Why The ‘One-percenters’ Will Benefit From The Gig Economy While The Rest May Not

Steven Hill

Dear Branko, thanks for sharing your very provocative post. It’s hard to know what the future will hold, but at the moment I think the most realistic scenario is that work will be carved up in smaller and smaller tasks and gigs/microgigs/nanogigs (what you call task T broken into T1, T2,…Tn) and then many of those tasks will be given to automation/robots/algorithms – not humans – to do. The human role may be reduced to merely hitting the button to start the robot. It will be a menial, unskilled job and low paying. More and more workers may well be reduced to that menial role.

In a sense, the gig economy companies like TaskRabbit, Crowd Flower, Elance-Upwork, Freelancer.com, Guru, Zaarley, Fiverr and others are pioneering app-driven labor job brokerages which indenture vulnerable1099 workers who auction themselves off, with the lowest bidders winning ever smaller jobs and smaller amounts of money. Many freelancers will be lowly paid braceros, offering their services in naked competition against each other. The customers can take the lowest bids, which are guaranteed to keep the bids low for the future.

Yes, this will result in unimaginably enormous productivity increases, and in the past that has sometimes led to greater prosperity for all. What about this time? Who would reap the benefit of this unimaginably enormous productivity increase? Would it be a handful of “Masters of the Universe,” i.e. such as the chief entrepreneurs and investors? Or would the gains be broadly distributed to the general public? Nobody’s crystal ball can tell us the answer, but what we do know is this: over the last several decades, the economy has been restructured so that the wealth gains from higher productivity and new technology have flowed into the pockets of an ever smaller minority of “one-percenters”. We also know that wages have stagnated despite sizable increases in corporate profits. So our nation’s recent economic history shows all too vividly that the general public is in no way guaranteed to benefit from technological innovations and productivity gains. Quite the contrary.

Indeed, the answer to this question is a political one. It depends greatly on what policies and politics are pursued during this interregnum, before our society begins edging closer to this very uncertain future. The onset is arriving, like a giant comet from another galaxy, more rapidly than the public or the politicians realize. And we are heading toward a head-on collision with it.

This blog was first published on Branko Milanovic’ Blog

Watch Steven Hill set out the main argument of his new book Raw Deal: How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers.