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David Brodwin's blog

Good Times for Gig Workers Won't Last Forever

The on-demand economy (which includes companies like Uber, Airbnb and TaskRabbit) has brought a firestorm of controversy about the nature of work and the meaning of the social contract. 

On one side of the controversy are the entrepreneurs in these companies. On the other side are advocates for worker rights. The entrepreneurs emphasize the freedom and opportunity created for workers who can pick their own hours and, in some cases, their pay rates. The worker advocates emphasize the loss of protections like minimum wage, employer-paid health care and other benefits – which apply to employees but not to contractors.

Both sides of this debate claim to have the workers' interests in mind. And until now, we've not heard much – other than anecdotes -- from the workers themselves. Last week, though, an important poll was released, conducted by the pollster Penn Schoen Berland and commissioned jointly by Burson-Marsteller (a public relations firm), the Aspen Institute (a think tank) and Time magazine.

The report shows a curious ambivalence among workers in the gig economy about how they want to be treated and whom they trust to protect them. It raises important questions about what will happen to gig workers as the industry consolidates. 

For starters, gig workers say they are a fairly happy lot, but some of that happiness is due to lack of conventional career opportunities. Among people who have worked in the on-demand economy (for example, driving for Uber, or renting out their couch on Airbnb) 76 percent report a positive experience. Compared to the public at large, on-demand workers are more upbeat about their personal financial situation and more confident that their finances will improve over the coming year. Most feel pretty good about the companies they work "for": 61 percent believe that on-demand companies "care about their workers" and 66 percent consider the companies "trustworthy."

But part of the positive feeling expressed by gig workers stems from the fact that they're simply glad to have some income. Thirty-three percent of gig workers say they "could not find work at a traditional company." And the most committed gig workers tend to be on the periphery of regular careers: a disproportionate number are either on the young side (trying to get a career established) or on the old side (trying to sustain income because they can't yet retire). Racial minorities, who often face discrimination in hiring and pay rates, are very overrepresented among gig workers. 

In essence, the on-demand economy contains two very different segments among workers: the "Want Tos" and the "Need Tos." The two groups may need different social policy. The "Want Tos" like their independence. Many of them may have another major time commitment, for example they might drive Uber only during the lucrative surge pricing periods, while at other times they work toward their graduate degree. They are "skimming the cream" of the on-demand economy. But the "Need Tos" are forced into the on-demand economy for lack of other opportunity, and they may not make as much money. The split between these two segments is close to 50/50.

On-demand workers say they want benefits, training and expense reimbursement, as you would expect. But interestingly, roughly half of them oppose regulation that would require on-demand companies to treat their workers the same as if they were employees rather than contractors. Those who oppose regulations that require gig workers to be treated as employees are, in essence, trusting the market: They assume that competition between companies (like Uber and Lyft) will force companies to pay workers fairly, without any regulation imposed. 

These views will likely shift as the gig economy continues to consolidate and competitors are bought out (or go out of business, as Sidecar recently did). Disruptive tech-based businesses tend to have a "winner take all" quality. Those who welcome the disruption at the outset often find themselves on the wrong end of it. For example, when Amazon came on the scene, publishers who resented the muscle of big retailers like Barnes and Noble welcomed the new entrant. They're not so happy now.

In the ride-hailing business, Uber completely dominates Lyft, its closest competitor, by 10 to 20 times on almost every conceivable metric. Soon, perhaps, Uber will be in a position to rewrite the deal terms with its drivers, without fear of losing drivers. Similar consolidation is underway elsewhere in the gig economy. When that happens, worker satisfaction will go a lot lower, and the appetite for calling gig workers "employees" will be a lot higher.

David Brodwin is a co-founder and board member of American Sustainable Business Council. This blog is adapted from a column recently published in U.S. News & World Report January 15, 2016.

Sustainability Is Not a Zero-Sum Game

Ever since Adam Smith wrote "The Wealth of Nations" in 1776, politicians and economists have debated why some countries prosper while others remain poor. Recently, the debate has become even more heated, as national leaders tackle sustainability issues. For example, last month heads of state gathered in Paris to debate carbon emissions, and challenges flew back and forth. No country wants to suffer from rising seas and other aspects of climate change, but at the same time, no country wants to place itself at a disadvantage, for example, from rising fuel costs.

To date, there has not been much of a framework for understanding how sustainability issues affect prosperity and how they create (or undermine) the competitive advantage of nations. Each country made as much of a commitment to sustainability as it thought it could afford (or as much as its political conditions allowed), and that was that.

Sustainability is hard to quantify, in part, because it is a very broad idea. It goes well beyond environmental concerns, and well beyond the challenge of climate change. A United Nations commission defined sustainable development as "meeting the needs of the present without compromising the ability of future generations to meet their own needs."

Recently a think tank and consultancy, SolAbility, took on the challenge of measuring sustainability – broadly defined – at a national level, and relating sustainability to national competitiveness. Their work led to a Global Sustainable Competitiveness Index, which ranks national economies based on sustainability criteria.

SolAbility's work highlights five major drivers of national competitiveness:

  • Natural capital: the value of the natural environment and natural resources
  • Social capital: the social factors that let people live fulfilling and productive lives, including health, equity, security and freedom
  • Intellectual capital and innovation: the ability of a country to generate jobs and wealth through innovation sufficient to add and retain value in the globalized economy
  • Resource management: how efficiently countries manage to utilize their capital
  • Good governance: whether governments can maintain a framework for sustainable and broad-based wealth creation, and avoid the pitfalls of corruption and cronyism

It's ambitious to pack so many diverse considerations into one ranking. Most ranking schemes focus on just a single criterion. For example, the Gini coefficient measures inequality, and the "Index of Economic Freedom," produced by the Heritage Foundation, ranks countries based on libertarian-leaning criteria of small government.

But these five factors fit together and make intuitive sense. A country may be prosperous today, but that prosperity may be fragile. For example, a small oil-producing country in the Middle East would have high per capita income due to its oil reserves (natural capital), but if it lacks the innovation and good governance to diversity its economy, its prosperity is unsustainable: It will collapse as oil prices plunge and the world shifts to renewable energy.

All the worlds' countries have been scored by SolAbility. Extensive quantitative data was collected for each of the five factors, and then the factors were combined to get a single overall ranking.

The results might surprise you. Many countries rank high on some criteria while ranking low on others, and the U.S. is no exception. For example, the United States ranks 41 overall out of 180 – barely making it into the top quartile. We score very well in intellectual capital and governance, so-so on natural capital but poorly on social capital (113) and resource management (159). The poor scores for resource management come from our very high consumption of natural resources per capita and relative to gross domestic product.

In contrast, Iceland earns the number one position, and northern European countries round out the top 10. People don't talk about Iceland much these days, but it's worth remembering that Iceland became ground zero of the Great Recession when its banks were catastrophically over-leveraged with bad mortgage loans. But Iceland didn't bail them out; it forced them through bankruptcy, and today, Iceland has achieved an enviably low 4 percent unemployment rate. Such resilience is rare.

No rating system is perfect, and few come close. Nonetheless, it's important that we pursue a more robust understanding of how sustainability drives economic success. All too often, we treat sustainability decisions as a zero-sum game: We can have clean air, for example, but only at the cost of slower growth. Or we can have great schools, but only at the cost of higher taxes that discourage investment. Tools like the SolAbility ranking help us understand how sustainability can drive prosperity, rather than get in the way of it.

David Brodwin is a co-founder and board member of American Sustainable Business Council. This blog is adapted from a column recently published in U.S. News & World Report January 8, 2016.