The “gig economy” sounds like a catch-all term. A slew of commentators, regulators and politicians use it often. It has also been used by businesspeople, academics and entrepreneurs.
The gig economy isn’t real.
Companies can skirt US labor laws to misclassify workers as independent contractors and exempt them from basic rights and social welfare programs. They also pay less than the minimum wage. This is not a new concept and certainly not an economy. Instead, Silicon Valley has reinvented piecework. Workers are required to work longer hours while they wait for jobs that will pay them little.
It’s a lot to say, so the “gig economy” was born. This term is now obsolete.
Sam Lipsyte, a New York magazine journalist, pointed out that language is crucial. He wrote this article in New York Magazine in 2016. It was part of an article that covered major events in Barack Obama’s presidency. This included the rise of gig economies as a new way to paint over old, exploitative practices. Over the past decade, gig companies have spent billions fighting not only how they’re regulated but also how they’re talked about. While this has been defined in different ways, the ultimate goal was to limit the debate. Gig companies have been guilty of exploitative and illegal behavior throughout the years, while distracting workers, consumers, and the wider economy.
Motherboard has covered many aspects of the gig economy over time. “>bathroom access to companies’ fight against misclassifying workers to driving strategies to make a living wage. It is becoming more crucial than ever to have a good understanding of the industry, especially as gig companies seek to duplicate regulatory victories like Proposition 22 both nationally and internationally. This guide is Motherboard’s to a core set of buzzwords and phrases that have been used over the years by gig businesses to promote their cause.
Gig workLoosely is a labor arrangement where tasks are performed in exchange for money. This is usually done via an app-based interface that assigns contracts to workers. To avoid paying labor costs, gig companies are often misclassified as independent contractors.Fix the cost of their labor?Assign them customers?Implement algorithmsCustomers to monitor and assess workers.Roll out policiesThere are limits to the amount and location of work that can be done.
Venture capitalistVenture capital, in the gig economy, is a type of private equity that allows investors to raise funds and then use them to gain access into large markets, reduce competition through anticompetitive or predatory behavior, then make a profit later by increasing prices or extracting monopoly rentals. It is helpful to consider VCs as a collective of investors.Capitalist central plannersTheir entry on to different markets will not only reorganize existing regulations but also decide the direction of technological development and allocation of resources.
PlatformAn ambiguous term that can be interchangeably used to describe an app, an app marketplace or its parent company. This term is often used to give gig companies a technological edge. It also obscures the fact that many of these companies are modern versions of pre-existing businesses (e.g. Uber and other ride-hail companies are taxi firms. Uber is an example of a “rideshare company” that allows them to justify certain arguments about the need for regulation.
Technology companyThe gig economy’s most enduring argument is the buzzword. It’s typically developed in Europe, where labor laws are more strict than in the United States. This makes it impossible to use exploits similar in nature. This argument is based on the “platform” which matches buyers and sellers, obscuring the true business model.
FlexibilityThis word is used by gig companies to claim that gig workers are more autonomous than employees when they are misclassified as independent contractors. However, gig workers have little or no control over their income, pricing, schedules, and wages. These are subject to change by companies in regular pricing experiments. Algorithms allow companies to structure when and how workers can work.
Algorithms:A machine learning-powered system that is supposedly automated and used by gig companies to optimize or streamline management decisions. Many of the “algorithms”, however, are not obvious.Underpaid human labor pretending to be robot.
Information asymmetries:Platforms, especially gig company platforms, have a wealth of information about cities, traffic systems, and working conditions that is not shared with anyone outside the company. In addition, gig companies often make authoritative claims based upon this unverifiable proprietary data and algorithms in relation to employment decisions and public policies that impact their services, communities that rely on them, or urban transit systems that are forced to compete.
Independent contractorThis legal classification of workers has allowed gig businesses to lower labor costs and improve their financial health. However, it has also denied workers benefits, protections and eligibility for social insurance programs. It has also allowed companies to dodge scrutiny for antitrust laws by using it against workers who collectively negotiate, accusing them price-fixing since contractors are technically corporations.
Workers who are independentA hypothetical worker category that is proposed by advocates of gig economy. It seeks to legally codify and preserve many loopholes in labor and antitrust law that companies currently exploit while giving workers minimal rights (e.g. rights to collectively bargain, without the need for a minimum wage.
Visit their websites.
Logging time:Gig workers don’t get paid for the time they log onto an app. This is because gig companies inflate the supply of workers to keep wait times low. This results in a lot more waiting. Instead, gig workers get paid only for the time they spend doing a task (e.g. making a delivery or driving passengers), and do not pay for travel costs or waiting for assignments. Estimates of average income from gig companies often ignore the total time spent on logged tasks.
DeadheadThis is the industry term for the unpaid gig work that occurs after dropping off an item or person, but before reaching the next pick up. This includes fuel, vehicle depreciation, maintenance costs and driving expenses without customers. Additionally, unpaid time on the app without an assigned task. Many gig companies fight wage regulations that would adequately compensate drivers. Instead, they externalize the cost as often as possible.
DeactivationInnuendo is a term that applies to workers who are terminated or fired in order to avoid any association with the notion of employment. Most cities make it impossible to appeal decisions, so drivers have no recourse if a rider files a false report or an algorithm that monitors driver behavior makes an error.
Security systemsSurveillance systems are being implemented to preserve production levels and to ensure that drivers do not become less safe due to increasing workloads and demand. Notable examples are:Uber and Ola EuropeAs well asAmazon USA.
Forcible arbitrationMost gig companies require workers and consumers to sign Terms of Service Agreements. This gives up the right to sue the company in a class action lawsuit. Instead, companies choose arbitrators to settle disputes privately.
Driver incentives that exceed the minimum requirements:As gig companies compete for market share in markets, they often pay workers more than customers to get a meal or a trip. This is to not only attract and retain workers but also to reduce wait times. These incentives are supposed to decrease over time, but they actually increase.They have actually grownCompanies have had to struggle to get workers to work long hours to earn what could be a high salary.Starvation wages.
AstroturfingThis is a strategy used by gig companies to give the impression of grassroots support for an agenda that aligns with their own. This strategy involves secret, hidden, or even secret funding for local groups as well as partnerships and trust with community leaders. This was California’s definition.Paymentsto a company run by the head state’s NAACP, who then supported Prop 22 but it is often required in other states.Much quieter workSuch asMailers that are deceptiveThere are grassroots groups that provide support.Reiterate corporate talking pointsApparently, evenFabricating endorsements.
ConvenienceMany times, gig companies are often a good choice.Their advocates will talk about the benefits they offer consumers. They’ll point out the ease of getting something on-demand and the cost savings that these services provide. This doesn’t take into account the fact that the services are more expensive when you consider the actual costs. These are ride-hail gig platformsPrices risingDue to an increase in driver demand triggered by subminimum wages and poor safety conditions during the coronavirus epidemic. If you are not of the white race, these price increases may be normal.Non-white communities are often hit with price hikes by ride-hail providers. Even worse are the food delivery options, which offer delivery at a substantial markup for consumers (As high as 91 Percent()Restaurants at a great price.
Do your research:Information asymmetries in the gig economy affect not only workers and consumers, but also regulators and independent researchers. Uber and other companies have monopolized data access.Information must be tightly controlledTeams that occur coincidentally will be offered segments.Proclaim gig economy PRUber created a website. Uber was founded in“Academic research”The shop produced claims and findings in 2014, as well as over the last seven years.Uber’s talking points are reaffirmedHowever, the data that is relevant to this case are considered proprietary and cannot be replicated or critically evaluated.
Arbitrage regulatory:This is a basic strategy where firms use favorable legal environments in one sector to avoid less favorable ones elsewhere. It’s also known as “gambling”, which means that they don’t have to follow the law while they are there. A recent example is when a group of gig companies passed the law.Proposition 22 in CaliforniaThe ballot measure was approved.RepackagedAnd pushed in other countries (Massachusetts?New York?Connecticut?Illinois(e.g. As well as other countries (e.g.CanadaIn the hope of formalizing the legislation elsewhere, he was able to sign the following: In the following months, not only wasApp changes made by gig companies in California to sell Proposition 22 to the public were reversedBut, it is newReduced payAndFare increasesThat was.As if it were a given.If Proposition 22 fails to be passed,
ChurnMost gig companies have such difficult labor conditions that their employees leave every year. Uber’s last year of data (2017) is the most recent.Over 95 percent of drivers are licensedYou must leave before the end the year.
ConcurrenceGig companies are fundamentally anticompetitive, and they seek monopoly status.Subsidize billionsTo operate below cost to ensure that the least fortunate are not left behind. The real cost of operation is borne by the public (pollution and traffic congestion, poor urban transit service), the consumers (higher prices) and workers (poverty and inadequate physical or mental health care).
Driverless:Uber and Lyft were once the first to pitch the sci-fi dream of autonomous taxi fleets to investors. This was to satisfy investors with low labor costs and to provide consumers with cheaper services. It was a success.AbandonedBoth companies have spent billions of investor capital in order to make little progress but they are still able to secure their future.Public markets at near-peak values. Other companies likeTeslaAndInstacartThey have also followed the example of others, spending billions on insufficient progress to justify higher valuations and more funding to pursue this moonshot project.
Amazon of transport:A storyOnce Uber has adopted you,To explain persistent losses. Uber, just like Amazon, was suffering from historic losses due to its investment in driverless business lines that would produce stupendous growth in the future. Uber, unlike Amazon, was not cash-positive and reinvesting profits to fuel ravenous growth, but rather cash-negative, burning cash to stay afloat.
EBIDTATheCharlie Munger’s wordsWarren Buffett’s longtime business associate, said that EBITDA (an acronym for earnings without interest, taxes and depreciation) is rarely a true representation of actual earnings. It’s still a common term used by gig companies like Uber, Lyft and DoorDash in their earnings reports. Uber has excluded stock-based and IT compensations, lobbying, accounting, as well as expenses that have arisen recently because of the COVID-19 pandemic from its earnings calculations in order to make its earnings more positive.
Scale economies:The theory is that the more consumers and gig workers on a platform, then the better it will be. Maybe wait times are shorter, or there is more information about how to optimize routes or prices based upon ride-hail data. Or maybe it costs less for workers to retain and attract users and workers. The idea is that the larger the gig company’s platform, the more it will be profitable to operate. This theory is not true. In fact, operations have become more costly due to price wars and litigation, lobbying efforts, lobbying efforts, lobbying efforts, as well as a shortage of drivers in times of pandemic that make it difficult for them to earn subminimum wages.
Perpetual rideA ride-hail trip that never ends was a dream of an early entrepreneur in the gig economy. Drivers would pick up passengers, drop them off, and then pick up the next passenger. This vision is also known as a private bus. However, it was inefficient and expensive. It was, above all, unrealistic.
ProfitabilityA state in which a gig business consistently makes more than it spends. This basic milestone has not been achieved by any of the major players. Uber has never claimed to have ever made any profit, but that was only once.This is essentially a once-off accounting entryDue to the sale of its Russian and Southeast Asian units. Because of their poor unit economics, the companies have to spend billions of dollars on price wars in order to attract and keep customers. Once competitors disappear, they can then slap price increases. Investors are warned by almost every S-1 filing gig companies made before going public that they may not be financially viable.
There are many other buzzwords and rhetorical flourishes. This list could go on for pages. For almost a decade, “gig” companies enjoyed little or no critical coverage other than labor reporting. They were able to convince regulators, politicians and investors that their PR was an objective accounting. The last few years have seen things shift, but only because the companies are about to permanently change the regulations that prevent them from making their first profits.