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The Gig Economy Is Failing. Say Hello to the Hustle Economy. | by Caitlin Dewey | Jul, 2020

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TThe Covid-19 pandemic crushed vast swaths of the economy, slashing consumer demand, closing businesses, and vaporizing millions of jobs. But it’s been good to the nascent sliver of the digital economy that helps people channel their existing skills into sellable services and products.

Such products range from ebooks and meal plan templates to online classes, podcasts, membership clubs, newsletters, and porn. They proliferate on platforms including Patreon, Twitch, Substack, Etsy, Teachable, Knowable, Podia, Thinkific, Supercast, Lulu, Smashwords, Outschool, OnlyFans, and Gumroad.

These platforms generally take a cut of each sale made, ranging from 5% to 50%, or charge a recurring fee to sellers for accessing their market. Tech investors have dubbed this the “passion economy,” a place where anyone can profit doing what she loves. But because that term risks both exaggerating the payoffs of this work and obscuring its ties to the gig economy, the last great labor “disruption,” we might better call it the “hustle economy:” an online labor market in which platform-dependent workers create and monetize their own digital products. Like Uber drivers or Instacart shoppers, workers in the hustle economy need a platform to succeed. But their work is individualized, self-directed, and on their own schedule — one “creator” can’t substitute for another.

The hustle economy is also not new. Since the late 1990s, tech futurists like the former Wired editor Kevin Kelly have predicted that social networking and online payment platforms would open up a range of new, and newly fulfilling, career choices. Writing in the Harvard Business Review in 1998, the organizational theorist Thomas W. Malone claimed “electronic networks” would dissolve the corporation as the main unit of the economy, and replace it with “flexible, temporary networks of individuals” who self-select their work. The next decade saw dozens of platforms launch with some version of that goal, from Upwork to Etsy and Kickstarter.

In 2017, the economic advisory firm Sonecon estimated that nearly 17 million Americans made some money off digital platforms. And since then, argues Li Jin, a former analyst at the venture capital firm Andreessen Horowitz, a wave of new startups has launched to capitalize on this “model of internet-powered entrepreneurship.”

To Jin, hustle economy platforms represent an opportunity to commoditize a once-worthless or near-worthless resource — think bottled water. Every person on earth has some deep knowledge or experience or skill in something, she argues. If platforms can funnel that into a product that consumers want, then the value of the hustle economy balloons into the hundreds of billions of dollars.

“Anyone with noncommoditized skills can do this,” Jin told OneZero.

For workers, the premise of hustle economy work is equally seductive. Just like gig work, you can choose your own hours. But with the hustle economy, you can really be your own boss, and spend time only on projects you like and feel proud of. While both the gig economy and conventional employment “stripped workers of their autonomy and agency,” Jin said, hustle economy platforms “empower” them. The movement’s rhetoric often, and ironically, echoes Karl Marx: Only liberated workers with control of production can soak up the full spiritual and financial benefits of their labor.

Better yet, in the midst of a protracted economic crisis, hustle economy work offers a safety net — a second income independent of a corporate employer, or even the physical environment. If Patreon and its ilk once promised flexibility or the chance to “do what you love,” they now also promise workers like Amit Levit a paycheck the next crisis can’t interrupt.

Levit, an instructor at Boston’s 305 Fitness, a cardio-dance studio, launched a Patreon in March on the advice of her employer, who couldn’t pay salaries during the shutdown. Though she loves the studio, Levit now plans to keep teaching on Patreon: “I am looking to move toward having two strings of income,” she said, “rather than just the one I had before.”

“People see how fragile their connection to the economy is. Their job could go at any second,” said Len Markidan, the chief marketing officer at Podia, a hustle economy platform that helps its workers set up classes, newsletters, storefronts, and other products. One of its marquee names, the physical therapist Emma Shapiro, has built an empire teaching other health care workers how to create hustles of their own.

In the past three months, Markidan added, “the baseline for this industry accelerated by 10 years.” His company hit benchmarks it didn’t expect to meet until 2026 or 2027. Economists say they’re not surprised by those figures: Workers often flock to “alternative” work during economic downturns.

But if the pandemic also acclimates consumers to new digital products — and new relationships with the workers who make them — then the shift could prove more permanent, said Susan Houseman, a labor economist at the Upjohn Institute for Employment Research.

“This time could be different,” Houseman said. “It’s a temporary crisis, at least until we have herd immunity or a vaccine or some kind of treatment… but the way people do business is going to change. We’re already seeing that.”

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Deconstructing the gig economy | Yield PRO

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With control of Congress and the White House, Democrats are making labor policy one of their first priorities. Ironically enough, that’s actually bad news for independent contractors and gig economy workers across the country.

The legislation at the core of their agenda is the PRO Act, which Democrats just re-introduced with sponsors including Speaker of the House Nancy Pelosi and Senate Majority leader Chuck Schumer. Among many other things, the bill would severely restrict the legal definition of independent contractors in a way that would largely end the gig economy as we know it.

The legislators’ stated intention is to protect workers and bolster their rights under law. Through the reclassification of independent contractors, Democrats hope to force gig economy companies to hire workers as full employees and thus provide them the accompanying salaries and benefits.

“The men and women of labor are the backbone of our economy and the foundation of our strength,” Pelosi said. “With American workers seeing their lives and livelihoods devastated by the ongoing pandemic and economic crisis, the reintroduction of the PRO Act is more important than ever.

“I am proud to join my colleagues in introducing this legislation to put more money in the pockets of hard-working Americans, creating a foundation that provides livable wages to our families,” Schumer added.

The context here is crucial, because this legislation isn’t coming out of nowhere. It’s modeled after a similar but highly controversial California bill, AB 5, that likewise forced the reclassification of independent contractors.

President Biden supported AB 5 at the time, and is on the record supporting the PRO Act, too. And now that Democrats control Congress, it could pass the House and find support from the White House.

The only question would be whether it could make it through the closely-divided Senate.

It’s worth examining the sweeping impact this legislation would have on the economy.

Millions of jobs outlawed with the stroke of the pen

The PRO Act would outlaw millions of existing jobs with the stroke of the president’s pen.

After all, it would make illegal any independent contractor arrangement where the worker provides services within “the usual course of the business of the employer,” meaning jobs like Uber drivers, Doordash drivers, Instacart grocery deliverers, and more could not exist as we know them. There are roughly 10.6 million independent contractors in the US, accounting for 6.9 percent of all employment. Some of these workers might not be affected by the law and some others may get hired on as full-time as a result. But there’s little doubt that millions more would find themselves unemployed.

For example, Uber alone employs more than 1 million drivers in the US. It’s nearly certain they would all lose their jobs under the PRO Act, because Uber already runs a loss, not a profit, and adding an independent contractor as a full staff member counts roughly $3,625 per driver. Basic math tells you that most of these workers would end up being let go; Uber could even go under. After all, the California legislation nearly forced Uber and Lyft to shut down operations in the Golden State altogether until a last-minute ballot referendum modified the law.

Uber is just one company and one example. But freelance workers such as journalists, photographers, florists, musicians and more all lost work in California under legislation similar to the PRO Act.

“Transcription allowed me to stay at home, be my own boss, and control my workflow and whom I work with,” 72-year-old transcriptionist Dori Lehner told the Independent Women’s Forum. “I only have one direct client now, and I only get work when they have it. My income has dropped down to a quarter of what it was before AB5.”

“A mom-and-pop studio can’t hire me and put me on payroll for a one or two hour lecture that I do once per month,” part-time yoga instructor Jennifer O’Connell said.

“That’s wiped out so much work,” she added, explaining that she’s lost roughly three-fourths of her freelance income.

The authors of AB 5 and the PRO Act likely earnestly believed they were going to help workers like Lehner and O’Connell. But the ugly results of their policy naivete will leave many like them unemployed instead.

Unintended consequences always plague big government regulation

The lesson here is clear. The Democrats’ latest labor proposal is a case study in unintended consequences, which inevitably plague big-government interventions into a vast and diverse economy.

“Economic policies need to be analyzed in terms of the incentives they create, rather than the hopes that inspired them,” famed free-market economist Thomas Sowell wrote. “The programs that are being labeled for the poor, for the needy, almost always have effects exactly the opposite of those which their well-intentioned sponsors hope them to have.”

“It’s not enough… to endorse legislation that has a nice title and promises to do something good,” economist Robert P. Murphy wrote. “People need to think through the full consequences of a policy, because often it will lead to a cure worse than the disease.”

Nancy Pelosi and Chuck Schumer clearly haven’t thought this through. If the PRO Act becomes law, it won’t help independent workers—it will eliminate their jobs or strip them of the flexibility that attracted them to the gig economy in the first place.


Source Brad Polumbo, fee.org

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EU launches gig economy consultation

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The European Commission has launched a six-week consultation with unions and employer bodies on how to improve working conditions for digital platform workers.

On 24 February 2021, the European Commission launched the first phase of its consultation on working conditions for digital platform workers in the gig economy.

The consultation comes as the COVID-19 crisis has accelerated the digital transformation of the European economy and the expansion of the platform model: 11% of the EU workforce say they have already provided services through a platform. It will tackle particular areas of concern around health and safety and limited access to social protection and benefits for platform workers.

European trade unions and employers’ bodies will be asked to give their views on the following questions:

  • Do you consider that the European Commission has correctly and sufficiently identified the issues and the possible areas for EU action?
  • Do you consider that EU action is needed to effectively address the identified issues and achieve the objectives presented?
  • If so, should the action cover all people working in platforms, whether workers or self-employed? Should it focus on specific types of digital labour platforms, and if yes which ones?
  • If EU action is deemed necessary, what rights and obligations should be included in that action? Do the objectives presented in this document present a comprehensive overview of actions needed?
  • Would you consider initiating a dialogue under Article 155 TFEU on any of the issues identified in this consultation?

(Article 155 of the Treaty on the Functioning of the European Union provides for dialogue between employers and labour unions or representatives)

The consultation will be in two stages, and the results will feed into the legislative initiative on platform work which the EU has promised by the end of 2021.

The consultation document is available here.

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EU takes step to help ‘gig’ economy workers

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Belgium: The European Commission launched a public consultation to look into the legal employment status and conditions of gig economy workers (a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs).

It is the bloc’s first step aimed at improving the rights of such workers, who work through digital labour platforms, such as ride-hailing or food-delivery apps.

Uber, Just Eat and Deliveroo are among some of the digital platforms used by gig economy workers in Europe.

Such platforms have been particularly in-demand during the coronavirus pandemic, as consumers turned online during lockdowns across the EU.

The gig economy debate
The gig economy allows for flexible working conditions, as well as “job opportunities and additional revenue, including for people who might find it more difficult to enter the traditional labour market,” the commission said on Wednesday.

But companies working in the sector are frequently accused of taking advantage of the self-employed status of workers to avoid covering social security payments and other benefits.

Courts in the UK and Spain have already overruled “self-employed” claims from some companies in the sector.
On Wednesday, Italy followed suit.
Prosecutors told Uber Eats, Glovo, Just Eat and Deliveroo in Italy their couriers were employees and not independent workers.

The companies were fined €733 million ($892 million) for a breach of labour safety rules. The more than 60,000 couriers must be offered non-permanent contracts with fixed pay, the Milan prosecutors’ office said in a statement.

What will the EU consultation do?
The first phase of the EU initiative will see six-week consultations with trade unions and employer organisations about their views on improving working conditions.
If labour and business representatives choose not to enter negotiations on the issue, there will be a second round of consultations on possible measures the EU could take.
If the two sides still do not come to the table after that, then the commission said it will “put forward an initiative by the end of the year.”   
Uber said it plans to work with policymakers and social groups on the proposal.       

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