Posted by Barbara Ann Berwick drove for Uber for eight weeks in 2014. She, and two others, then brought suit against the company. On June 16, the California Labor Commission ruled that she as a driver should have been classified as an employee – not an independent contractor – and that she was due over $4 million in expenses and penalties. As expected, Uber filed its rebuttal on July 9, bolstered with written statements from more than 400 drivers supporting the company.
Are Uber drivers being exploited or fairly compensated? Should governments, consumers, and voters support or suppress the movement towards increasingly freelance labor? It depends.
The 150-year history of industrial capitalism has led the US (and others) to tie benefits and workplace rules to full-time employment. “Choose the full-time job with benefits!” parents urge their children.
Yet, in countries with national health benefits, free childcare, low-cost higher education, and robust social safety nets, working as an independent freelancer is great, and it is easier than ever with new, Internet-enabled platforms.
Jamie, who lives in France, sells handmade stationery on Etsy while working part-time as a family therapist. “I cannot imagine working for someone else. Being my own boss affords me the independence and flexibility I need to express my creative processes, be they typically artistic or intellectually creative. I am not tied down to other people’s wants and expectations and can choose the paths I want or need to focus on at any particular stage in my life.”
Sidney, who was working as an Uber driver in New York City when we met, told me that he loved being able to control the amount of money he’d earn in a week. If he needed $400 to cover rent, then he’d work the necessary hours to earn it. He told me if you were smart and hardworking, working for yourself was the only way to go. Yet I worried that his calculus didn’t include the full costs of the car, or factor in sick and vacation days, health insurance, or the inevitable retirement that stretched ahead.
This new way of working also rewards the ambitious, the hardworking, and the entrepreneurial, and it moves us closer to a real meritocracy. Our résumés become irrelevant, and we can try our hands at many things and more quickly figure out what we want to do more of. In the famous New Yorker cartoon, a dog seated at a computer says to another one looking on, “On the Internet, nobody knows you’re a dog.” We’ve moved beyond that. With the rise of social networks (and expectation of NSA-level spying), it’s become more true that “everyone knows you’re a dog, and nobody cares.” It’s your work product and your reputation that matter.
According to Economic Modeling Specialists International, the number of freelance workers in the U.S. grew from 20 million in 2001 to 32 million in 2014. Freelance work now comprises almost 18 percent of all jobs. This trend is expanding explosively. And not just because workers are unemployed or unable to make ends meet with traditional jobs (although this has some truth in it) but also because companies are finding it advantageous to rely on freelance labor.
It used to be that companies would gain a competitive edge by bringing more and more people, assets, and resources inside the company in order to reduce transaction costs. The Internet has stripped that advantage away. Now, the smartest companies are using the Internet’s ability to facilitate collaboration by leveraging assets, resources, and expertise outside of their sphere of control. I call this new collaboration “Peers Inc.” and we are seeing its transformative and disruptive power in every sector of the economy.
As early as 2000, Zipcar (which I co-founded) built a platform that empowered its members to do work that used to be done by car rental employees. The platforms created by Uber and Lyft (who invented the idea) have redefined what it means to be a taxi and a taxi driver, and Airbnb has done the same with hotels and hoteliers. The effect extends well beyond what has been called the “sharing economy” – featuring many instances of peer-to-peer coordination of the use of assets — to what I think of as the collaborative economy: marked by many platforms that engage a diversity of peers to contribute excess capacity which can be harnessed for greater impact.
Massive Open Online Courses (MOOCs) are challenging work flows in the education sector. 3D printing will restructure manufacturing. The music and print media – in fact, all content producers – have had to transform as new platforms increasingly give the small the powers of marketing and distribution that were once reserved for the very large.
Companies like these, who tap directly into the full diversity and energy of their human marketplaces, are able to scale faster, learn faster, innovate and adapt faster. Whether companies like this new approach or not wholly depends on whether they are part of the old or new economy.
Governments need to recognize and prepare for this new third way of working which is neither full-time nor temporary part-time, but a new way of life. The Internet exists and everything that can become a platform will. Local and federal governments need to start tying benefits to people and not jobs, ensuring that labor is protected during this disruptive and swift transition.
In a world struggling to cope with incessant disruption brought on by fast-paced technical innovation, climate change, urbanization, and globalization, Peers, Inc. is the structure for our times. It enables us to experiment, iterate, adapt, and evolve at the required pace. I’m happy this flexible new tool has come to exist. But while we are reaping the economic benefits brought on by individual contributions, we need to proactively share the productivity and innovation gains with individuals, too.