07.05.13
CAHY: Labor and the ‘sharing economy’
CAHY — or my abbreviation for Corporate America Hates You, its open hostility to people — is recognized as real. Awhile ago I wrote about it, in the economy of strangle:
In Sunday’s New York Times, a front page piece on how corporate America has shifted to staffing with part-time employees, to avoid benefits and the payment of wages:
While there have always been part time workers, especially in restaurants and retailers, employers today rely on them far more than before as they seek to cut costs and align staffing to customer traffic. The trend has frustrated millions of Americans … reducing their pay and benefits.
“We’re seeing more and more that the burden of market fluctuation is being shifted onto the workers, as opposed to the companies absorbing it themselves,??? said Carrie Gleason, the executive director of the Retail Action Project, an advocate for retail workers …
Here is seen the maximizing of profit by compressing wages and having government programs in the tattered safety net picking up the slack. This from corporate America, where the prevailing sentiment during the last four years is that socialism and entitlement has run rampant.
However, the kind of entitlement spending that allows corporate American to pay people so poorly that there aren’t yet food riots [because 48 million working people are compensated with a food stamp benefit] is apparently OK.
The answer isn’t near at hand.
It will be generational as the current climate of corporate predation can’t be changed, only slowly replaced.
And the only way it can be supplanted is through the strengthening of labor after decades of attack from the private sector. And law requiring that people must be paid a living wage.
At PBS today, a discussion on the inexorable decline of labor in the US, accelerated by “innovation” that does not achieve any social good.
The PBS piece explains how capital has stayed the same globally, but an explosion in labor availability and ease of using it, has radically reduced what people can earn.
The piece also dallies with what this means for the future and none of the prognostications are good.
Near the end of it, a couple statements stick out, both having to do with a recognition that social norms have changed and not in any good way. Destruction of union power and compensation became normalized and, increasingly, technology driven.
Gary Marcus, a psychologist at NYU: “I have a question for those of you here that are more optimistic about the future. What specifically do you think might be the future economic domains in which there might be large-scale employment? I’m not interested in the cases where there’s a cool new job that really, really smart people who read Wired magazine can do. What I am interested in are new occupations that hundreds of thousands of people could do, in game-changing ways like when the automobile industry once opened up.”
Thomas Kochan, MIT: “In terms of a market failure, it’s the reality that it’s not in the interests of any individual firm in the United States to try to solve the jobs problem. So, we’ve got to figure out a way to deal with that…and the only way that you solve this is by getting people and institutions and organizations to work together, to engage these issues collectively.
“It’s about an institutional failure over the last 30 years. With the decline of the labor movement, you’ve seen a lot of institutions go downhill equivalently. We don’t see the kind of dialogue, we don’t see the enforcement of our social norms and social policies that discipline corporations, and that really provided the kind of collective spreading of wage patterns and wage norms across the society.
“We’ve got to rebuild those, but we can’t try to rebuild them in an old-fashioned way. Now we’re in a more digital economy, a more knowledge-based economy, and we need to invent the new institutions that will cut across and aggregate these interests to address these challenges. We’ve got to get the education community working with business and employers, working with labor and civil society.
“I’m not a believer that technology is going to naturally eliminate jobs and cut income, but if we don’t do anything about it, if we just leave it, as we have, to individual market forces and to individual corporate actions and to individual technology innovations, then that’s probably where we are headed.”
Hanan Kolko, a labor lawyer: “Until this social norm of trying to crush unions and workers in general is changed, you’re going to have more and more instability for working people. And it’s a very bad thing for the economy, because at the end of the day, if there’s not enough aggregate demand, there’s not going to be enough people with money to buy the stuff to keep our economy going. This is a structural change in the social norms of our economy that makes me pessimistic about the future.”
Last week the blog addressed it in a response to an LA Times piece on “concierge apps,” or trivial technologies that exist to pit all-against-all in free-lance labor bidding wars, driving earning power downward for the sake of superfluous vanity work. (Paradoxically, while this was published the Times was going through another wave of layoffs brought on by a poor profit picture brought about by the digital sharing and content-is-free economy.)
These are technologies which do not increase the economic pie. They only fractionate it in favor of the holders of the technology and at the expense of low-wage workers who cannot defend themselves from it.
As far as innovation goes, it is not a future.
Specifically, we can talk about Uber, the Silicon Valley cab-summoning app that serves limousines and free-lance drivers to the top most and that part of the upper middle class which retains work as high-button servant labor.
Los Angeles sent Uber a “cease and desist” order to stop operations in the county and the company ignored it.
The LA Times piece provided precious little about the problem a company like Uber professes to solve using smartphone innovation.
That problem is claimed to be transportation dysfunction and lousy cab service.
First, transportation is hard in LA County because of its sheer size. It’s an automobile economy.
There is a need for shuttle service to airports. And, indeed, there is an effective network of shuttle companies. They work and anyone who has lived here a long time has come in contact with them.
Uber cannot improve upon it. The job remains the same whether summoned by smartphone app or through the old fashioned way of simply calling them by voice.
Shuttle drivers don’t get rich. They are not parasites who need cutting down by digital innovation. But what Uber purports to do in such things is just use technology to summon a swarm of free-lance workers to undercut business and undermine costs. This is not expansion of an economic pie.
It is the same with cab drivers. Do you know anyone who is one making as much money as a Silicon Valley tech company CEO?
So concierge apps be damned as progress. Parasitic apps for chiseling the cost of labor is a much better description.
Companies like Uber, or TaskRabbit, call themselves leaders in the emerging world (and here is another Orwellian tech industry term) of the sharing economy.
If it is so much about sharing, how come most in American society receive so little benefit?
The destruction of payment for recorded music was the first grand achievement of the sharing economy. Sean Parker, for example, one of the founders of Napster, is now wealthier than Croesus, so much so that when he’s pilloried for excess he shows everyone he really is that venal by writing about how his posh wedding was ruined.
More descriptive of the sharing economy, a White House economic advisor recently wrote a widely, ahem, shared essay on how the old pop music industry was gutted by technology, turned into a winner-take-all struggle in which only the biggest names thrive.
This was placed within the larger context of how inequality is very high in the US, and rising, as those with access to the means of the sharing economy employ it to take larger and larger pieces from an economic pie through divestment from fair compensation for labor. More gallingly, the Internet does not create fabulous opportunity because perceptions of popularity mean a lot when society is grossly unequal. In other words, algorithms that put something in the first page of results because of counts of various things make everything below the top few rungs displayed untenable.
Now you can surely say that Apple and iTunes store funneling digital music purchases through a country with a legal mechanism for tax evasion is innovation. And Google’s development of YouTube as a service that provides a great deal of free pirated music with the salve that by attaching a link to a copy of it at the iTunes store is certainly some kind of wee innovation. But you can also call such things parasitic or predatory.
Last, from the Guardian, “In the digital economy, we’ll soon all be working for free – and I refuse”:
[In] Jaron Lanier’s new book Who Owns The Future? … he argues: “Capitalism only works if there are enough successful people to be customers.” Lanier, a computer scientist and a musician, is rightly called a visionary because he sees what is happening, when everything is live-streamed but no one knows the name of the person who made the music any more. Content is free.
Governments play up the idea that a digital future creates jobs rather than eats them up. Culturally, there is now a fantasy world of start-ups and blogs and YouTube TV where a very few people manage to make money but most work simply for “experience”…
He describes a winner-takes-all world, with a tiny number of successful people and everyone else living on hope. “There is not a middle-class hump. It’s an all-or-nothing society.”
But the digital economy operates as a kind of sophisticated X Factor. Someone will make it, sure. For more than 15 seconds even, maybe. But most won’t. This is why Lanier says the internet may destroy the middle classes, the people who can’t outspend the elite. And without that middle group, we cannot maintain a democracy.
This is why it is easy to root for the downfall of Uber.
The California Public Utilities Commission could see that the company is not really tech innovation at all, that what urban parts of the state do not urgently need from a company like Uber and its rivals is more poorly paid free-lance cab and shuttle drivers. The place won’t fall if it never gains traction.
I can compare a world class innovation in the US, with the alleged world class innovation of free digital music content.
There are three electric guitars that are historic technology: The Fender Telecaster, the Fender Stratocaster, and the Gibson Les Paul. The three defined pop music around the world, the first two being invented by Leo Fender and co-workers in California.
Leo Fender did not invent the idea of an electric guitar. Technically, he was not even the first to bring one into market. But he was the first to produce a genuinely great iconic model that revolutionized that market.
The invention of the Telecaster and the Stratocaster electrified pop music creation in the United States. It created jobs, entire large industries. The pop music industry, from the Sixties to the Nineties, simply would not have existed as it did without Fender innovation and all the companies it did business with and competed against.
Electric guitars were not about fractionating the economy, using widgets to chisel labor costs downward, or make millions of people claw against each other for the privilege of almost-unpaid work. (Despite what you may have experienced in struggle for a major label contract.)
The coming of the electric guitar did not take everything the majority had and throw it in the trash for the profit of a small slice at the very top.
When you see terms like concierge app or the sharing economy, you should choke. They always mean a lot of people are about to lose big.
Corporate America Hates You — from the archives.