A Job is an Exchange

by on August 17, 2014 at 4:57 pm in Economics | Permalink

I love Natasha Singer’s parenthetical in her excellent NYTimes article about job exchanges like Uber, Lyft and Task Rabbit.

“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.”

(Disclosure: For two weeks in the summer of 1988, I had a gig as the au pair for Professor Aronowitz’s daughter, then a toddler.)

dearieme August 17, 2014 at 5:02 pm

Quite brilliant. Well said, lass!

By the way, can anyone explain how one can be quite confident that someone who is “director of the Center for the Study of Culture, Technology and Work” will be a tedious lefty? Similarly, why one would expect that his background probably isn’t in Technology, nor indeed in Work? And moreover, that “Culture” won’t be in the sense of Shakespeare, Rembrandt and Mozart?

BenK August 17, 2014 at 5:05 pm

Customers always hold the cash, at some level. Unless you build a capacity in private skills or facilities, you are laboring for a customer. Most people in history have done this. Lyft, uber, take the power from intermediaries and give most of it to customers, some to drivers. That doesn’t mean drivers will suddenly own fleets of cars or somehow gain an ever growing skill set that demands steady raises. It hasn’t been that way historically. It doesn’t make them bad jobs.

Max August 17, 2014 at 5:37 pm

Seems like these services are solving a problem for her by giving her the opportunity to work flexible hours for her kids. 20 years ago her options would be more limited.

anon August 18, 2014 at 12:01 pm

+1

And no mention of the other side of the ledger: expenses.

It never ceases to amaze me how well one can live in the USA for very little money if you are not trying to ape an expensive “leafy” suburban / urban lifestyle. Indoor plumbing, hot water on demand, heat in winter and cooling in summer, Internet access and the millions of free books and videos online and through your local library – almost everyone in the USA today lives better than the wealthiest and most powerful did less than 100 years ago.

$100k for a 50 hours / week office job where a suit and tie is required and showing up certain hours is worth $100k to some people. I wouldn’t do it for $500k per year, but good on you if that’s what you want. I’d prefer to live in a smaller and less expensive place, eat out less, etc., etc.

If Uber becomes too bad a deal for drivers, the good drivers will stop driving for Uber. Uber drivers are not “slaves” of any kind, and to label them such is dehumanizing and infantilizing. And offensive.

Pro tip: Uber riders have no clue who their drivers are and what they have done or are still doing. That brown guy with the thick accented English? He was an engineer in Pakistan who came to this country where he has put all 5 of his children through college. And as a bonus, ask him where the best Pakistani restaurant is.

anon August 18, 2014 at 12:06 pm

Also no mention of how the woman in the article is diversifying her income – multiple streams of income. Just as it is unwise to put all your retirement savings into your employers stock (or for 2 spouses to work for the same employer), why is it not wise to diversify sources of income?

FUBAR007 August 18, 2014 at 12:34 pm

>>… almost everyone in the USA today lives better than the wealthiest and most powerful did less than 100 years ago.<<

For most, this comparison is irrelevant.

triclops August 17, 2014 at 6:11 pm

Why must so many lefties worship preindustrial mercantilism and guild monopolies as the only way to save workers from slavery?
So weird.

Locke August 17, 2014 at 6:51 pm

I am going to copy and paste that for the future. Perfect wording of something I have always struggled to so elegantly describe.

If employment is slavery, then why invest so much energy into maintaining it as an institution?

Cafs August 17, 2014 at 7:28 pm

Your opinions of prior working dynamics don’t negate the arguments about the current state of these jobs. The article at minimum might raise an important discussion.

triclops August 17, 2014 at 9:47 pm

I love important discussions. Please show me where that is in this article. Negative points for tired Marxist complaints that pretend the constraints of reality can be wished away, or if they conflate the short and long term throughout.

Cafs August 18, 2014 at 1:02 am

Negative points for your presumptuous and reductionist use of the M word. Please show me where in my comment you found any of what your purport.

Seerak August 18, 2014 at 11:21 am

Answer his original question first. Why the primitivism on the Left?

Cafs August 18, 2014 at 1:23 pm

How about he stops pretending there’s nothing useful to discuss in the article. You act as if there’s no primitive to be found anywhere on the right. Again, you are still making assumptions about what people think.

triclops August 18, 2014 at 2:06 pm

I’m using Marxist as descriptive, not as pejorative. It’s much clumsier to describe the concepts of worker alienation and labor theory of value, hence Marxist.
Now can we get to the important discussions?

Leefs August 18, 2014 at 2:40 pm

“as descriptive, not as pejorative.” Which still doesn’t preclude your ascription from presumptuous and reductionist reasoning, but your clarification is nice.

“Now can we get to the important discussions?” Sure. Read the article again. I think it goes something like, “you can lead a horse to water but you can’t make it drink.”

The owner of this blog thought it was interesting enough anyway, regardless of whatever you are willing to think.

Kitty_T August 19, 2014 at 12:06 pm

I’m not sure the owner of this blog was pointing out the “interesting enough” discussion of jobs with no future and wage slavery so much as pointing out how amusing it is that the professor saw fit to declaim about those issues to someone he’d once employed as an au pair.

FUBAR007 August 18, 2014 at 12:32 pm

>>Why must so many lefties worship preindustrial mercantilism and guild monopolies as the only way to save workers from slavery?<<

Because they bring predictability which, in turn, enables long-term planning. A central purpose of large, cumbersome organizations and bureaucracy in general is that they frustrate disruption and slow things down, lowering the bar for survival and prosperity.

On top of that, Western civilization is multiple generations down the rabbit hole of conditioning and educating people for industrial-model, skills-based lifetime employment. The vast majority of people are not equipped for a freelance, transactional model of employment. Nor are major social institutions–e.g. education, finance–structured to facilitate adaptation to such a model. It's too unpredictable and thus too scary.

The masses don't really give a rat's ass about creative destruction and the wonders of market de-regulation. They care about sustaining their standard of living status quo and will move accordingly.

TL;DR: Intense status quo bias.

anon August 18, 2014 at 12:40 pm

+1

Leefs August 18, 2014 at 1:38 pm

“a freelance, transactional model of employment.” Is that what you call apps that decide where the jobs are and funnel away a cut of each wage earned? Not suggesting technology shouldn’t exist to find work, but be realistic about the nature of this employment.

triclops August 18, 2014 at 2:10 pm

These apps do the deciding?
That seems like anthropomorphism, as well as a fundamental misreading of the situation.
Do you think all intermediaries are so destructive?

Leefs August 18, 2014 at 2:34 pm

“That seems like anthropomorphism.” Witty. You must think when people who refer to companies by name are anthropomorphizing them as well.

You don’t deny the original assertion: How is an app filtered and algorithmic marketplace with a cut of earnings funneled a way a truly “a freelance, transactional model of employment”? It’s not.

Michael August 17, 2014 at 6:18 pm

The Champagne Socialists strike again. I wonder if Aronowitz summers in Cape Cod with Chomsky.

derek August 17, 2014 at 6:28 pm

So if the employer, Uber, messes with the drivers in some way, what will happen?

Locke August 17, 2014 at 6:47 pm

Uber is not the employer.

asdf August 17, 2014 at 7:32 pm

Uber decides what the rates will be, and the drivers really don’t get much input on that (they can take it or leave it). Also, Uber seems to change their rates pretty often (both overall and through some kind of pricing algorithm).

Also, Uber decides who gets a license to be an Uber driver. In essence, they control the brand.

One thing I’ve noticed lately is that Uber has been lowering fares and at the same time loosening driver requirements. The result being a decrease in quality and reputation. Individual Uber drivers don’t get any input on those decisions, but it affects them.

derek August 17, 2014 at 9:32 pm

So if the prices are too low they won’t get drivers, or they will get drivers but no customers.

I fail to see how any of this is slavery.

Drivers get paid by Uber don’t they? And riders pay Uber don’t they? It may be a pass through arrangement, but it passes through nonetheless. My suppliers get the money I collect from my customers.

triclops August 17, 2014 at 9:51 pm

Prices set by markets or customers (leftists think they are different things) are evil, prices set by businesses are also evil, but prices set by employees are virus and wise.

triclops August 17, 2014 at 9:52 pm

Are *virtuous and wise.

asdf August 18, 2014 at 10:51 am

I don’t recall mentioning slavery.

When I open a McDonald’s franchise the actions that McDonald’s takes in managing the brand will have a big effect on the value of my franchise. It’s not practical that I’m going to be given hard legal control over the actions of McDonald’s, but there is a kind of implied agreement that my franchise fee represents a trust that they won’t mismanage the brand.

If someone at McDs corporate then goes an mismanages the brand for their own benefit all the reputation I tried to purchase and build up is ruined. I don’t have much of a say in it but it affected me.

Uber drivers are in a similar situation.

BC August 18, 2014 at 12:16 am

I guess drivers will move to Lyft and Sidecar. It’s strange: the Left fears the alleged monopsony power of employers, especially employers of low-wage labor, but when Walmart emerges to compete against McDonald’s for low wage labor, they criticize and try to limit Walmart’s growth. Now that Uber has emerged to provide an alternative to Walmart, (some elements of) the Left also complain, calling Uber “wage slavery”. Fast food chains like McDonald’s, Wendy’s, and Burger King; discount retailers like Walmart and Target; sharing-economy enablers like Uber, Lyft, Sidecar, and TaskRabbit; independent households that employ domestic help — just how many employers of low-wage, low-skill labor does it take to transform a monopsony market into a competitive market? I’m not saying that the wages are high, but it’s hard to argue that the wages are determined by bargaining power rather than market competition.

Kevin Erdmann August 18, 2014 at 2:15 am

+1

Bryan Willman August 17, 2014 at 8:08 pm

Let’s ask a different question – why are so many benefits tied to employment, and hidden as non-visible parts of compensation?

Part of the “Why must so many lefties worship preindustrial mercantilism and guild monopolies as the only way to save workers from slavery?” seems to be bound up in the question of “why is so much of somebody’s compensation hidden from them, even though it affects their results in the labor market?”

A related questoin – given that union members have never been all that large a part of the US labor market, why is such great progress attributed to Unions?

There is another deep issue that is glanced over – for lots of very strong reasons, employers who consume very much of any one service want as much of it as possible from as few people as possible. If our business world were really structured kind of differently, so it was easier for 2 part time people to be the controller of a company, would the pressures for these gigs be less?

charlie August 17, 2014 at 8:21 pm

The tax code

byomtov August 17, 2014 at 9:24 pm

The tax code

Asked and answered.

Jeff R. August 18, 2014 at 9:48 am

A related questoin – given that union members have never been all that large a part of the US labor market, why is such great progress attributed to Unions?

Because they formed a cohesive voting bloc, politicians could compete to do favors for them in exchange for votes.

cfh August 17, 2014 at 8:34 pm

Who sends out the 1099s?

Drea August 17, 2014 at 9:23 pm

Uber sends them to the drivers: https://get.uber.com/drive-uber/san-francisco/p2p/?utm_source=partnerships&utm_campaign=CalJobs_00085 (See “How taxes work” under the FAQs)

freethinker August 17, 2014 at 9:33 pm

“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. ” Moral: in the sharing/gig economy it is better not to have kids if you want a less stressful life.

Cliff August 17, 2014 at 9:40 pm

Moral: In any economy ever, it is better not to have kids if you want a less stressful life.

I don’t think anyone has kids to relieve stress

DangerZone August 17, 2014 at 9:41 pm

Uh, isn’t this equally true in the non-sharing/gig economy?

Perhaps even more so?

triclops August 17, 2014 at 10:08 pm

Not in the idealized view that all employment should consist entirely of artisanal guilds and massive government bureaucratic leviathans.

Cafs August 18, 2014 at 1:07 am

So you want to swing the pendulum all the other way so everyone can have an edifying job delivering bags of burgers for pittance.

andrew' August 18, 2014 at 3:20 am

Yes.
It doesn’t have to be their only job. Every week almost u take someone else’s kids to the movies or bouncy houses or sleepovers on about a 50% rate of reciprocation. I’d love to do a meal swap and have done it. It is hard to start and maintain. I would love to buy and sell piggy backing on things I am already doing. I’ll grab you some burgers on the way home, no problem. If the web lowers transaction costs for these things it would be awesome.

andrew' August 18, 2014 at 3:21 am

I wonder why autocorrect finds it normal that it always uses u where I is intended.

Jeff R. August 18, 2014 at 9:50 am

Can I occasionally eat one of the burgers and then say “sorry, they must have forgot to make it back at the store?”

derek August 18, 2014 at 11:23 am

If you want a job that pays well and you have a modicum of control of your time, get a skill that works that way. Taxi drivers haul drunk bar patrons home, late at night. What did that woman expect?

Cafs August 18, 2014 at 1:28 pm

A major point of the article is that most of these jobs can’t really be considered well paying full time jobs, and it’s not easy to add in other jobs along with them. No, people don’t have to take them, but no one here has really denied that major point that the article tries to make. Most people are only offering vague optimism about these apps potential, whereas the article tries to look at some of the reality.

triclops August 18, 2014 at 2:13 pm

I don’t want to swing anything. That’s the difference. I don’t presume to know which voluntary interactions should be outlawed.

Cafs August 18, 2014 at 2:44 pm

Where does the word outlaw appear in the article?

Dismalist August 17, 2014 at 10:38 pm

Sounds like auction labor markets are spreading. Better than no labor markets, as in Europe. The phenomenon can be best understood by understanding Ronald Coase, The Nature of the Firm (1937). There is a cost to using the market to contract for delivering deliverables. Hence we have bureaucracy, explicitly including private bureaucracy, to lower that cost. A greater turn to individual contracting is explicable by a change in technology which makes individual contracting cheaper.

hat bureaucracy is apparently more comfortable to some people is understandable in that there are ways of exploiting bureaucracy that can’t be utilized in contracts for deliverables. Tough, on some of us. I’ve worked in an auction labor market when I was a kid, and while it’s not fun, neither is working in a bureaucracy.

Kevin Erdmann August 18, 2014 at 2:17 am

+1

triclops August 18, 2014 at 2:14 pm

+2
Good insight

andrew' August 18, 2014 at 2:52 am

I am literally, and I mean literally dying for an au pair. It is ridiculous to have such a matching and policy problem now.

Adrian Ratnapala August 18, 2014 at 4:45 am

When do you expect to leave this mortal coil. More importantly, we want salacious details of your forbidden love.

Go Kings, Go! August 19, 2014 at 1:19 am

Our au pair arrives Thursday, following her orientation in NJ. Why are you having problems?

(I hope she’s witty as Natasha Singer and calls my BS too).

Nate Rausch August 18, 2014 at 7:17 am

Well, she is half-right though. They aren’t jobs, but they are not wage-slaves. They are simply self-employed.

Free selv employed who can work as much or as little as they choose (at least with Uber). The demand is not dictated by technology, as she seems to think, but by the market. Like any other self-employed hair dresser, tudor or consultant.

It is odd, that this professor of technology is not even familiar with this term. I suspect that in her world there exist only capitalists and proletariat, and therefore the concept is foreign.

Leefs August 18, 2014 at 1:31 pm

A lot of people would argue that true self employment doesn’t involve an app dolling out tasks and taking a cut of each wage earned.

triclops August 18, 2014 at 4:02 pm

Lots of people argue lots of things, doesn’t mean they are all good arguments. It’s amazing how grossly some can fail to understand the value of good matchmaking between customer and service provider.

Leefs August 18, 2014 at 6:01 pm

Then focus on that argument instead of regressing into a broader commentary about all arguments. Also, while there may be value in good matchmaking between customers and service providers, that doesn’t take away from the reality of the quality of jobs these apps are providing to people, and the nature in which they are provided and earnings deducted. Your argument that there is value to be found somewhere doesn’t mean people can’t critique the current state.

Thomas Sewell August 19, 2014 at 1:53 am

Yeah, most self-employed would dream of having a situation where another company provided a steady stream of customers in exchange for a commission. It’s like having a sales force for your company without needing to manage them. What an efficient arrangement, incredibly useful to the self-employed.

Now excuse me while I use that insight to start companies for entrepreneurs to outsource their sales force to in lots of other industries…

Leefs August 19, 2014 at 5:42 am

The article never said it wasn’t an efficient arrangement (in a basic sense, anyway). It was a reaction to the reality of the work, their wages, and what the author perceived as the implications of the further proliferation of these jobs.

ZZZ August 18, 2014 at 8:33 am

“(Disclosure: For two weeks in the summer of 1988, I had a gig as the au pair for Professor Aronowitz’s daughter, then a toddler.)”

Obviously you were never able to move beyond your contingent wage slavery.

Chris S August 18, 2014 at 8:42 am

The argument used to back up the quote – “all the cards are held, mediated by technology, by the employer” – would be stronger if it could be shown that the drivers had no negotiating or pricing power. In fact, at least here in my area, Uber and Lyft are offering all sorts of incentives to drive for them, including guaranteed minimum hourly earnings and cash bonuses.

Seems that Uber can offer both higher earnings to drivers and lower prices to consumers by disintermediating the true monopoly in the value chain, the holders of the statutorily limited taxi medallions.

triclops August 18, 2014 at 4:05 pm

The economically illiterate often have a very visceral hatred of middlemen. The concept of reducing friction is not understood by them, and so they think it’s some kind of scam.

asdf August 18, 2014 at 11:27 pm

Like how Payday Lenders are reducing the friction between you and getting CASH NOW!

These dumb poors don’t understand free exchange.

Chris S August 18, 2014 at 8:50 am

I did find persuasive this article about the shifting power of employers vs employees intermediated by technology.

Service retailers use real-time demand forecasting software to change shifts frequently or cancel them mid-way, eliminating the cost associated with having employees on hand with nothing to do – a classic risk in a service business. But, it has not eliminated the risk, it has shifted the risk to the low-wage worker, where it has a greater impact: the worker cannot have a second job, attend school or have consistent child care arrangements.
http://www.nytimes.com/interactive/2014/08/13/us/starbucks-workers-scheduling-hours.html

This echos with Atif Mian and Amir Sufi’s recent book’s insight that one mechanism of debt (e.g. mortgages) is to shift the risk of price decline from investors (equity) to homeowners (debt).
http://www.amazon.com/House-Debt-Recession-Prevent-Happening/dp/022608194X

I seem to recall the glory of finance was that it shifted risk to those most capable of bearing the risk. This seems to be completely opposite – what gives??

Someone from the other side August 18, 2014 at 10:04 am

No, risk goes to whomever will take it on for cheapest. Whether that is a good bargain for the risk bearer or indeed one he should do at all is an entirely different question.

Chris S August 18, 2014 at 10:50 am

Ah yes, also assuming rational actors with viable alternatives, and any externalities are priced into the model.’

One could also say that, as much as possible, costs are shifted to the party with the least negotiating power. So even if the sum of utility – GDP even – would be increased by keeping the risk of low-productivity shifts on the employer, it is shifted to the worker simply because they have less negotiating power. Is that a boundary of firm issue?

Interesting to note that in the SBux case, the employee did indeed appeal to a higher power – the consumer’s tastes, where, especially for the SBux demographic, people like to make-believe they are willing to pay a little more for perceived equitable outcomes.

Chris S August 18, 2014 at 10:53 am

A step further, bear with me…

So, presuming utility/GDP is lowered (think shift workers can’t go to school and upgrade to higher-productivity skills), that is an externality to this economic arrangement. From a Coasean perspective, all we need to do is properly place property rights, and then the externality is eliminated – although the incidence of expense is arbitrary.

What is the nature of the externality here? What is the ‘thing’ to which property rights should be assigned? The workers’ time? Educational opportunities? Potential future productivity given appropriate factors?

Yancey Ward August 18, 2014 at 11:14 am

I wonder, though, whether the author of the article really intended that parenthetical as a counterpoint rather than just a simple disclosure.

Yancey Ward August 18, 2014 at 11:16 am

As bad as Mr. Aronowitz comes off in that article, Dean Baker looks even more ridiculous.

bartman August 18, 2014 at 11:42 am

“Even more ridiculous” is Dean Baker’s default state.

anon August 18, 2014 at 12:10 pm

“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.”

Ai yi yi, no one knows what is going to happen next week.

http://www.condenaststore.com/-sp/Thought-balloon-above-man-reads-Less-Cholesterol-Regular-Checkups-No-Nic-New-Yorker-Cartoon-Prints_i8575250_.htm

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