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Prosperity in the On-Demand Economy Prosperity in the On-Demand Economy: Reinvigorating the American Labor Force By Ziya Smallens ______________ Submitted in accordance with the Oberlin College Honor Code. Oberlin College Politics Department Honors Program April 2016 1 Table of Contents Introduction ................................................................................................................................. 4 Chapter 1: Rethinking Labor Relationships ............................................................................. 8 I. The Trend of Growth and Transition into the Gig Economy ....................................... 8 a. A Note on Terminology .............................................................................. 24 II. Flaws in Past Measurements of the Contingent Workforce ...................................... 25 III. Definitions of Workers and Exchanges in The Gig and On-Demand Economy ........ 33 a. Who Works in This Sector of the Economy? ............................................. 33 b. SubjectiVe Experiences of Gig and On-Demand Workers ......................... 37 c. How Do We Refer to These Workers? ....................................................... 42 IV. Unique Employment Relationships in the Gig and On-Demand Economy ............... 43 V. Impact on Traditional Industries ................................................................................ 49 VI. The Role of Technology ............................................................................................ 51 Chapter 2: The Dangers of the New Employment Landscape ............................................. 59 I. Case Studies: On-Demand Platforms ....................................................................... 59 a. Uber ........................................................................................................... 59 b. Airbnb ......................................................................................................... 69 c. TaskRabbit and other On-Demand Labor-Brokering SerVices .................. 77 Chapter 3: Historical Precedents ............................................................................................ 83 I. History of Workplace ProVided Benefits, Voice, and CounterVailing Power ............. 83 a. Historical Parallels to Worker Organization in the Gig and On-Demand Economy .................................................................................................... 90 II. History of GoVernment-Sponsored Benefits, Voice, and CounterVailing Power ....... 98 III. Old Protections Are No Longer Viable .................................................................... 107 a. UnraVeling of GoVernment-Sponsored Protections ................................. 109 b. UnraVeling of Workplace Based Protections ............................................ 111 Chapter 4: Opportunities to Shape the Gig and On-Demand Economy ............................ 114 I. The Potential for On-Demand Platforms ................................................................. 114 II. What Solutions Best SerVe Workers? ..................................................................... 120 III. The Façade of Gig and On-Demand Lexicon ......................................................... 125 IV. New Category of Employment ................................................................................ 128 V. The Role of Public Policy ........................................................................................ 135 2 VI. The Role of Labor Intermediaries ........................................................................... 142 VII. In Conclusion .......................................................................................................... 150 Glossary .................................................................................................................................. 153 Bibliography ............................................................................................................................ 156 3 Introduction In the 21st century, the American labor market is best defined by instability. Since the 1970s, more and more Americans have been forced into precarious work arrangements that fail to ensure job security, livable wage-rates, or employee satisfaction. A dark cloud swirls around the labor market in the form of contingent work. Contingent workers are not guaranteed the same protections and securities as traditional employees. Firms revel in an employment landscape that allows them to deploy and terminate workers with ease. Contingent work has carved its own position in the economy in the form of the Gig economy. The Gig economy marks a pivot in American employment relationships: where the postwar labor market served to fortify long-term commitments between firms and their workers, the Gig economy has propelled workers towards vulnerability. Despite its casualization of the American economy, the Gig economy has also inspired the emergence of a new, and potentially significant, form of commercial exchange in the On-Demand economy. The On-Demand economy is comprised of app- based platforms that connect consumers with workers who provide a single service or form of exchange. On the surface, this sector of the economy simply exacerbates a structural trend towards precarity. This assessment is short-sighted. On-Demand platforms offer groundbreaking forms of commercial exchange. Consumers can request a service, and within minutes, have their whims conveniently satisfied. Recent technological advancements have inspired the growth of business models that were implausible less than two decades ago. Today, most On-Demand platforms placate the desires of consumers. These platforms have the potential to generate consumer 4 demand and ensure the provision of vital services to the weakest among us. With the On-Demand economy, workers can benefit from the ability to assert sovereignty in a labor market that has subjugated them for the past several decades. Currently, the On-Demand economy is hindered by the fact that it is a product of the wider Gig economy. The former may inspire innovation and creative forms of exchange, but it still operates under the auspices of the latter. Therefore, On-Demand workers are pushed into unstable and unpredictable employment arrangements. The predominant systems responsible for protecting and advocating for American workers were constructed in the early 20th century, during the New Deal. The public policies and institutions ushered in by the New Deal have undoubtedly enhanced the livelihoods of millions of Americans. Despite this fact, these systems and forms of protections have frayed over the past several decades; they were never intended to satisfy the needs of workers in the Gig and On-Demand economy. If the rules and regulations outlined by the New Deal were imposed on firms in the On-Demand economy, the results would be disastrous. While conventional policy prescriptions could theoretically benefit workers, they would smother the emerging On-Demand economy, and inhibit the flexibility it avails to workers. Macrostructural trends have provoked the rise of the nefarious Gig economy as well as the potentially valuable On-Demand economy. Both sectors of the economy challenge the traditional methods by which workers are guaranteed security and stability. The goal of this Thesis is to investigate how labor protections and benefits can be reimagined in order to empower American workers whilst simultaneously fostering innovation and flexibility in the On-Demand economy. 5 Chapter 1 examines the transformation of the American labor market since the 1970s. There is a plethora of indicators that demonstrates a structural shift towards precarious work arrangements and these statistics underpin my research project. What’s more, the federal government has failed to capture the size of the Gig and On- Demand workforce and non-governmental organizations have had to pick up the slack. Chapter 1 also offers an in-depth analysis of the inner-workings of the On-Demand economy. Chapter 2 is comprised of case studies performed on three popular On-Demand platforms: Uber, Airbnb, and TaskRabbit. The case studies reveal that all three platforms vary from one another another in terms of generating consumer demand, impacting local economies, and skirting existing regulations. The case studies also contemplate the experiences of On-Demand workers and how the three platforms creatively employ technology. Chapter 3 considers the existing systems and institutions that protect and advocate for American workers. This chapter primarily surveys government- and workplace-sponsored benefits and sources of collective organization. There are historical parallels to the experiences of On-Demand workers and they are worthy of consideration. However, Chapter 3 ultimately concludes that the predominant institutions and public policies responsible for advancing the interests of American workers have been rendered inadequate in the Gig and On-Demand economy. Chapter 4 explores how public policies and institutions can act to unleash the potential of the On-Demand economy while also protecting and liberating workers. This chapter re-examines many of the concepts discussed throughout this Thesis and 6 considers how they can be applied to best serve both employers and employees. This Thesis concludes that the On-Demand economy can thrive in an environment where workers are guaranteed legitimate protections. A glossary at the end of the document clarifies some of
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