Serfs up for the self-employed and gig economy workers (and the middle class)

One of the most significant consequences of the 2008 economic crash was a remarkable shift in the nature of employmentThe recession led to a surge in the number of people categorised as self-employed. The numbers have been increasing ever since, albeit at a lower rate. By the end of 2019, the number of self-employed people in the UK exceeded five million people for the first time. Fifteen percent of the workforce. 

Although this has been often characterised as a voluntary shift, and frequently mischaracterised – in the UK at least – as evidence of entrepreneurialism, for many people it was and remains a necessity. Where a job doesn’t exist, they create their own. It has since become clear that many would prefer to work in traditional employment, but don’t have that option if it doesn’t exist in the right way.    

As ever, the big numbers that frame these issues obscure some realities. In particular ‘self-employed’ can cover a number of forms of work. As the ONS notes in its report on the data, ‘the aggregate number of the self-employed hides some differences in the composition of different types of self-employed. In particular, the number of self-employed reporting themselves as working on their own, or with a partner but no employees, has increased between 2001 and 2016, while those who report themselves as having employees has fallen over the same period.  

The common narrative also presupposes generous income levels for the self-employed. But this is not really the case, as the blogger FlipChartRick points out in an analysis from last year:  

People often assume that the self-employed are minted because a few self-employed people earn a lot of money. However, most don’t. A report by the Institute for Fiscal Studies (IFS) last summer found that the mean annual self-employed income (£30,000) was just below the mean employed income (£31,000). However the median self-employed income was only £14,000 – much lower than the employee median of £22,700. The mean figure for the self-employed is skewed by a small number of very high earners at the top, usually working in partnerships. 

No wonder that around one in five self-employed people felt insecure even before the pandemic and couldn’t last a year trying to make ends meet. Little wonder that so many of them and those in the so-called gig economy would much prefer traditional workin particular how they might be willing to exchange some income and many of the benefits of self-employment for greater security. 

 

What now?

A very similar phenomenon is likely to happen in the wake of the Covid-19 pandemic. This time it will affect a greater number of people, in new ways and many of them will sleepwalk into it all in the name of remote work. They may think they’re merely switching their place and time of work, but are about to discover that they are also likely to be adopting a new, insecure and worse-paid form of work.  

It is true that in the short term, the number of people in self-employment in the UK has fallen. ONS data showed that by the middle of 2020, large numbers of self-employed people were looking for more permanent roles.  

Pay for an average job has dropped by about 20 percent in the past six months

Again, this was a rational response to the challenges faced by the self-employed. An analysis by the London School of Economics highlighted the problems faced by the self-employed as the pandemic progressed. It found that the self-employed saw greater drops in their earnings and hours of work than other types of workers.  

The proportion of the self-employed working fewer than ten hours a week hit 40 percent in the Summer, while half earned less than £1,000 in August.  

The same analysis found that a third of workers in the so-called gig economy were actually working longer hours, even though 78 percent of them thought their health was at risk, compared to just 23 percent of other self-employed workers.  

The UK was not alone in seeing this downward pressure on wages coupled with a shift towards gig workA report from Bloomberg in July highlighted how a rush to freelancing sites as traditional work dried up applied downward pressure on incomes. On just one of these sites, Freelancer.com, used by 46 million people, pay for an average job has dropped by about 20 percent in the past six months – partly the result of more people competing for the available projects.” 

This shift will not just be marked by the availability of traditional jobs but also the nature of the work people doThere are signs that the lockdown has driven a new obsession with productivity. We are again talking about work as the exchange of money for units of labour 

Once it reverts to that, firms will ask themselves what for them is a perfectly rational question. If you can do your job anywhere, can anyone do your job? 

They will inevitably answer yes, probably. Their workers may find that, shorn of the context of the traditional workplace and job structure, and with work boiled down to labour transactions, their work can indeed be done by anyone, anywhere, and probably more cheaply.  

 

Think global

This competition won’t just be driven by local markets. People will end up competing against others within very different sorts of economies and with different personal circumstances. The marketplaces for these competitions already exist and are becoming far more sophisticated. They are not just forums to allow people to find work when jobs are unavailable.  

This is the future of work for many people, according to the commentator Li Jin. “The notion of the “organization man”is giving way to the rise of “micro-entrepreneurs,” or free agents, creators, freelancers, and independent workers who utilize digital platforms to make a living by leveraging skills and knowledge in the absence of a traditional employer-employee relationship”, she writesAccelerated by digital platforms that help surface job opportunities, facilitate customer connections, and aid in setting up and operating a business, workers are empowered to go independent and to earn a livelihood outside the confines of a traditional company. 

Not everybody will necessarily do well out of this new era of work, however well the platforms that serve them are designed. The pessimistic view is that many, perhaps the majority, will do badly, including the young, the old and the less well offIt won’t only be their finances that suffer. It will be their mental health and wellbeing too. 

A Matthew effect could begin to dominate the global gig economy, in which the most successful workers do better and better. Everyone else, though, is going to do worse

So, while some will thrive, for most people, their experience will be of a race to the bottom. These trends were already evident before this year’s lockdown. Some people saw it coming, including Alana Semuels in a 2018 article in The Atlantic. 

We never did find a way to help the losers of globalization become winners. 

It’s possible that Americans will still decide that this latest wave of outsourcing is, on the whole, beneficial, too. But the usual mantra told to people who have lost their jobs to outsourcing—get more education, get more training—doesn’t make sense in an economy where educated people across the world are competing: On Fiverr, I found someone in Pakistan offering to do architectural designs for just $5. 

For the many talented people who now have a global platform to sell their services, Fiverr and other sites represent a huge opportunity. The people who prosper are “the cream of the crop,” Graham told me. One recent paper has predicted that a Matthew effect could begin to dominate the global gig economy, in which the most successful workers do better and better. Everyone else, though, is going to do worse. 

 

A sense of disproportion

Some of this is already playing out in the short term, according to the LSE analysis. This slow recovery is echoed in work by the Resolution Foundation, who also demonstrate that workers with lower qualifications are the most likely to experience prolonged earnings losses.

One well-documented feature of the current crisis is the disproportionate negative labour market impact on women

One well-documented feature of the current crisis is the disproportionate negative labour market impact on women. Once we account for the fact that self-employed women are more likely to be able to work from home, we also find that they are more negatively affected in terms of hours and incomes. 

A report from the World Economic Forum last year, emphasises this disparity. Based on an analysis of 800 occupations in nine countries it found thatin contrast to the media narrative, the majority of people had not worked from home during the global lockdowns, including in countries like the UK.  

The report concludes that: “The potential for remote work is concentrated among highly skilled, highly educated workers in a handful of industries, occupations and geographies We anticipate more remote work going forward, but primarily in hybrid models, with employees splitting work time between home and office, for occupations with high remote-work potential.  

Remote work also risks accentuating inequalities, delivering expanded benefits like greater flexibility and lower costs to the minority of workers who can work from home, while increasing the precariousness of the jobs that cannot be done remotely. For some women, remote work has the potential to exacerbate the regressive effects of COVID-19, which we have explored in prior research. The influence of COVID-19 on other big trends affecting the workforce, which we are currently studying, may further exacerbate inequity, making it imperative for policy-makers and companies to take steps to mitigate the consequences and help workers navigate the emerging new world of work.” 

 

Caste offs

The author Joel Kotkin explores growing disparities and falling social mobility across Europe and North America in his 2020 book The Coming of Neo-Feudalism: A Warning to The Middle ClassHe argues that we risk turning back the gains made in the 20th Century in which wealth, influence and authority are concentrated in the hands of a relatively small proportion of the population. He asks the question whether the last century was an anomaly in the working of societies.  

The growth in automation and access to a greater supply of cheap labour could stratify incomes and halt social mobility

He describes a world of work, common to the agricultural and industrial era in which people work from home or very nearby and in which most people are underemployed except at certain times of the year. The book suggests that the growth in automation and access to a greater supply of cheap labour could stratify incomes and halt social mobility.  

This thinking pre-dates the current upheaval. Writing in Wired in 2018, Antonio Garcia Martinez talks of the emergence of a caste system in California. The categories he describes – Inner Party, Outer Party, Service Class and Untouchables – deliberately evoke the caste systems of both Nineteen Eighty-Four and Brave New World.    

This, of course, is a burgeoning dystopic nightmare,” he writesBut it is the vision of the future that San Francisco offers: highly stratified, with little social mobility. It’s feudalism with better marketing. Today’s “sharing” economy resembles the “sharecropping” of yesteryear, with the serfs responding to a smartphone prompt rather than an overseer’s command. 

Inequality rarely decreases, and when it does it’s often as the result of wars, revolutions, pandemics, or state collapse. If there’s any nonviolent political hope here, it’s probably to be found among the Outer Party. The Inner Party lives estranged from reality. But the Outer Party still has to teach their kids not to pick up street needles and occasionally feels the depredations of crime to person or property.” 

This takes the assertion made by Winston Smith in Nineteen Eighty-Four that “if there is hope, it lies in the proles” and applies it to people like Smith, himself a member of the book’s Outer Party 

 

A new hope

This hope will rely on us acknowledging the true dynamics of the social, economic and work shifts that we are currently witnessing. Too much of the debate has been about the effects on a minority of people, especially older people with bigger houses and established careers and networks. Even most of these people may not be sheltered from the changes the pandemic has accelerated, especially as they find themselves in transactional jobs they used to think were relational.   

For others, the talk of lockdown puppies, equipping bedroom number five with a desk or building an office in the garden is irrelevant. Young people risk having no way into mentorship and the culture of the organisation. There are signs that the progress made by women towards equality may have taken a step back. We are all suffering from the consequences of too many tech-mediated interactions, as we were before the pandemic.    

Joel Kotkin’s book may be needlessly pessimistic in describing a return to a feudal state, but the dangers are clear and already evidentHistory not only teaches us about these dangers but also the solutions to them. Hope lies not only in the proles and the Outer Party, but also the State.   

The 19th Century sociologist Emile Durkheim saw the state as a potentially liberating force. At the time he was writing the state was introducing laws to protect people from oppressive landlords, long hours and poor and unsafe working conditions as well as address their general wellbeing. There are still reasons to be optimistic.  

This piece appears in the new issue of IN Magazine

Main image by free stock photos from www.picjumbo.com 

 

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