The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan, MIT Press: Cambridge, Massachusetts, 2016, 256 pp.
Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream by Andy Stern with Lee Kravitz, Public Affairs Books, 272 pp.
Although it is rarely in the news, vast unseen, private sector forces are arrayed to do away almost entirely with wage income, employment benefits and security, all in exchange for ever-increasing labor in an emerging capitalism 2.0 based on the "gig," with goods and services available "on demand" to those with money -- who are not likely to be the gig workers.
Is this a good thing and, if not, can anything be done about it?
To Arun Sundararajan, professor of information, operations and management sciences at the Stern School of Business, New York University, there isn't a problem. We're simply entering a heady, frothy new world of "microentrepreneurs" who get to "choose" their standard of living.
Andy Stern, the former president of the Service Employees International Union, sees a picture frightening enough to draw him out of retirement and into a new campaign for a socialized form of income. Moreover, Stern disabuses any reader of the illusion that middling income white-collar ordinary office work is safe from this trend.
These recent books by these two authors are worth considering for what they tell us about a future of work whose expansion will find no obstacles under the Republican one-party rule we are entering.
Sundararajan starts on a morning in New York City street while rushing to take his daughter to school. He writes: "On many a cold winter morning, while frantically trying to hail a taxi, I'd think, wouldn't it be nice if I could borrow one of those parked cars instantly, drive to school, return it to where I found it, perhaps with a $10 bill and a note on the dashboard that said 'Thank you!' "
Turns out there is such a service on the internet: Getaround.
It's one of a number of digitally enabled business models that allow what he calls the "asset light" generation to engage in peer-to-peer commercial exchange. They include Airbnb, Lyft, Uber, Etsy, TaskRabbit, France's BlaBlaCar, China's Didi Kuaidi and India's Ola -- all summoned from computers and smartphone applications.
Sundararajan lavishly explains each and offers a travelogue into the world of device platforms, blockchain technology and even bitcoin.
However, behind the economic model lies a new kind of workforce, from Lyft drivers who on average put in 15 hours a week, to grocery shoppers and deliverers, contractors, handyman laborers and task service workers (Handy and TaskRabbit) who put in 40 to 50 hours a week. In total, they're estimated at about 3 million workers today, projected to rise to 7 million by 2020.
What rights do they have? Attorneys have already asked the question.
Uber drivers are "managed" based on user ratings and can be dropped from the rolls like a hot potato, with no notice -- much less compensation -- because Uber does not call them employees. In an opinion by Judge Edward Chen in a case involving 160,000 Uber drivers, the judge insisted on applying the established legal test of what defines an "employee" -- a collection of 20 factors, such as whether the worker defines when work begins and ends, that courts have decided separate an employee-employer relationship from a contractor agreement. However, he acknowledged that Uber's business model poses "significant challenges."
Economist Robert Reich, a former secretary of labor with mild social democratic leanings, minces no words in calling the new way a "share-the-scraps economy" in which the "big money" goes to the corporations behind the online site and scraps to the workers.
"On the other hand, there are sharing economy enthusiasts who see the future of work as one defined by increased flexibility, fluidity, innovation and creativity," retorts Sundararajan to critics like Reich. He argues that many young workers don't want decades of 9-to-5 work ending with a gold watch. They don't want to own a house or a car or get tied down to assets of any kind. Nonetheless, just by considering mild palliatives for the workforce, he shows he is not entirely blind to the problems.
Stern sees something entirely different: a largely robotized world in which a few functions are parceled out as piecework to the very small fraction of the population needed to produce what is necessary for the nation as a whole. Anyone thinking piecework is only the stuff of farm labor in John Steinbeck novels or some newer form of Third World menial labor may abandon that idea by page 108.
That's where Stern describes Amazon Mechanical Turk, an offshoot of online retailer Amazon, self-described as a "marketplace for work that requires human intelligence."
"Turkers, as the workers like to call themselves, can choose from among a variety of tasks -- for example transcription, content moderation and image classification," Stern states. "Because they get paid per piece of data, they are, in effect, doing cognitive piecework on demand."
Then consider what Stern learns from Saket Soni, founder of the National Guestworker Alliance, which represents hundreds of thousands of workers who enter the United States on temporary guestworker visas, mostly in landscaping, construction industries, seafood processing and "certain professions that weren't previously considered contingent and low-wage -- for example, adjunct professors." The latter are people with PhDs, but with short-term contracts and pay that is "shockingly low" and without health coverage, union representation or even the remotest prospect of tenure.
Expelling all the guestworkers won't fix the problem. About 50 percent of such cognitive workers are American; 40 percent are in India.
Indeed, Stern spent four years interviewing economists, futurists, labor leaders, chief executive officers, investment bankers, entrepreneurs and political leaders about the U.S. economy some 30 years from the present. He found an omnipresent 24/7 world of goods production and services performed by an ever diminishing number of people -- ultimately by almost no one at all!
"The one recurring fear I have about this moment is that while academics, elite policy makers and people in positions of responsibility nearing the last third of their work lives (older people like me), are more likely to be spared the first wave of the disruption," Stern states, "the people working in the 47 percent of jobs at risk of technological elimination will be on the front lines of a disaster, and they are our friends, children, neighbors, and fellow Americans."
Sundararajan offers as a palliative a proposal put forth by a group of tech gurus, union leaders and start-up chief executive officers -- the signers include the author -- titled "Common ground for independent workers." The main plank proposes portable benefits that are independent of employment. He shows he is under no illusion that he has found the answer.
Stern, however, thinks he may be close. Universal basic income (UBI), he argues, would allow people to take "gig" jobs without starving and choose a standard of living higher than base survival in an economy of continued consumption thanks to secure income.
Stern goes beyond Band-Aids. He proposes a government-paid UBI of $12,000 a year for every adult. The price tag is $1.75 trillion a year, which he pays for by eliminating all public assistance and a gradual phaseout of Social Security, leaving only Medicare untouched. By ending some tax expenditures (subsidies) he would also establish a non-employer-based health care system.
The former labor leader amasses 200 years of proposals that look a lot like UBI, from notables including Bertrand Russell, Milton Friedman, F.A. Hayek and John Kenneth Galbraith, concluding with a 2006 book proposing a universal $10,000 annual cash grant by Libertarian polemical bomb thrower Charles Murray. He notes that Finland is about to begin experimenting with the idea in 2017 and Prime Minister Justin Trudeau of Canada was elected with a platform calling for a similar experiment.
Perhaps the most startling is Thomas Paine's "there shall be paid to every person, when arrived at twenty-one years, the sum of fifteen pounds sterling [in compensation for landed property, since land belongs to all, and] ten pounds per annum." Although he suggests a pitifully small income subsidy (£10 of 1776 would be worth about $1,600 today), the idea itself was an amazingly advanced proposal two and a half centuries ago, from someone as American as apple pie.
Neither book presents a complete solution, but the haunting prospects they see in our present labor trends will serve as an urgent reminder of what needs to be done.
Cecilio Morales is a labor-economy journalist and frequent contributor. MDCDSA members heard more about UBI in a recent Salon, covered in the March issue.