;
 
–  A rising number of consumers make purchasing decisions based on a company’s social purpose;
 
–  The media applies a lot more pressure on CEOs to take positions on political topics, such as race and immigration;
 
–  Every CEO/company is vulnerable to split-second, social media uprisings. Undefined CEOs and companies find it impossible to push back. 

The Roundtable’s corporate leaders are also aware that the desirability of “the capitalist system” that they safeguard is itself being debated in the run up to the next election. And finally, many of them seem to realize that acting on the Statement’s promises is the right thing to do given the imbalances that have grown between their companies and Amerca’s workers/ consumers over the past 50 years.  
 
What advocates for a flourishing workforce (and the families and communities they support) need to do is hold these corporate leaders to their noble sounding but still generalized promises. This business community needs to generate specific policy proposals and then put their considerable lobbying clout and bully pulpits behind them. For our part, we need to hail their efforts in our public statements and at the ballot box, if and when (as I hope they do) those efforts get underway.

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It is hard to escape the conclusion that America’s social fabric is both loosening and fraying. Much of the reason for this breakdown is the growing tide of economic anxiety and insecurity that has resulted from a half century where American business has gained while American workers and consumers have lost. In the political season ahead, each one of us will have many opportunities to support what is important to us. My argument is that we need to begin with thriving workers, families and communities.

This post was adapted from my September 8, 2019 newsletter. When you subscribe, a new newsletter/post will be delivered to your inbox every Sunday morning.

Filed Under: *All Posts, Being Part of Something Bigger than Yourself Tagged With: BRT Statement, Business Roundtable Statement on the Purpose of a Corporation, competition, consumer, economic anxiety, economic insecurity, flourishing workers, gig economy workforce, gig-economy workers, re-bundling of worker benefits, safety net, thriving workers, work, worker, workers, workforce

Re-Bundling Protections and Benefits Around Our Work

May 27, 2019 By David Griesing Leave a Comment

Not so long ago, jobs came with a bundle of economic advantages beyond a paycheck. Those advantages included health insurance for you and your family and a pension or post-retirement paycheck based on your years with your employer and how much you’d been paid. 
 
While already a vestige of days past, my job at a municipally-owned utility a little over a decade ago came with family health benefits, a matching 401(k) plan, a pension that vested after 5 years of employment, and days off for a raft of holidays including Flag Day.
 
That job also included additional economic benefits that I didn’t appreciate enough at the time such as the creditworthiness of my regular salary, continuous training to bolster old skills and develop new ones, regular contributions to Social Security for additional retirement security, unemployment compensation if I ever lost my job, and the stability and continuing enrichment of that job for as long as I had it.
 
Today, in many of our full-time jobs and nearly all of our part-time ones, between some and all of this bundle of protections and benefits has disappeared.    
 
It is hard to overstate the significance of this unbundling.
 
Jacob Hacker, a political science professor at Yale calls it a shift of economic risk in his new book The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream.  Hacker argues that the loss of this financial cushion around our work tests our economic resilience whenever unexpected burdens arise.

In the 50 years following the Great Depression, both employers and the government insulated workers from many of the economic risks they might confront when they weren’t working. By contrast, from the 1980s and continuing through today, there has been:

a massive transfer of risk from broad structures of insurance, including those sponsored by the corporate sector as well as the government, onto the fragile balance sheets of American families. This shift has fundamentally reshaped Americans’ relationships with their government, their employers and each other. And it has altered and sometimes dashed the most fundamental expectations associated with the American Dream: a stable middleclass income, an affordable place to live, a guaranteed pension, good health insurance coverage, greater economic security for one’s kids.

As a result of this sea change, the American worker is increasingly on his or her own when confronting whatever comes next, like sudden illness or loss of a job.
 
Writing this week in the New York Times, Hacker talked about how this “risk shift” is impacting the run-up to the next presidential election, particularly the fact that so many Americans feel insecure.

They may be doing well at the moment, but they fear that, however high they are on the economic ladder, a single bad step or bad event could cause them to slip. A booming economy hasn’t quieted these concerns, because insecurity remains a huge and growing problem in ways that voters and candidates instinctively get, but the sunny job numbers largely hide.

Of course, this insecurity affects not only workers but also the ability of their families, their communities and the country as a whole to flourish—an impact that I discussed a few weeks ago in the post “The Social Contract Around Our Work Is Broken.”
 
As more of us are “on our own” shouldering the economic risks that employers and the government once protected us from, it has become an increasingly important priority to re-bundle new versions of the benefits and protections that have been lost around working in America.
 
The leading edge of these rebundling efforts are perhaps most visible when it comes to the gig-economy workers who are striving to build a stable and dependable “living” out of a series of independent-contractor jobs both large and small.
 
As I argued last week, technological advances involving blockchain, digital currencies, on-line exchanges and markets are promising to make it possible for independent workers to preserve existing income streams while gaining new (and unexpected) ones. The needs of this growing number of gig-economy workers are stimulating efforts to re-bundle some of those traditional insulators around their work. Fortunately, these same innovations will also help to meet the needs of every insecure worker who is trying to get by in a job with few, if any, of the traditional benefits and protections.

1.         Getting Paid for Jobs Both Big and Small

One of the most tantalizing possibilities of a future enabled by blockchain and digital currencies is that we could all get paid for time and effort we currently give away for free. Last week I mentioned a few of them, like providing traffic information to news outlets about roads we are already driving on at rush hour or being paid by a social media platform whenever we encourage the conversation there. I also mentioned the current backlash from the banking industry to the rise of on-line exchanges that will facilitate these payments. Part of it is an old guy-new guy turf war.
 
Over the past week, I’ve come upon some additional information about the hurdle that stands in the way of more seamless payments for a succession of small and big jobs. David Galbraith is a partner at Anthemis, a company seeking creative opportunities between the start-ups and financial institutions that are dedicated to reinventing financial services for the digital marketplace. In a recent interview, Galbraith remarked on the fundamental differences between on-line platforms that cater to consumers in America and their counterpart platforms in China. 
 
In America, digital platforms like Google and Facebook are supported by advertising revenues while in China a platform’s revenue streams come directly from consumers when they buy something they’ve seen there. In other words, the payments process in China is simplified by removing advertising from the business model. Another difference is that Chinese consumers pay for consumer goods with their bank account balances, while American platforms interpose financial intermediaries like PayPal or bank-owned credit card companies that stand between the tech platforms and consumers. As Galbraith observes, the transactions costs are lower in China, “friction is taken out of the system,” and purchases are completed in a “fundamentally more fluid fashion” on the smartphones of Chinese consumers without prompting by a blizzard of ads.
 
When the inefficiencies imposed by banks and an advertising-based model are removed from the digital “payments system” in America, payments to gig economy workers for big and small increments of work will also be facilitated—making these new jobs more robust. At the most basic level, these changes in how we get paid will support the ways that many of us are working now and even more of us will be working tomorrow.

2.         Anxiety About Retirement

When it comes to re-bundling benefits and protections around workers, none may be more significant than retirement security.
 
A recent article called “Why Work Has Failed Us: Because No One Can Afford to Retire Anymore” provides statistics that indicate how much the “shift in risk” from pensions to “figure out your own retirement” has impacted American workers:

66% of millennials have nothing saved for retirement. Among the working-age families that have retirement savings, the median balance is $5,000, according to the most recent data available from the Economic Policy Institute. For families approaching retirement, the median savings is $21,000–after taxes, on its own, enough to last a couple a little more than a year living at the federal poverty line.

At the same time, the enormity of these unfunded liabilities—how will all of these people with limited retirement savings support themselves?—presents a corresponding opportunity for entrepreneurs who want to help workers regain at least some of their retirement-related security. In the same interview where he discussed digital payment innovations, David Galbraith also considered the enormity of the opportunity for the new fin-tech companies that are trying to meet this need.

[R]etirement is the biggest [risk] shift anyone can possibly imagine. To put a number on it — the committed pension liability shortfalls in developing nations are 450 trillion dollars. That’s half a quadrillion dollars. So when people talk about billion dollar market opportunities — this is a half a quadrillion dollar shift in money. 

Of course, no one has found a feasible way to fill the deficit for those who have nothing to retire on today, but there is opportunity in providing expertise to workers who have at least some retirement savings.
 
Most of us don’t know how to take what we have today and marshal it to cover uncertainties like how much income we’ll need to live after we retire, how long we’re likely to live, what Social Security elections we should make, and how much medical care we’ll need along the way. This is where a new company like Kindur comes in, according to Galbraith.
 
Kindur helps workers create retirement portfolios that minimize their tax burdens while ensuring that the money they do have for retirement lasts as long as possible. Unlike investment advisors who charge commissions to maximize your savings, Kindur utilizes its on-line platform and need assessment programming to help individuals design their future income. There has never been a web-based service like this before. As the company’s tagline says: “It’s like fuel efficiency for your retirement.”
 
Kindur isn’t the only fin-tech company that is aiming to provide more comfort (or bundling) around worker retirement. This article from the New York Times last December discusses some of the others.
 
For a rising gig-economy workforce and the traditional workers who are seeking supplemental income and greater autonomy in the gig economy, the empowerment of acting in more entrepreneurial ways is easily undermined by retirement anxieties. Today, both traditional advocates and new companies are finding other ways to calm those anxieties too.

3.         Additional Protections and Benefits for Today’s Workforce

With the exception of supporting teachers in several high-profile confrontations with school districts and state funders recently, labor unions’ ability to protect workers in “union shops” seem to have lost much of their influence over economic decision-makers. They’ve also had a spotty record protecting their members’ bundled benefits and protections over the past 35 years. But while continuing to be the obvious champions for workers pitted against corporate profit taking, as the ways we work evolve, organized labor has other important roles to play in benefiting its changing membership.
 
Workers no longer stay in one locality with one employer for the course of their careers like they once did. Moreover, the average worker today takes on several different kinds of jobs. In this new world of work, services to meet these realities are desperately needed by the rank-and-file.
 
For example, unions could help their memberships “vote with their feet” when unbundled jobs no longer support them while providing assistance with “reskilling” when needed, help in finding new work, and housing in the new communities. Moreover, if unions were already providing these services in a tight labor market like we have today, their negotiating power with employers who are reluctant to lose workers would be enhanced significantly.
 
As Nicholas Colin writes in his thoughtful new book about the future of work called Hedge: A Greater Safety Net for the Entrepreneurial Age:

[I]t’s time we imagine unions that support workers as they switch jobs, unions that would provide their members with all of the resources necessary to find inspiration (“What should I do?”), train (“How can I acquire new skills?”), find a new employer (“When do I start?”), relocate (“I need an affordable house close to my new workplace”).

Labor unions should be key contributors to a re-bundled workforce in traditional companies as well as in the new gig-economy as free-lancers, for example, unionize to protect themselves.
 
The tremendous need among workers that has been created by the unbundling of jobs has also spelled opportunity for new service providers beyond the need for a more secure retirement. Take a company like Portify that aims to help independent workers in the gig economy who are unable to obtain affordable credit without “a regular salary” and an employment contract.
 
Portify is currently in the beta-phase of providing financing to independent workers whose only source today is a payday loan charging an exorbitant interest rate. With access to information about its customers’ cash flows and bank accounts, Portify is able to understand what its customers can afford to borrow and to make loans at a substantially lower rate than payday lenders. By doing so, it will provide gig economy workers with the ability to finance growth opportunities so that a succession of smaller jobs can eventually add up to a sustainable and profitable business.
 
Another promising start-up is Dublin-based Trezeo, which is “an income-smoothing service” for self-employed people. The company calculates its clients’ average weekly income. If that income dips because a client takes a day off or someone doesn’t pay them for their work, Trezeo “tops them up to” their average income with the understanding that it will be paid back when the client is paid again. A service like Trezeo’s allows workers to maintain a steady quality of life–some of that bundling again–despite the ups and downs of gig-economy work.
 
Finally, Zego is a new company that provides gig economy workers with flexible insurance. For example, if you occasionally drive for Uber, you may not earn enough to afford the additional monthly or annual car insurance coverage that you should have.
 
To meet this problem, Zego sells insurance by the hour. For drivers, it utilizes an app to collect data about how often they are working and where they are driving that helps it to assess their insurance risks and issue coverage more affordably. Moreover, without a product like Zego’s, independent workers could be put out of business by a single workplace loss that they are unable to cover. A start-up company like this bundles these workers in greater risk protections than were available before.

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The upside of entrepreneurial, gig-economy jobs is that they promise greater autonomy, flexibility and self-fulfillment, but these work rewards can never be realized when the jobs themselves are laced with insecurity.

The bundling of benefits and protections around these new jobs (and their re-bundling around traditional jobs) promises to reduce more of that insecurity for millions of workers.

Instead of giving up in the face of growing income inequality and job-killing automation, there are thinkers, writers and entrepreneurs who are more hopeful about the future of work because they acknowledge their own and other people’s agency to build a future where workers, their families and communities can flourish again.
 
Slowly but surely, that hopeful future is being built by the re-bundlers of work today.

This post was adapted from my May 26, 2019 newsletter. When you subscribe, a new newsletter/post will be delivered to your inbox every Sunday morning. 

Filed Under: *All Posts, Continuous Learning, Entrepreneurship, Work & Life Rewards Tagged With: ability to flourish on the job, David Galbraith, gig economy, gig economy workforce, Jacob Hacker, Nicholas Colin, rebundle a job, unbundling of benefits and protections, work, work related anxiety, work rewards

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