California has passed a new law that was very likely going to force gig companies to treat such workers as employees, with all the attendant costs. So the sector spent $200m to convince voters to support a ballot measure which will exempt it from the rules (their opponents spent about $20m).
Instead, the companies will provide gig workers with improved conditions, such as an earnings guarantee of at least 120 per cent of the state's hourly minimum wage, though this won't apply to the time when drivers are waiting between passengers. The new deal will add 1 per cent to Uber's costs, whereas reclassifying the workers as employees would have added 5 per cent, according to Morgan Stanley.
What's next for the gig economy? To hear some critics, you would wonder why anyone would choose to work this way at all. But the people who use these apps are not dupes. The gig economy gives them something they need. Mr Hawkins, for example, chose a gig job because he needs to be able to answer his phone at work without being disciplined, and to be able to disappear for an hour to deal with a family issue.
Economists have long known that this sort of job flexibility is a key determinant of health and wellbeing. Yet it is far more common in higher-paid occupations than lower-paid ones. Many jobs from warehousing to call centres impose strict rules on employees.
In another company-produced video, Bennie, a driver, explains: "Me and my wife, we can't afford babysitters, we just can't. So when she comes in, that's when I can go out to work, but when she gets called in to work and she's on call, I immediately have to come in to watch the kids."
He needs to be able to stop work without consequences (other than lost income) in order to compensate for the inflexibility and unpredictability of his wife's job. Between 10 per cent and 20 per cent of Americans have irregular and on-call work schedules, according to government and private surveys.
This is not to endorse claims by gig economy companies that the California package is a "third way" that others should adopt. There is no reason why gig companies couldn't maintain flexibility for workers while offering proper employment protections.
Accepting this "third way" would codify the notion that, in order to gain some flexibility, blue-collar workers must sacrifice their rights. That is not the case in the white-collar world, where flexibility often goes hand-in-hand with salaries and protections.
The European Working Conditions Survey (which covers 44,000 workers in 35 countries) shows two-thirds of workers in the EU say that "arranging to take an hour or two off during working time to take care of personal or family matters" is "fairly easy" or "very easy", but it is "fairly difficult" or "very difficult" for 46 per cent of plant and machine operators, and 43 per cent of service and sale workers.
Unions and other campaigners against the gig economy are now planning to lobby US president-elect Joe Biden's administration to refine the federal classification of an "independent contractor" to make clear that gig workers should be treated as employees. That would be a good move. But insecurity and inflexibility in the "traditional" labour market need to be addressed too.
If Mr Biden wants to help lower-paid workers, who he describes as the "backbone of America", he should remember the gig economy isn't the cause of their ills, it's a symptom of them.
- Financial Times
