sharing economy

Piecemeal labor has taken on a shinier veneer under new rubrics: the sharing economy, the peer economy, the collaborative economy, the gig economy.

Jennifer Guidry was in the driveway of her rental apartment just after 4 a.m. on a Friday while most of the neighbors in her leafy Boston suburb were still asleep. Her blond hair pulled back in a tidy French braid she was vacuuming the inside of her car.  A Navy veteran and former accountant, Ms. Guidry uses the early time to mitigate the uncertainty of working in what’s known as the sharing economy.

Ms. Guidry, 35, earns money by using her own car to ferry around strangers for Uber, Lyft and Sidecar, ride services that let people summon drivers on demand via apps. She also assembles furniture and tends gardens for clients who find her on TaskRabbit, an online marketplace for chores.

Her goal is to earn at least $25 an hour, on average. Raising three children with her longtime partner, Jeffrey Bradbury, she depends on the income to help cover her family’s food and rent. That has become more unpredictable of late. Uber and Lyft, her driving mainstays, recently cut certain passenger fares. Last month, TaskRabbit overhauled the way its users select their helpers; immediately after the change, Ms. Guidry’s stream of new clients dried up.

“You don’t know day to day,” she said. “It’s very up in the air.”

In the promising parlance of the sharing economy, whose sites and apps connect people seeking services with sellers of those services, Ms. Guidry is a microentrepreneur. That is, an independent contractor who earns money by providing her skills, time or property to consumers in search of a lift, a room to sleep in, a dry-cleaning pickup, a chef, an organizer of closets.

For people seeking a sideline, these services can provide extra income. Beyond the ride services, there are businesses like Airbnb, the short-term-stay broker; task brokers like TaskRabbit and Fiverr; on-demand delivery services like Postmates and Favor; and grocery-shopping services like Instacart.

“Someone on Sidecar doing the same commute they do on a daily basis and picking up a rider, it’s really free money for the driver and reduced cost for the rider,” notes Nick Grossman, the general manager for policy and outreach at Union Square Ventures, which is an investor in Sidecar.

In a climate of continuing high unemployment, however, people like Ms. Guidry are less microentrepreneurs than microearners. They often work seven-day weeks, trying to assemble a living wage from a series of one-off gigs. They have little recourse when the services for which they are on call change their business models or pay rates. To reduce the risks, many workers toggle among multiple services.

“Having a diverse portfolio is the best protection,” says Sara Horowitz, the founder and executive director of Freelancers Union, an advocacy organization. “People are doing this in the midst of wage stagnation and income inequality, and they have to do these things to survive.”

To try to insulate herself from the uncertainty, Ms. Guidry makes herself available to drive most weekdays in the predawn darkness. At that time, she figures, ride seekers are likely to be business travelers headed to the airport, a profitable fare.

Around 4:30 a.m., Ms. Guidry ushered me upstairs to her home office, careful not to wake her family sleeping down the hall. She pulled up TaskRabbit on her laptop to check if any new offers had come in. She scrolled through Craigslist, where she occasionally picks up work as a private chef. Nothing doing.

She glanced at the sofa bed by her desk, musing aloud whether she could rent it out on Airbnb. “The thing is, I have kids,” she said, gesturing to a child-size desk on the other side of the room where her son Aden, who is 5, does his schoolwork. So much for the couch-rental idea.

Resigned, Ms. Guidry activated her Uber iPhone, a device that the company issues to its drivers. On her personal Samsung Galaxy phone, she activated the driver modes for her Lyft and Sidecar apps.

Moments later, the Uber phone pinged with a ride request. She accepted immediately. But, ever in risk-mitigation mode, she waited two minutes before leaving, lest the rider change his mind.

“There’s nothing worse than driving all the way over to some place and then having them cancel,” she explained, heading down to the driveway.

A little over an hour later, Ms. Guidry returned home, having completed an airport drop-off. She had made $28, not accounting for the cost of gas. She would do a second airport run, then come back to wake her family and make breakfast.

The ‘Precariat’

Piecemeal labor is hardly a new phenomenon. But as expedited by technology and packaged as apps, it has taken on a shinier veneer under new rubrics: the sharing economy, the peer economy, the collaborative economy, the gig economy.

Gigs hold out the prospect of self-management and variety, with workers taking on diverse assignments of their choice and carving out their own schedules. Rather than toiling at the behest of some faceless corporation, they work for their peers.

“Providers in the peer economy really value the independence and flexibility; for lots of people, it has been transformational,” says Shelby Clark, the founder of RelayRides, a car-sharing marketplace, “You meet great, interesting people. You have great stories.”

Certainly, it’s a good deal for consumers. Peer marketplaces democratize luxury services by making amateur chauffeurs, chefs and personal assistants available to perform occasional work once largely dominated by full-time professionals. Venture capital firms seem convinced.

Uber has raised more than $1.5 billion from investors; Lyft has raised $333 million; and TaskRabbit, $38 million. Part of the attraction for investors is that the companies can avoid huge employee payrolls by effectively functioning as labor brokers.

If these marketplaces are gaining traction with workers, labor economists say, it is because many people who can’t find stable employment feel compelled to take on ad hoc tasks. In July, 9.7 million Americans were unemployed, and an additional 7.5 million were working part-time jobs because they could not find full-time work, according to estimates from the Bureau of Labor Statistics.

There are no definitive statistics on how many people work in the gig economy. But according to a report from MBO Partners, a company that provides consulting services to independent contractors, about 17.7 million Americans last year worked more than half time as independent contributors, among them project workers.

With piecemeal gigs easier to obtain than long-term employment, a new class of laborer, dependent on precarious work and wages, is emerging. In place of the “proletariat,” Guy Standing, a labor economist, calls them the “precariat.”

“They may be able to paint someone’s shed this week,” says Dr. Standing, a professor of developmental studies at the University of London. “But they don’t know what will happen next week.”

He views peer marketplaces as part of a larger global phenomenon, in which labor brokers encourage people to work on contingency without basic employment benefits or protections. The companies essentially channel one-off tasks to the fastest taker or lowest bidder, he says, pitting workers against one another in a kind of labor elimination match.

The flexible timetables of project work are a trade-off for regular employment income and benefits. Retailers, restaurant chains and other employers may require more rigid work schedules than piecemeal gigs, or, worse, keep their workers guessing from week to week about which hours they will work. But many of those employers also offer workers benefits like disability pay or commuter discounts.

Uber, Lyft and TaskRabbit, for instance, do not regard the workers who provide services to their users as employees. The companies say they are simply arenas, like eBays for gigs. They require their service providers to work as independent contractors and, as such, the workers don’t qualify for employee benefits like health insurance, payroll deductions for Social Security or unemployment benefits.

Jamie Viggiano, senior director of marketing at TaskRabbit, says the company is trying to improve the situation for its 30,000 contractors in 19 cities in the United States. It recently instituted a sitewide minimum wage of $15 an hour. It also adopted a $1 million insurance policy, covering both clients and contractors, for any property damage or bodily harm that occurs while performing a job. Still, Ms. Viggiano says that “across the industry, we have only scratched the surface of helping freelancers work in the gig economy.”

One issue for contractors is that the companies can alter their terms with impunity. Workers are often reluctant to challenge these changes because the companies can drop them — or deactivate them, in industry lingo — at any time.

Executives at Lyft say they are sensitive to the implications of price changes for drivers. The company, which has more than 60,000 drivers, recently decreased fares 30 percent in many cities as part of a price war with Uber, its chief rival. To compensate drivers, Lyft temporarily suspended charging them its 20 percent commission fee on fares.

“We have an internal culture of putting drivers first,” John Zimmer, Lyft’s president and co-founder, told me last Monday.

Later that same day, Lyft reinstituted its 20 percent commission, but with an incentive for the most active drivers. It reduced its cut to 5 percent for those who work from 40 to 50 hours a week and suspended the fee altogether for those who work more than 50 hours a week.

The sudden imposition of tiered commissions on drivers didn’t sit well with Ms. Guidry. “It’s a penalty for part-time drivers,” she said.

By now, workers are accustomed to companies’ rapidly switching edicts.

“They can do whatever they want with pricing and compensation; they can deactivate you as a driver whenever they want,” said a man who drives for three ride-sharing services in San Francisco and asked that his name be withheld for fear of being blacklisted. “Nobody has my back.”

Painter, Caterer, Dog Sitter

On Saturday morning, canvas tool bag in hand, Ms. Guidry drove to a house a couple of miles from her apartment on a TaskRabbit assignment.

The clients, a professional couple, were repeat customers. They had previously hired Ms. Guidry to assemble a rolling wooden cart for their young son, an energetic toddler, and to install child-resistant latches on their kitchen cabinets. Now she was to childproof a chest that contained their wedding china and crystal goblets.

For the past year, Ms. Guidry has devoted most weekends to such gigs.

“It’s regular people who don’t own a drill and have never hung anything on drywall. It can be daunting for people,” she said of the chores. She feels invigorated by the variety of the work and the applicability of her skills: “I’ve done everything from painting and catering to dog sitting.”

For about 30 minutes, she worked on the cabinet. Later, she adjusted a child-safety gate at the top of a staircase. After that, she hung a wind chime off the back porch.

For two hours of work, her take came to $50. Some of her competitors on TaskRabbit do similar chores for $15 an hour.

“I probably get fewer gigs than people who bid less,” Ms. Guidry acknowledged. “But it’s a sustainable model for me.”

Six years ago, she had a full-time job as the controller at a small company. After she gave birth to her youngest son, her office asked her to work extended hours. She couldn’t both accommodate the company and take care of her newborn. So she ended up leaving her job.

“I started applying for part-time jobs, but those are very rare and highly competitive,” Ms. Guidry recalled. “Midcareer, there is very little available part time for stay-at-home moms.”

Her partner, too, was out of work for a while, although he now has a full-time job as a network administrator. At the time, she was also coping with the aftereffects of a back and hip injury she had sustained in 2000 when in training for the Navy. With reduced mobility, she needed a cane to get around.

So Ms. Guidry, who has training in electronics, accounting and cooking, began taking on projects in different fields. Peer marketplaces have greatly improved her ability to find gigs that she can fit into her child-care schedule. TaskRabbit has become one of her income mainstays.

Until recently, TaskRabbit functioned as an auction site where clients posted tasks and its “rabbits” bid for them. The system allowed workers to communicate with potential clients in order to make more accurate estimates for bids.

“You could chitchat, find out more about the task and see if they were flexible on time,” says Erin Mata, a single mother in Austin, Tex., who has delivered flowers and designed birthday invitations for TaskRabbit clients.

But last month, TaskRabbit overhauled its approach, replacing open bidding with an algorithm to match a client with people who have specific experience in the requested task and are within the client’s budget.

Ms. Viggiano, the TaskRabbit marketing executive, says the new model makes it faster for consumers to find the right helpers and for workers to secure gigs. The company now asks workers, rebranded as “taskers,” to respond to offers within 30 minutes.

“There was a lot of inefficiency,” Ms. Viggiano says. “There was a lot of back-and-forth before the task was assigned.”

After the redesign, some active taskers ended up receiving even more offers. Under the new system, for instance, Ms. Guidry’s stream of new clients initially slowed to a trickle. But she expanded her range of tasks on the site and ended up with a flood of new offers, often at a higher rate of $35 an hour.

“I’ve been five times as busy, without having to hunt down jobs,” she told me.

Some others are seeing fewer work offers.

Although she has a regular office gig with a longstanding TaskRabbit client, as of late July, Ms. Mata in Austin said she had not received new offers. “I guess it makes sense on the business end, but it takes all the personal interaction out of it.”

She said she was glad to have another gig to fall back on, with a local delivery service called Favor.

Favors and Fees

Inherent in Favor’s name is the peer-economy rebranding of labor as a kind of good-will effort toward others, rather than an old-fashioned exchange of work for remuneration. Instead of one-off gigs, however, Favor offers workers delivery shifts of several hours or more at a time.

Consumers can use the Favor app to select items from local restaurants or stores. Then, for a fee from $5 to $10, depending on the cost of the order, the service sends a messenger to pick up and deliver it.

Favor runners earn tips plus a percentage of the fees. But the company has tried to insert some predictability into the process by allowing workers to schedule shifts a week ahead of time. Should their tips fall short, Favor currently guarantees them a minimum wage of $9 an hour.

“If they don’t make that in tips, we will bump them up,” says Zac Maurais, the co-founder of Favor. “So they don’t have to worry that they aren’t going to be fairly compensated.”

The income floor appeals to Ms. Mata. In January, she was laid off from a job as a manager of customer-service employees at General Motors. She now works 20 to 40 hours a week for Favor, earning an average of $15 an hour in tips and commissions. She signed up for health insurance through the state health exchange.

“On average, you’re going to make $7 per favor,” Ms. Cruse explained, using the company’s euphemism for a delivery. “If you are running two favors in an hour, that’s $14 an hour. It’s pretty awesome.”

She hadn’t yet racked up enough “favors” to earn that much consistently. So far that week, she had worked about 20 hours and earned $179 — the company minimum.

Many gigs may seem to offer decent pay. But they may not look that great after factoring in the time spent, expenses, insurance costs and taxes on self-employment earnings.

“If you did the calculations, many of these people would be earning less than minimum wage,” says Dean Baker, an economist who is the co-director of the Center for Economic and Policy Research in Washington. “You are getting people to self-exploit in ways we have regulations in place to prevent.”

What about the potential risk to Favor drivers or bike messengers if they have an accident while making deliveries? Mr. Maurais, Favor’s co-founder, says that the company itself has $1 million in insurance coverage per incident; it requires delivery drivers, but not bike messengers, to provide proof of vehicle insurance.

Good Gigs, or ‘Wage Slavery’?

One humid evening in Boston, I accompanied Kelsey Cruse, a Favor messenger, as she picked up and delivered burritos from a Chipotle outlet. Favor had just come to town, and Ms. Cruse, a student at the University of Massachusetts, Boston, had been one of the first people selected to make deliveries.

After her TaskRabbit work on that Saturday morning, Ms. Guidry spent time at a local farmer’s market, where she bought squash and basil for a meal she was making on a private-chef gig. Later that afternoon, she ferried passengers for a few hours. She spent an hour in her home office, combing through discount websites like CouponMom and printing out a stack of grocery coupons. She took them to the supermarket to buy more ingredients for the client meals.

Around midnight, she returned to driver mode, taking Bostonians to downtown clubs and local house parties. Others she drove home to far-flung suburbs. Her self-assigned shift ran until around 5 a.m.

“Combining all this stuff together, I don’t know that it adds up to a career,” Ms. Guidry ruminated. “But it definitely makes things easier.”

Technology has made online marketplaces possible, creating new opportunities to monetize labor and goods. But some economists say the short-term gig services may erode work compensation in the long term. Mr. Baker, of the Center for Economic and Policy Research, argues that online labor marketplaces are able to drive down costs for consumers by having it both ways: behaving as de facto employers without shouldering the actual cost burdens or liabilities of employing workers.

“In a weak labor market, there’s not much of a floor on what employers, or quasi employers, can get away with,” Mr. Baker contends. “It could be a big downward pressure on wages. It’s a bad story.”

Labor activists say gig enterprises may also end up disempowering workers, degrading their access to fair employment conditions.

“These are not jobs, jobs that have any future, jobs that have the possibility of upgrading; this is contingent, arbitrary work,” says Stanley Aronowitz, director of the Center for the Study of Culture, Technology and Work at the Graduate Center of the City University of New York. “It might as well be called wage slavery in which all the cards are held, mediated by technology, by the employer, whether it is the intermediary company or the customer.”

Peer-economy experts and executives recognize that many gig workers are laboring largely without a safety net. Mr. Clark, the industry veteran who founded RelayRides, reels off a list of lacunas: health insurance, retirement saving plans, tax withholding and even the kind of camaraderie and mentoring that can be available in full-time office jobs.

“Looking at this as a new paradigm of employment, which I think it is, the question is, What are you giving up?” Mr. Clark says. “At the end of the day, there’s a metalayer of support services that is missing.”

He predicts that new businesses will soon arise to cater to the needs of project workers: “There are opportunities to focus on providers, finding ways to make it easier, more stable and less scary to earn in the peer economy.”

TaskRabbit has started offering its contractors access to discounted health insurance and accounting services. Lyft has formed a partnership with Freelancers Union, making its drivers eligible for the advocacy group’s health plan and other benefit programs.

That may not be enough. Dr. Standing, the labor economist, says workers need formal protections to address the power asymmetries inherent in contingent work. International rules, he says, could endow gig workers with basic entitlements — like the right to organize and the right to due process should companies seek to remove them from their platforms.

“There should be codes of good practice at an international level that all companies should be required to sign,” he said.

As for Ms. Guidry, she had joint implant surgery a few months ago to address the back and hip injury she sustained in Navy training. For the first time in years, she can stand and walk at length without chronic pain. Now she is trying to decide whether to continue patching together an income from multiple gigs, or to start looking for more formal employment.

“I like my freedom — fixing someone’s cabinet, driving, pulling up weeds, cooking,” she told me as we sat in her dining room on Monday morning, recapping her weekend of work. “I would not like to do any of those things as a full-time job.”

Yet she recognizes that her current routine may not be sustainable. Between 10 a.m. on Saturday and 5 a.m. on Sunday, she had earned about $263. But that had required working marathon hours and running a sleep deficit.

“It was a good day I would say, all in all, but a long day,” Ms. Guidry acknowledged. “I can’t do many of those.”

Photo credit: Mashable

Via New York Times