Poor worker conditions power gig economy | FT Alphaville

Summary

This video script explores the dark side of the gig economy, where smartphone apps promise efficiency but may rely on poor worker conditions. The narrator's personal experience as a delivery rider reveals mandatory shifts, low pay, and a lack of job security, contrasting companies' claims of flexible, empowering jobs. The script questions the sustainability of such business models and the impact on workers, suggesting a return to a feudal-like society with app companies as modern-day lords.

Takeaways

• 📱 Smartphone apps are transforming the way we summon services like taxis, plumbers, and even masseuses to our exact location with a push of a button.
• 🤔 The efficiency of these apps is questioned, as it may be at the cost of poor worker conditions, rather than true innovation.
• 📚 The 1992 sci-fi book 'Snow Crash' by Neal Stephenson envisioned a brutal labor market within a sophisticated digital economy, foreshadowing today's gig economy.
• 🚗 The gig economy is criticized for exploiting workers by classifying them as contractors, thus avoiding traditional employment protections and benefits.
• 💰 The cost of services provided by apps is often subsidized by investors and workers, who may have to work harder for less money.
• 📉 There have been protests by gig economy workers like Uber drivers, who claim they cannot earn a living wage after accounting for all costs.
• 🏍️ Workers bear the costs of their equipment and maintenance, while companies like Uber and TaskRabbit claim they offer flexible and empowering jobs.
• 📝 The author's personal experience as a delivery rider revealed rigid schedules and low earnings, contradicting the advertised flexibility and income potential.
• 📋 The contract for gig workers contains clauses that are intimidating and aim to prevent workers from asserting their rights, although legally unenforceable.
• 💼 Companies in the gig economy are accused of underpricing their services to drive out competition and later raise prices once a monopoly is established.
• 🌐 The rise of the gig economy is compared to feudalism, where workers are in a coercive and exploitative relationship with app companies that profit at their expense.

Q & A

How are smartphone apps changing the traditional work landscape?

Smartphone apps are enabling on-demand services by allowing users to summon services like taxis, plumbing, or massages to their exact location with a push of a button, thereby changing the way we work and interact with service providers.

What is the concern raised about the efficiency of apps in the gig economy?

The concern is that these apps may not be making the world more efficient as we think, but rather exploiting poor worker conditions to power the gig economy.

What is the 'Deliverator' in the context of the 1992 sci-fi book 'Snow Crash'?

In 'Snow Crash', the 'Deliverator' is a character who represents a brutally Darwinistic labor market within a sophisticated digital economy, delivering pizzas under the control of a mafia monopoly called Casa Nostra, emphasizing speed and risk.

What is the core issue with the cost of service provided by these apps?

The core issue is whether the low cost of services offered by these apps is due to true innovation or simply a loss-leading model subsidized by investors and workers, who often have to work harder for less money without traditional employment securities.

What has been the response from workers in the gig economy regarding their working conditions?

There have been several protests by workers from companies like Uber and delivery services, arguing that they cannot make a living wage once all costs are accounted for, and they bear all the risks while the platforms profit.

What was the experience of the journalist who tried working as a bike rider for a delivery company?

The journalist found the job to be hard, with little flexibility, high costs for equipment and maintenance, and low earnings that did not meet the living wage. They also experienced technical issues with the app and felt pressured by the mandatory nature of the shifts.

What contradictions did the journalist find in the contract with the delivery company?

The contract stated there was no minimum commitment for drivers, contradicting the mandatory shifts they had to work as stated by the company. It also contained clauses attempting to prevent workers from asserting their rights as employees or workers, which are legally unenforceable.

How do companies like Uber and TaskRabbit respond to accusations of poor working conditions?

They argue that they are creating flexible and empowering jobs, and that contractors are free to leave if the work does not suit them or if they are not earning enough.

What is the perspective of some critics on the gig economy's impact on job quality?

Critics argue that while the gig economy is creating jobs, the quality of these jobs matters, and the so-called empowerment often comes with a lack of control over earnings, pricing, and working conditions.

What is the argument made by some economists about the pricing strategy of gig economy companies?

Some economists, like Guy Standing, argue that companies are underpricing their services to drive out competition, with the intention of later raising prices once a monopolistic situation is achieved, which is a form of predatory pricing.

What solution is proposed by some to address the issues within the gig economy?

One proposed solution is the implementation of a universal basic income to provide a safety net for the growing precariat class, which lacks the security traditionally enjoyed by workers.

What is the potential impact of recognizing workers' rights in the gig economy?

Recognizing workers' rights could lead to increased costs for companies, which may then have to be passed on to customers, potentially changing the competitive landscape and pricing structure of the gig economy.

Outlines

00:00

📱 Gig Economy and Worker Conditions

The script discusses the impact of smartphone apps on the gig economy, focusing on the working conditions of those who provide services through these platforms. It questions whether the efficiency of these apps is overshadowed by poor labor conditions. The author references 'Snow Crash' by Neal Stephenson to draw parallels between the dystopian labor market in fiction and the current gig economy. The narrative includes the author's personal experience with a delivery service, highlighting the discrepancy between the promised flexibility and the actual mandatory shifts. The summary also touches on the protests by gig workers demanding fair wages and job security.

05:02

🛵 The Reality of Gig Work: An Insider's Perspective

This paragraph delves into the author's firsthand experience as a delivery rider, emphasizing the challenges faced in meeting the demands of the job, such as time constraints, app issues, and the difficulty of maintaining a profitable wage. The author's earnings are compared to the living wage in London, highlighting the struggle to make ends meet. The contract's terms are scrutinized, pointing out contradictions and intimidation clauses designed to deter workers from asserting their rights. The company's response is included, claiming that they offer flexible and well-compensated opportunities, a claim that is contested by the author's experiences and those of other workers.

10:05

🏰 The Gig Economy's Feudalistic Parallels

The script compares the gig economy to feudalism, with companies acting as modern-day lords, extracting surplus value from workers who bear the risks and costs. It discusses the power dynamics, where companies control prices and conditions, and workers compete for limited opportunities. The comparison extends to the legal loopholes that classify workers as contractors, thus avoiding responsibilities towards them. The paragraph also considers the broader implications of this model, including the potential for a universal basic income as a solution to the precarity faced by gig workers.

15:06

🏛 The Future of Gig Work: Challenges and Possibilities

The final paragraph contemplates the future of gig work, acknowledging the challenges faced by workers and the societal implications of the gig economy's business model. It suggests that while these platforms are popular with consumers, they may be built on unsustainable practices that disadvantage workers. The discussion includes the potential for collective bargaining and unionization as means for workers to improve their conditions. The script ends with a reflection on the societal shift towards an 'Upstairs, Downstairs' dynamic, where workers are increasingly disadvantaged in the digital economy.

Keywords

💡Smartphone Apps

Smartphone Apps are software applications designed to run on mobile devices. They have become integral to modern life, offering a wide range of services at the touch of a button. In the video, they are highlighted as a driving force behind the gig economy, allowing users to summon services like taxis, plumbers, or food delivery to their exact location, which raises questions about the efficiency and sustainability of this convenience.

💡Gig Economy

The Gig Economy refers to a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. The video discusses the gig economy's reliance on smartphone apps and questions whether the efficiency they promise is overshadowed by poor worker conditions and a lack of job security.

💡Contractor

A Contractor in the context of the video is an individual who works on a freelance basis, often for gig economy companies, without the benefits and protections of traditional employment. The script highlights the distinction between being a contractor and an employee, noting the implications for workers' rights and job security.

💡Snow Crash

Snow Crash is a 1992 science fiction novel by Neal Stephenson. The video uses it as a reference to illustrate a dystopian digital economy with a brutal labor market. The novel's depiction of a 'deliverator' character, who embodies the gig economy's harsh realities, serves as a cautionary tale for the current state of labor dynamics.

💡Living Wage

The Living Wage is the minimum income necessary for a worker to meet their basic needs, including food, housing, and other essentials. The video discusses the struggle of gig economy workers to earn a living wage, especially when considering the costs of equipment and maintenance, which contrasts with the companies' profit.

💡Precariat Class

The Precariat Class refers to a new social group characterized by the lack of job security, low wages, and a lack of benefits. The term is derived from 'precarious' and 'proletariat.' The video suggests that the gig economy is cultivating this class, with workers facing uncertain and unstable employment conditions.

💡Minimum Commitment

Minimum Commitment in the context of the video refers to the mandatory hours or conditions that gig economy workers must fulfill to be paid. The script points out a contradiction between the advertised flexibility of gig work and the actual mandatory shifts that some workers are required to commit to.

💡Legal Loophole

A Legal Loophole is an ambiguity or exception in the law that can be used to avoid the intent of the law. The video discusses how companies in the gig economy exploit legal loopholes to classify workers as contractors, thereby avoiding the responsibilities and costs associated with employing workers as traditional employees.

💡Universal Basic Income

Universal Basic Income (UBI) is a proposed economic measure where all citizens receive a set amount of money from the government, regardless of their employment status. The video mentions UBI as a potential solution to the instability and insecurity faced by the precariat class in the gig economy.

💡Collective Bargaining

Collective Bargaining is the process by which representatives of workers negotiate with employers to determine working conditions and compensation. The video touches on the difficulty gig economy workers face in forming unions and engaging in collective bargaining to improve their working conditions and wages.

💡Upstairs, Downstairs Society

The term 'Upstairs, Downstairs Society' is used metaphorically in the video to describe a social and economic structure where a privileged class (upstairs) benefits at the expense of the working class (downstairs). It reflects the video's argument that the gig economy perpetuates social inequality and exploitation.

Highlights

Smartphone apps are transforming the way we summon services, but the gig economy may rely on poor worker conditions.

Author Neil Stevenson's 'Snow Crash' envisioned a brutal labor market within a sophisticated digital economy.

The gig economy's low wages and lack of job security contrast with the convenience and cheapness of apps.

Workers are protesting against the discrepancy between the reality of gig work and recruitment promises.

The narrator's personal experience as a gig worker revealed mandatory shifts and a lack of flexibility.

Delivery apps like Uber and TaskRabbit claim to offer flexible, empowering jobs.

Workers face high costs for equipment and maintenance without the benefits of traditional employment.

The narrator's earnings averaged less than the London living wage after costs.

Contract terms for gig workers are confusing and contradictory, with intimidation clauses.

Delivery companies claim high average earnings for riders, but workers report inconsistent pay.

Gig economy critics argue that companies underprice services to drive out competition and later monopolize markets.

Economist Guy Standing suggests a universal basic income to address the precarity of gig work.

The gig economy may be cultivating a new social class without the security of previous generations.

Workers in the gig economy face challenges in organizing and bargaining collectively.

A landmark legal decision suggests potential recognition of rights for gig economy workers.

The gig economy's success with customers masks the pressure on workers' living standards.

Critics argue that the business models of gig economy apps are dubious and exploit workers.

The transcript suggests a return to an 'Upstairs, Downstairs' society with app-based services.

Transcripts

smartphone apps are changing the way we

work with the push of a button we can

summon services to our exact location

whether that's taxis plumbers take ways

or even masseurs we think these apps are

making the world more efficient but what

if they're not what if what's really

powering this gig economy is something

much less sophisticated like poor worker

conditions to find out I decided to try

it out myself I'll tell you about my

interview process and the contract

designed to scare you off asserting your

rights in the 1992 sci-fi book Snow

Crash author Neil Stevenson has a go at

envisioning a brutally Darwinistic labor

market which sits within a sophisticated

digital economy where everyone must fend

for themselves without any job security

or protection he conjures up the job of

the deliberate err someone who at his

own prerogative Scouts to make a living

out of pizza delivery within that

economic dystopia everything by the

physical delivery is automated the

sector is controlled by a mafia monopoly

called Casa Nostra guiding the cartels

operations is one single principle the

deliverator stands tall your pie in 30

minutes or you can have it free shoot

the driver take his car or file a

class-action suit but whereas snow crash

was only a story

today's gig economy is not what's

frightening about that is that the

brutality of this system is being lost

on those who actually use these apps

[Music]

the heart of the problem relates to the

cost of service we love the apps because

they're convenient and cheap technology

has something to do with that but in

reality the jury's still out on whether

this is true innovation or just a loss

leading model currently being subsidized

by investors and workers many of the

latter having to work harder for less

money and without the securities

provided by traditional employment

contracts just because they're called

contractors instead of employees or

workers this year has seen several

protests by uber and delivery workers

they say it isn't possible to make a

London living wage

once all costs are accounted for they're

the ones taking all the risk while the

platforms are making a steady profit at

their expense we have to pay for a

motorcycle mine costs two and a half

grand Jeremy like the people send big

money on a bike then you've got

insurance which cost me a hundred and

forty pounds every month you've got a

keep your bike maintained but get it

serviced companies like uber delivery

and TaskRabbit counter the accusation

saying they're creating flexible

empowering jobs they add contractors are

free to walk away if the work doesn't

suit them or if they're not earning

enough price not paying for tomorrow

there was genuine anger among protesters

over the disconnect between the reality

of the job versus the expectations put

forward in the recruitment process but

equally in the case of food dispatching

firm delivery

they were objecting to the company's

unilateral decision in the summer to

switch workers from hourly to per drop

contracts without any warning at all

delivery is somewhat unique in offering

these two types of agreements to

understand some of the concerns of the

drivers I decided to apply for a job as

a bike rider at delivery

hello speller speaking I did so using my

real identity after completing a quick

online form I was through to the

telephone interview that's right I'm

good thank you I was under the

impression it's supposed to be quite

flexible right I'm working full-time

but I'm looking for a supplementary

income it's a media job so it just

involves writing stuff on the internet

just about the nature of the commitments

so it's a minimum of two evenings of two

to three hours on the weekend provided

Sunday and other than that it's up to me

when I can do the time and when I when I

don't have to at no point was I asked

what contract type I wanted the terms

given were the hourly type 7 pounds per

hour plus a one-pound bonus per delivery

but it was stressed I could earn up to

12 pounds per hour or more in surge

periods so I've got my kids I didn't get

it immediately I had to go back a second

time to get it all because they didn't

have the staff on hand to do it the

first time around I was told initially

that my shifts would be really flexible

but it turns out that's not the case

instead I'm doing four shifts a week

6:30 to 9:30 Tuesday Thursday Saturday

and Sunday these are had to pre commit

to and I can't change them now that I've

established them and the ones on the

weekend are utterly mandatory so I have

to do them no matter what otherwise I

don't get paid my zone is London Bridge

and that was my second choice and at the

weekend I'm doing Fulham which was the

only other option for me that was

available in the end I delivered five

orders over two separate shifts on the

job I soon realized it's very hard to

stick to deliveries manual it demands

you take your helmet off when going in

and out of a restaurant or to a

customer's home but that plus finding a

secure place to park your bike eats up

time and is impractical delivery also

wants you to double-check the contents

of each order before setting off but

rifling through a bag of hamburgers to

check what's a cheeseburger and what's

not is inconvenient and

the customers I delivered to were almost

exclusively urban professionals living

in gated communities as a whole the app

was efficient when working but

exceptionally battery draining on the

second go the app crashed halfway

through the shift and was out of order

for more than an hour leading me to miss

out on potential bonus earnings my

orders were back-to-back and there was

hardly an opportunity to even take a

toilet break which made me feel a little

like a rat on a treadmill if there are

errors you bear the risk my overall

earnings averaged out to be about 8

pounds 10 per hour I also got three

pounds in tips

London authorities say the capital's

living wage is nine pounds 75 whilst

employers aren't forced to abide by that

they are obliged to pay minimum living

wage of 7 pounds 20 this turns to 7

pounds 50 from next April onwards but

the most troubling aspect of my whole

experience was when I read the contract

it said there was no minimum commitment

which drivers had to work but wait a

minute so it's a minimum of two evenings

of 2 to 3 hours on the weekend Friday to

Sunday over the phone and in person

delivery had repeatedly told me I had to

work mandatory shifts so there was a

contradiction between what I was hearing

about flexibility and what was written

on paper even within the contract there

seems to be a contradiction so firstly

it says that you weren't obliged to do

any minimum level of work but then just

down the page it says that you are

expected to be as flexible as possible

to meet deliveries needs what really

stands out for me about this contract is

or there are two things the first is the

clause which says that delivery riders

can't bring a claim to an employment

tribunal or any other Court where they

say that they are an employee or a

worker in other words this says they

can't assert their rights as workers or

employees and then the second Clause

just underneath that says that if they

do go to court and they do claim that

they are employees or workers then they

will pay deliveries costs in relation to

that legal action these clauses are

legally worthless no tribunal will

enforce them so if they've had that

advice and they have still chosen to

include them the only reason they can

have chosen to do so is to scare their

workforce from asserting their rights so

it's a form of intimidation basically

yeah you could say that delivery

declined to be interviewed but they did

give us a statement including the

following points riders are at the heart

of delivery and we are proud to offer

them the flexible work they valued they

choose when and where to work and for

how long allowing them to fit their work

with us around other commitments such as

studying or starting a small business

indeed over 10,000 people apply to ride

with us each week which shows that

working with delivery is popular and

valued by riders right across the

country riders with delivery on average

earn substantially more than the

national living wage the Financial Times

journalist herself was paid

significantly above the living wage in

spite of her completing fewer deliveries

than the average of other riders working

in the same area at the same time but

the delivery workers I've spoken to

insists there's never a guarantee there

will be enough orders to achieve the

minimum wage

especially after costs are accounted for

there are also parts of the country

where delivery advertises rates of 6

pounds per hour plus one pound per drop

at this year's web summit in Lisbon

those representing the gig economy

didn't seem fazed by growing criticism

Bradley tusk lobbies Washington on

behalf of uber and its CEO Travis

kalanick he said low wages weren't the

fault of the uber model sure there are

the black car drivers in London and taxi

drivers who feel disillusioned physical

uber although they can always become

uber drivers by the way but at least in

the u.s. what frequently happens is the

taxi cartel tries to shut up or down

today once innovation and because Luber

alternately is so much a more democratic

system others however see it differently

are they creating jobs and yeah sure

they are creating some jobs but it's the

quality of the jobs that also really

matters and that's where this notion of

empowerment comes in so one of the

things that we're told is that these

workers can work when they want to you

know they're self-employed and have lots

of flexibility but often we see in

practice is that say for instance with

uber those those self-employed drivers

don't set the price

uber sets the price

in the gig economy many companies are

using a legal loophole regarding

contractor status to turn workers into

competing privateers who they control

and dictate earnings - it echoes the old

system of feudalism the workers battle

it out to grab whatever works available

in a zero-sum game but the app companies

behave more like medieval robber barons

they are the house that always wins

there's a high similarity with the

broader feudal structure insofar as that

is a coercive inegalitarian

extractive relationship where lords are

drawing surpluses off peasants and other

workers to line their own pockets and

increase their own status and financial

power lords have the power to vary their

terms and conditions as they please they

can switch from taking money rent to

cultivating the land themselves directly

and saying you have to come and work on

the land for so many so many days a week

economists guys standing reckons

companies are deliberately underpricing

their service because they rely on

venture capital they don't have to go

public and therefore they can run an

operating loss why are they running

under operating loss because they're

deliberately underpricing

their service in order to drive out

competition who can't compete at that

price once they've done that they can

raise the prices and then have a

monopolistic situation today often

within the app economy it's the worker

who has the means of production and has

responsibility for the costs of

maintenance and the insurance when the

app is pure renting a pure rent here and

this is a form of feudalism but it's a

very specific form

landing argues instead the unrestricted

digitalization is cultivating the rise

of a precariat class a new social group

which exists without the predictability

or security enjoyed by the previous

generation of workers and since this

digitalization can't be reversed

he thinks the solution is a universal

basic income but the political will

alone to drive it through would have to

be extraordinary and this would take

time they tried it in Switzerland but

the referendum failed in October British

prime minister Theresa May announced the

government would conduct a review into

the rights at stake in the gig economy

Labour leader Jeremy Corbyn has even put

digital platform worker rights into his

party's manifesto in medieval times if

and when freelancers did pop up in large

numbers

they were often met by community

disapproval this forced them to regulate

but for today's gig economy workers

organisations difficult so we're not

interested in talking on end of the

individual races we're here to talk

collective bargaining that means people

representing a wider group of people

they refuse to recognize that the people

here are working as collect as a

collective as a collective bargaining

unit and they refuse even what to say

the word unique but some say forging a

union is definitely within the realms of

possibility

Powell's firm recently won a landmark

decision at a London Employment Tribunal

on behalf of uber drivers she's

optimistic that the law can work on the

side of this new precariat class

[Music]

the law itself is quite effective it has

this category of worker which recognizes

that some people might not be an

employee but they're certainly not in

business on their own account but if

these rights are recognized this could

impact competition as respective costs

will have to be passed on to customers

in other ways what we're learning slowly

but surely is that the gig economy works

by putting living standards under

pressure despite its success with

customers critics say these apps are

built on dubious business models and

that someone is always losing out at the

moment it seems to be the workers until

anything changes there's no escaping

that what these apps are really doing is

popularizing the return of an Upstairs

Downstairs society workers instead of

saying you rang milord just end up

saying you hailed milord

[Music]