“Our Laws Weren’t Written With This Economy in Mind”: Susie Cagle on the Gig Economy

Two days ago we looked at the decoupling of productivity and wages, courtesy of Hank and John Green.

Now, journalist and artist Susie Cagle helps us look at another decoupling: one of employers and employees.

I have been hitting refresh on Al Jazeera America ever since Cagle hinted that she would be writing about this subject and shared one of her drawings:

Working on a ~ future of work ~ corrective, soon at @ajam pic.twitter.com/GhILoBvMGV

 — @susie_c

You should definitely read her article, titled “Worker Protections? There’s No App For That,” but if you want the tl;dr: by redefining employees as contractors, today’s gig economy employers are offloading much of their risk, including a huge portion of the cost of doing business, onto the people who work for them. Meanwhile, these contractors have very few legal protections. As Cagle puts it: “Our laws weren’t written with this economy in mind.”

Here’s an example that illustrates how the freelancing economy has changed: I grew up watching my mother teach piano lessons, and as soon as I was old enough I started helping her and then teaching lessons on my own. We were freelancers. We had to supply our own tools (the piano, for example), but we also set our own hours, and — most importantly — set our own rates. Obviously we had to charge within what was appropriate for the local market and our customers’ incomes, but if it was time for a rate increase at the end of the year, that was our decision to make. We also had relative job security; unless all of the students quit at once, we could still work and get paid.

Another freelancer may sign up to work with a gig economy company. This freelancer does not get the privilege of setting her own rates; the rates are determined by the company. The freelancer ostensibly gets to set her own hours, but she quickly learns that the best jobs go to the people who are always available, so it is best to always be available. The freelancer is still required to supply her own tools, and is sometimes required to purchase and wear/display company-branded materials. The company can choose to reject the freelancer’s work and not pay her, and the freelancer can also be fired. Despite all of this, the freelancer is not an employee.

To quote Cagle:

Corporate entrepreneurship is rewarded with lower tax rates, but the self-employed enjoy none of those benefits, instead paying an additional 7.5 percent in income tax compared with employees. They cannot qualify for an earned income tax credit. They have no guarantee of equal protection under laws mandating minimum wages, sick leave or family leave, nor do they have protection against workplace discrimination, harassment or injury, unless they prevail in a lawsuit.

I read a Business Insider article recently that suggested we were in a tech bubble, including the horrifying quote “The mortgage crisis was eight years ago. An entire generation of entrepreneurs under age 30 has no clue what it’s like when everyone runs out of money at once because they were children when it happened last time.” One way this tech bubble might burst — or, at least, start to leak air — is if companies like Uber, Lyft, Handy, Postmates, TaskRabbit, and the rest had to reclassify their workers as employees and take on the financial risk of payroll taxes, supplies, and benefits.

As Cagle notes, class-action lawsuits are already being filed against some of these gig economy companies, arguing that they treated workers as employees while classifying them as contractors.

We’ll see what happens.

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