10/27/2015 03:24 pm ET Updated Oct 27, 2016

A Revolt Is Coming for Cloud Labor

Guy Standing

We are on the cusp of a revolution in the way work and labor are done. The changes are generating chronic insecurity and worsening inequality. Put bluntly, in the past three decades, a global market system has been emerging, aided by economic liberalization policies, a technological revolution based on electronics that has facilitated changes in organizations and a dismantling of the firm and a shift of bargaining power from workers to capital.

In their wake, a new global class structure has taken shape, with one mass group, the precariat, at its core. It consists of millions of people being forced to accept a life of unstable labor, in an almost bewildering array of statuses that mock conventional labor statistics. That goes well beyond casualization. The most rapidly growing type of labor goes under the confusing term of "cloud" or "crowd" labor. We will come to that shortly.

Most importantly, the precariat has no secure occupational identity or narrative to give to their lives. They have no corporate narrative either; their employers come and go, or are expected to do so. And, the precariat must do much unremunerated work-for-labor alongside any labor they do for remuneration.

Our labor statistics do not reveal how much work-for-labor is done, but it is substantial and growing. Think of how much time is spent looking and applying for jobs. Some of those who have read my book on the precariat have told me they have applied for thousands of jobs. This is scarcely leisure; it is work.

We are on the cusp of a revolution in the way work and labor are done.

The same applies to the training and re-training that many do, only to find that what they learned is out of demand by the time they finished. Then there is the growing amount of time spent in filling forms for benefits or services. There is also the vital time-using activity of networking, mainly with people from whom one may hear of casual jobs or who could offer support in times of need. And many in the precariat know they have to spend considerable time just waiting for opportunities to arise.

This is also the first working class in history in which the average (modal) level of education is above the average level of labor they can expect to obtain. This creates considerable status frustration. Our workforce is much more skilled than our statistics suggest.

The precariat is also the only class that must rely almost solely on money wages. Unlike the salariat above them, which has employment security, good salaries, access to capital income and a widening array of non-wage benefits, such as paid holidays, pensions, sick pay and sick leave, the precariat has none. This is one reason why conventional income statistics underestimate inequality.

The problem is compounded by the fact that real wages have been stagnant or falling for the past 30 years. This is not just an American reality; across other industrialized countries, the story is the same. In addition, those in the precariat live on the edge of unsustainable debt, in which one misjudgement, illness or accident would lead to ruin.

To compound the income insecurity, the precariat has no access to rights-based state benefits. Even if they gain means-tested benefit, they fall into poverty traps, where going from meagre benefits into low-wage casual jobs means they face marginal tax rates well above what higher income groups face, acting as a disincentive to take the labor.

This is the first working class in history in which the average level of education is above the average level of labor they can expect to obtain.

Finally, the precariat is the first class in history that is losing all forms of rights -- civil, cultural, social, political and economic. This is documented in my book, "A Precariat Charter." To give just one example: Cuts to legal aid mean the precariat, and the under-class below it, cannot afford to take the risk of legal cases, which is why most plead guilty to lesser offenses.

So, the precariat has no security, has volatile and falling incomes and is losing rights. But what will be the impact of cloud or crowd labor? Informed observers predict that within the next decade one in every three labor transactions will be done online, as part of what is misnamed the "sharing economy." Already millions of people around the world are doing what should be called "tasks," via labor brokers or "requesters."

We should differentiate between three entities involved. First, new corporations, such as Uber and Airbnb, are rentiers, controlling the technological apparatus, the apps. They are booming. Uber has become the most valuable American company of its generation, growing faster in its first six years than Facebook did in its first six. It is valued at $50 billion, and is operating in 311 cities in 58 countries. Airbnb, by which people rent out their homes, is valued at over $24 billion, more than twice what it was a year ago, and is operating in more than 34,000 towns and cities around the world. Many other platform companies are coming up in their wake.

These platforms are rent-takers, labor brokers, taking about 20 percent from all labor transactions. Unlike the great corporations of the past, they do not own the main means of production, the cars, homes or other equipment. They are rentiers.

The precariat has no secure occupational identity or narrative to give to their lives.

The next group has received less attention. These are the labor requesters or middlemen that exist in some sectors. They, too, receive rental income; they do not do the actual labor.

The third group consists of taskers, which come in three forms. The first are in the on-demand -- or, more cruelly, "concierge" -- economy, linked to the rentier corporations by the apps, and who are neither self-employed nor employees in the classic sense of those terms. The court cases brought on behalf of these taskers to try to establish that they are employees, and thus covered by labor regulations and entitled to certain benefits, reflect the fact that the old system is inadequate for current realities. We need to overhaul labor statistics and develop new regulations. They are not employees, since they are not directly supervised, own the main means of production and, in principle, have control over their working time. They also must do a lot of work-for-labor, unremunerated. They are not self-employed either in that they depend on the labor broker for access to the apps. But they have to bear most of the risks, of accidents, ill-health, repairs and maintenance. They are well within the precariat.

There has been too much romanticising of this type of tasker, with Uber among others trying to give the impression that most of those doing the tasks do them on a part-time basis, to supplement their regular income. Although more evidence is needed, it seems rather that globally millions doing menial tasks are otherwise unemployed or in very low-paid activities.

A second type of tasker is in the crowd labor pool, an expanding part of the global labor market. Estimates of the number involved are bound to be hazy, but some suggest that already over 12 million people are in it, one third in the USA. These are the most exploited and most likely to self-exploit of all taskers.

What happens is that platform companies contract to have certain jobs done for corporations, and in turn designate labor requesters to contract out jobs to people invited to compete in a Dutch auction. Requesters announce that so many tasks are up for bid, with a stipulated deadline, and that bidding will close within, say, five days. Often, the requester announces at the outset a maximum piece rate. Then taskers can bid to undertake as many tasks as they think feasible at a price they think is right. At the end, requesters select from the lowest bids.

New parties in many European countries openly associate themselves with the precariat, and are developing new policies suited to it. Politicians of all hues should take notice.

So, somebody in Boston can be competing with someone from Bangalore or Accra. This is invidious, since the most insecure will tend to bid the lowest. As they do not know how many are bidding or where they are, they may believe competition is more intense than it is. For the broker, that is ideal. And the tasker has no assurance he will be paid. If a broker, based in New York, decides that a tasker in Dakar did not do something well enough and refuses to pay, in practice the tasker has no means of redress.

The third type of tasker consists of those who are nominally employed on a full-time basis but who are paid only for the hours in which they actually work, as defined by the broker. This is a growing ruse. One term for it is "zero-hours contract." People in such situations must be on standby at almost all times and must travel to and from workplaces without compensation, often not knowing if they will obtain paid labor or for how long.

The growth of all these forms of tasking is sure to have profound effects on the labor market, not only offering low earnings for those directly involved but also depressing the incomes of those with whom they are competing, such as regular taxi drivers or guest house workers. They put people in risky situations. Some will do fine. But too many will under-insure or not appreciate the depreciation in their cars or homes.

They are all part of the precariat, which has been neglected by the politicians of the center-right and center-right. Part of the precariat, those with little education and looking back at lost working class lifestyles, are listening to the appeals of populists and neo-fascists, who blame their insecurity on migrants, minorities or some other group that can be demonized. But part of the precariat, the more educated, is increasingly angry because they feel they have no future, and are being denied the opportunity to develop themselves through work. This is the growing part in many countries. Until 2011, they were dropping out of politics. Since the Occupy Movement, the indignados and other protests, that has begun to change. New parties in many European countries openly associate themselves with the precariat, and are developing new policies suited to it. Politicians of all hues should take notice.

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