The Gig Economy enrages certain political quarters. Ironically, anti-giggers demonize companies like Uber, Lyft, and Airbnb by romanticizing and reinforcing the most hated aspects of post-1800 employment—subordination of and control over employees by employers. This blinkered nostalgia threatens employability in a world of smart machines.
I’ve Been Working on the Railroad
The Industrial Revolution transformed generalists who made their own food, clothes, shelter, and medicine into specialists with long-term, full-time jobs in hierarchical organizations. As Don Boudreaux notes, “Having a job only makes sense in a modern world, where each individual typically does only one type of work.”
Today, you likely have a boss who also has a boss. Hierarchy reduces transaction costs. (The SVP for Marketing doesn’t have to negotiate delivery prices with the mail-room clerk.) Long-term, full-time jobs enable employees to accumulate highly specialized knowledge. (London cabbies spend years absorbing the city’s map and drive constantly to maintain that knowledge.)
Dierdre McCloskey characterizes economic history as tens of thousands of years of impoverished stasis, followed by a sixteen fold or more increase in per capita wealth in 200 years. Hierarchical, long-term, full-time jobs made this possible.
Working 9 to 5
But humankind’s sudden wealth came at a terrible price—perpetual tension between bosses and subordinates. A steady paycheck demands permanent subservience. Karl Marx boiled up from this tension, along with two centuries of conflict, revolution, war, and slaughter. The boss who offers a job has a dozen tethers controlling the most intimate aspects of your life:
- Mandating the hours and days you work;
- Dictating where you work and live;
- Limiting time off for illness, fatigue, family, or leisure;
- Forcing you to work closely with ghastly people;
- Limiting and homogenizing your skills and routine;
- Preventing you from exploring new opportunities;
- Spending your earnings on benefits you didn’t choose;
- Delegating aspects of your life to unseen people;
- Invading your privacy;
- Reconfiguring all the above on whim;
- Plunging you instantly from comfort to destitution; and
- Poisoning your future employment prospects.
No matter how much you like your job and your boss, you’re unlikely to enjoy these tethers. To temper employers’ excesses, laws and regulations limit employer discretion over firing, pay, harassment, hours, and so forth, but the tethers remain, and the limits create new ones. For example, legal privileges for full-time employees implicitly deny those privileges to part-time employees. The employee wishing to scale back to 30 hours in order to acquire new skills, tend to children, or relieve exhaustion must plunge over a financial cliff to do so.
Yet the anti-giggers’ demands for employee benefits, 40-hour privileges, and so forth reinforce the tethers.
Sixteen Tons
The romantic attachment to benefits is ironic. From the mid-19th century, mines, mills, and manufacturers routinely “gave” employees housing and scrip (pseudo-money usable only in the company store). Nonmonetary payments-in-kind comprised the “truck system” and were despised by unions. The labor movement understood that companies didn’t “give” housing, food, and clothing to employees but, in fact, forced employees to buy them via reduced wages. The truck system discouraged entrepreneurs from providing better housing, food, and clothing. The result was low disposable income, substandard goods, exorbitant prices, punitive credit terms, and handcuffs to jobs. (Employees who quit lost housing and accumulated scrip.)Merle Travis’s 1947 classic, “Sixteen Tons,” was a bitter elegy to the truck system:
You load sixteen tons and what do you get?
Another day older and deeper in debt.
St. Peter don’t you call me, cause I can’t go.
I owe my soul to the company store.
Yet, just as Travis recorded “Sixteen Tons,” big labor demanded a newer, bigger truck system built of life insurance, health insurance, and retirement accounts. This high-tech company store replicated every pathology of the old truck system.
Take This Job and Shove It
Entrepreneurship has been the primary escape from the tethers, but starting a business requires special talents and entails great costs and risks—quitting your steady job or building your business during the crevices of time between work, sleep, and other activities.The Gig Economy effectively offers the benefits of entrepreneurship to a broader population at lower cost and risk. Drive an Uber or rent an Airbnb space, and no one dictates your hours or location. If you find routine as oppressive as the factory in Modern Times, divide your efforts between Uber, Airbnb, eBay, DogVacay, and Zaarly. If you like fishing, spend four days at the lake and work long hours the other three days. If your productivity depends on a two-hour midday nap, take a nap.
For many, the variety of multiple jobs, the freedom to fit work hours to one's personal rhythms, and the absence of employer-employee tensions make life far more pleasant.
Perhaps more importantly, the Gig Economy gives workers flexibility to continuously upgrade skills in a rapidly changing economy or pursue dreams that are incompatible with a 9-to-5 routine. No permission is needed to take off hours or days or weeks—even on the spur of the moment—to attend classes, acquire new skills, compose music, or invent the next killer app or cancer cure.
John Henry
All this is possible because connectivity and artificial intelligence massively shrink transaction costs and learning curves. Consider those London cabbies:
Traditionally, anyone wishing to drive a cab through London’s medieval labyrinth had to first spend several years acquiring “the knowledge”—internalizing the map and optimal pathways between any two points. Maintaining the knowledge required continuous, full-time driving.
The knowledge visibly alters the cabbie’s physical brain structure. When the driver retires, his enlarged hippocampus shrinks back.
But in theory, Uber can crystallize the knowledge into an artificial brain and impart it instantaneously to novices and part-timers. For now, the unique complexity of London’s streets means cabbies still retain an advantage over ridesharing. But three or four more years of Moore's Law should dissolve the difference between the knowledge and a GPS device.
Established business and labor groupings rage against the shift to gigs for two reasons: protectionism and paternalism. They correctly perceive the Gig Economy as a threat to their long-established turfs. And they genuinely fear the loss of protections against the tethers without perceiving that smart machines are fraying the tethers themselves.
Brother Can You Spare a Dime?
Optimists expect the workforce will adjust to artificial intelligence by acquiring new skills, as post-1800 workers adjusted to steam and electricity. Others aren’t so certain. In his book, Average is Over, Tyler Cowen cautiously worries that machines will turn some individuals into unemployable “zero-marginal-product workers” as skills fall out of sync with contemporary production. In The Second Machine Age, Erik Brynjolfsson and Andrew McAfee wonder whether technological change will proceed faster than many workers can adjust their skills. In Rise of the Robots, Martin Ford warns of chronic machine-induced joblessness.
Whether people can adapt is a legitimate concern, and it’s prudent to avoid both extreme optimism and pessimism at this juncture. Re-tooling will be essential for many, and it’s prudent to remove whichever obstacles stand in the way of re-tooling. Laws and regulations obstructing the Gig Economy constitute a massive obstacle to adjustment.
For a person whose skills are approaching obsolescence, a 40-hour job with fixed hours may make it impossible to take retraining classes, obtain a new degree, or do part-time work in a different field that may provide his next full-time job. A Gig Economy worker has the flexibility to rearrange the calendar.
Uber drivers I’ve encountered recently include: an undergraduate hoping to avoid student loans; a medical student with a highly irregular schedule; a software programmer between jobs; three deaf drivers; a young cancer survivor, ready to earn money but unable to work more than four hours at a stretch; a Chicago resident visiting his parents in Washington, with a few spare hours now and then; a foreign diplomat’s husband who spoke little English. All were five-star drivers. None had equivalent options in the Job Economy.
Ridesharing keeps these people solvent while giving flexibility to pursue other parts of their lives—ramping up Uber when they have free time and cutting back when they don’t. Unlike, say, a restaurant job, there are zero transaction costs in reconfiguring a gig schedule. If the med student needs an extra two hours to study, there’s no need to plead with a boss for time off—or risk the boss saying no.
Xanadu
The Gig Economy will never completely replace the Job Economy. The issue is whether law and regulation should favor jobs and discourage gigs, or whether individuals should freely choose one or the other, based on highly personalized considerations.
Uber and Airbnb are the leading edge of the sharing economy, but not its limits. Uber-like technologies are spreading into higher-paying areas, like medicine. In California, Heal provides physician house calls.
As the sharing economy moves into higher-end activities, previously nonexistent opportunities appear. In the early 1960s, my family doctor, Milton Ende, pioneered stem-cell therapy by performing the world’s first cord-blood transplants on cancer patients. This occurred while he maintained an extraordinarily busy internal medicine practice in our small Virginia hometown. His research and writing had to fit into whatever scraps of time he had left. If a sudden insight flashed in his mind, he couldn’t shelve his medical practice for an hour or a week to flesh out his idea, so his findings languished in obscurity for decades. A Gig Economy doctor, in contrast, might have that essential flexibility. For a creative mind, the traditional full-time, fixed-hour job is a perpetual Person from Porlock—interrupting or extinguishing nascent strokes of genius. How many would-be Flemings, Listers, Salks, or Ventners are obliterated by the need to fit creativity, innovation, and invention around work, rather than the reverse?
Wichita Lineman
The Gig Economy does for work what packet-switching did for communication. It lets one atomize and reassemble time and resources in ways incompatible with hierarchical, full-time jobs.
In pre-digital days, a telephone call between two parties monopolized lines connecting the two telephones for the duration of the call. When the callers were silent, the lines remained unavailable to others. If all lines were occupied, new callers were shut out of the telephone system. Packet-switching shatters one caller’s words into fragments sent out across multiple pathways; an instant later, fragments rejoin and the other caller hears the words in real time just as they were spoken.
Packet-switching lets vast numbers of conversations travel over the same line. It also creates multiple pathways, so a call no longer depends entirely on the integrity of a single line.
In a traditional job, a slow workday means twiddling thumbs and staring out of windows. There is little capacity to turn idle time productive. If the employee’s one job disappears, his income stream ceases as suddenly and as completely as a phone call did when a pre-digital wire failed.
In the Gig Economy (perhaps we should call it the “Packet Economy”?), workers who so choose can fragment their time and work—to engage in multiple productive endeavors in discontinuous packets of time rather than five eight-hour lumps of time, 50 weeks a year. By engaging in multiple activities and modulating the division of their efforts over time, they will no longer have to put all of their financial eggs in a single basket. They will have the flexibility to modulate their work enough to update skills on a continuous basis. In a sense, the Gig Economy transforms the division of labor from an interpersonal concept to an intrapersonal one.
An unfettered Gig Economy will not guarantee that we avoid the jobless future that Cowen, Brynjolfsson and McAfee, and Ford ponder. But it may be the best way to stave off the obsolescence and alienation that Rust Belt steel workers experienced when public policy fought a furious, futile battle to preserve an old way of working.
Robert F. Graboyes is a senior research fellow with the Mercatus Center at George Mason University, and he teaches at the medical centers at Virginia Commonwealth University and the University of Virginia. He produces a twice-a-month health care policy newsletter and is on Twitter here. Dr. Graboyes received the Reason Foundation’s 2014 Bastiat Prize for Journalism.