Screwed and superfluous:
The dark side of the sharing economy
Platforms like Fiverr and Uber present themselves as part of the trendy sharing economy, but mainly they share in the employee’s earnings. And like in any other exploitative industry, women have it harder
By Ruti Levy
Companies involved in the gig economy often claim to hold great promise for women, mainly by brandishing the flexibility they enable. That is a magnetic attraction for anyone bearing most of the parental burden. Women indeed are traditionally over-represented in part-time jobs and other flexible arrangements, of which the gig economy is one. In the United States, women constitute 14% of Uber drivers, but only 8% of taxi drivers, who have more rigid schedules. A study by the U.S. Institute for Public Policy found that women aged 20-24 were the likeliest to be maneuvering between multiple jobs, by a considerable margin over men in the same age group. The report briefly remarked on something that many neglects to note: that it isn't necessarily a matter of choice.
To understand the gap between corporate hype and the bitter reality, just look at the recent news publicized by car-sharing company Lyft. Lyft intended to praise Mary, a 24-year-old 9-months pregnant Chicagoan who, while having contractions, picked up a fare on her way to the hospital. The company relates, "she stayed in driver mode, and sure enough — ping! — She received a ride request en route to the hospital. Luckily, the ride was a short one…When she arrived at the hospital, the doctors informed her that she was indeed in labor!"
If it hadn't been in a corporate PR release, one might think that it is a biting satire about the gig economy. Mary gets no social benefits like overtime or health insurance from Lyft. She did get a onesie for the baby bearing the words "Little Miss Lyft." It was displayed in a photo on the company’s blog.
The phrase "gig economy" sounds a little off somehow, so it's little wonder that startups in the field prefer to pass themselves off as "sharing economy." Their founders and managers speak of democratization, challenging the traditional industries, changing consumer culture, and liberating the workers from bondage to employers into a world of freedom, flexibility, and economic opportunities. "Your best boss is yourself," Gett says on its Hebrew webpage seeking freelance drivers to join its courier service.
The rationale behind the sharing economy is the maximal utilization of resources. People going on vacation rent out their homes so their precious resources can create value for them rather than stand empty. If you own a car and drive to work alone every day, you can rent out the unutilized seats to people going in the same direction, making extra money and also economizing on the number of cars on the road.
But many startups tap into the enthusiasm surrounding the idea of the "sharing economy" without actually helping to share anything other than the demand for cheap, available labor, or to analyze the income other people make on work.
The technological platforms connecting between demand and supply may expand the community of people who may be their own bosses, but at the cost of their economic security, social benefits, and other rights. When somebody with a bike works as a courier with Gett, he isn't "sharing" his vehicle: he's using it to work. Gett brokers between couriers and business owners of all kinds. Helped by the platform, restaurants can replace delivery systems with a fleet that fulfills the same function exactly – but free of employer-employee relations.
Under Israeli law, for instance, when using freelancers as opposed to employees, companies are relieved of providing employee rights and job security, overtime pay, severance compensation, sick days, maternity leave (which is mandatory in Israel when employment-employment exist), and pension provisions. They are also relieved of compliance with various employment-related laws, such as concerning discrimination at work.
The work these startups are hawking is the same old work, just with new buzzwords and branding. EatWith, for instance, portrays itself as a venture supplying "unique culinary experiences at tables around the world! Supping at the tables of creative, exciting chefs”. In practice, the hosting page invites amateurs to open their homes and tables to guests and tourists, for pay. The company takes a commission from the local cook for each guest.
Strong platforms with no competition manage to take a significant bite of profits from the suppliers of the services and from product sales.
There are few empiric studies on the gig economy from the perspective of gender. One of the few was written by two Israeli researchers, Dr. Arianne Renan-Barzilay from Haifa University and Dr. Anat Ben-David from the Open University of Israel, and published this February in the Seton Hall Law Review. Analyzing the data of more than 4,600 U.S. freelancers active on a specific platform between June 2015 and March 2016, they discovered wide, significant differences in pay to women and men for the identical job through the platform, whose identity they did not disclose.
Women were priced, on average 37% below men per hour. The overall average hourly rate for women was $28.20 per hour, compared to an average hourly rate of $45.07 for men. The gap stayed even when corrected for parameters such as customer feedback, experience, working hours and education.
One of the more intriguing findings in their paper was that in categories with more female workers than male, the pay gap widens. In the category of "Legal Services," women asked for $0.37. On average for each dollar demanded by men. In the category of “Engineering,” women asked for $0.64 on average for each dollar requested by men.
The researchers did not investigate whether women are holding themselves in lower esteem, or whether it is the market that does it: "This could be caused either by women’s increased need for money (which may explain why they work more on the Platform), or because the online hourly rates are operating in the shadow of the offline market in which women often earn less than men," they wrote.
Other studies do indicate that the market is underpricing women. Consumers tend to grade women lower than men on internet platforms: women can't even charge as much as men do for the same items on eBay. In other words, the platforms may be gender-blind and do not require users to reveal their sex (though it can be discerned from the worker's name and picture), but they still perpetuate the problem of gender inequality. Renan-Barzilay and Ben-David call it "discrimination 3.0."
In the past, plaintiffs in discrimination suits could point to a specific culprit, whether an individual or a policy, and the court would have to answer a fundamental underlying question: “Who did the discriminating?”
The first generation of discrimination faced formal obstacles that denied equal opportunity to women. The second generation focused on gender bias in management, policy, or organizational culture at the workplace. The third generation of discrimination, this one, is brighter: men and women ostensibly have equal opportunities in entering the technological platforms that run the gig economy. But the ability of women to enjoy these platforms is very different, and they have no legal recourse, as discrimination laws arising from employment relations do not apply. In any case, it is hard to say who did the discriminating.
Renan-Barzilay and Ben-David have a practical solution to offer: drawing attention to the women's pay-inequality problem on the web in order to drive the companies to self-regulation. They suggest building the gig-economy market places initially sensitive to common forms of gender inequality ("equality by design"). An example of how such software could work could be when a woman enters a low bid for a given job - a pop-up message would appear showing the average pay.
Another downside of the gig economy touches on both sexes: low value for work. A multi-annual study done at Oxford University and the University of Pretoria on the gig economy in developing nations found that connecting freelancers (or independent contractors) to global customers created a problem of surplus supply. Unlike in Uber's case, where people work in a given city with a given supply, the pool of people available for digital jobs, such as graphic art, is practically infinite. One platform they sampled reported that the supply of people registering for jobs was nine times more than needed to handle the existing demand.
Various people told the researchers that at first, they priced their services by the hour based on the pay they were accustomed to receiving before entering the platform, but they couldn't find work and had to settle for about half.
Most of the growth by the gig economy comes now from the developing nations, effectively creating a large community of people prepared to work for low pay, based on their low cost of living.
In March New Yorker writer Jia Tolentino published an article called "The Gig economy celebrates working yourself to death." Part of the article is devoted to ads run by Fiverr, an Israeli startup that has raised $110 million to date and become an international brand for gig work. Fiverr's latest campaign is dedicated to "Doers," and its main slogan is "In doers we trust" (a-la "in God we trust" on dollar bills). Billboards in New York and a video on the company's website explain who its beloved "doers" are: women who “Eat a coffee for lunch” and for whom “Sleep deprivation is their drug of choice.” In the company's words.
Fiverr urges its doers to be always accessible to customers, even if that means taking a call in the middle of sex, to take on the “rich kids” and the “gurus” and the tech community, “to change the industry.”
Micha Kaufman, Fiverr founder, and CEO used to tell the media that by 2020, freelancers would occupy 40% of the labor market, and that change is coming from a new generation who grew up in the digital world and want to be entrepreneurs while experiencing a range of areas. But for all the talk about innovation, Fiverr is ultimately just a platform to broker cheap labor starting from $5 per job – anything from designing a logo to translating a text to writing code. And the ones getting rich are mainly the company's shareholders. The youngsters who want to try their hands at all sorts of things can eat coffee for lunch and abstain from sleep to meet the high demands of the world of economic uncertainty (in a cool way, of course).
"We built a platform for freelancers, but don't forget the other side – the users," Kaufman told TheMarker in an interview last January. "The amazing thing is that you are slowly seeing big organizations entering into our arena. 50% of the Fortune 500 companies used Fiverr at least once. A company releasing a new product seeking a video clip to describe it could choose to work with a studio that charges tens or hundreds of thousands of dollars and supplies the video after months – or use us and get a good product for less than $500. And it all happens fast. Everybody wants to be 'lean' entrepreneurs."
But things aren't as amazing for the suppliers, at least in Israel, because Fiverr is encouraging a new breed of subcontracting, devoid of the rights that subcontract workers managed to obtain in law after years of struggle. Now subcontract workers in Israel are entitled to all the social benefits and have to be formally employed after nine months.
Some of the success behind some of the Silicon Valley giants, and what makes their shares so attractive to investors, stems from their ability to produce vast revenues and profits with a relatively small staff of employees. They focus on essential core activity and outsource everything else. This makes them more efficient and productive, but also helped widen financial gaps.
The number of people without job security has soared in the last 20 years and has become a social class of its own. It is called the precariat, a combination of "precarious" and "proletariat." Economist Guy Standing did not invent the term, but he published a book about it in 2011 (“the precariat: the new dangerous class”): “The precariat has replaced the proletariat as the core of global capitalism, which would like them to adapt and direct themselves towards unsteady work, rather than the old format of guiding to orderly stable full-time work”. Standing told Haaretz. "It is the first mass class in history that is as oppressed and exploited outside of work as they are exploited during it."
The gig economy is a distributor of the precariat, and it is neither fun nor cool even if it’s mediators are young cool tech companies. It is just one sign of a fundamental problem In today’s changing labor market, and it will take years to deal with its harmful effects.