12.06.14

The Scamming Economy: Red hot tech innovation

Posted in Culture of Lickspittle, The Corporate Bund at 1:39 pm by George Smith

Tech industry start-ups love the operation of the sharing scamming economy.

At its base is a smartphone driven global network that reduces people to pieceworkers. That is poverty level pay work akin to jobs from the 18th and 19th century, only made new through the smartphone and the desktop for the 21st.

Old piecework slavery is now called being a micro-entrepreneur. Perhaps micro because the compensation is microscopic.

From the San Jose Mercury News we get a press release for it, dressed up as business news, tipped by Frank from Pine View Farm.

The essentials:

What’s often known as the “sharing economy” — represented by legions of Airbnb hosts, drivers for Lyft and Uber and countless other micro-entrepreneurs — has increasingly gone mainstream, creating thousands of jobs and new business models in the process.

Now Peers, a San Francisco-based organization that has advocated for sharing economy startups during various regulatory battles, is pivoting to focus on a growing issue: the myriad needs of the workers involved.

How does someone who earns money as an independent contractor deal with taxes? What happens when a car-sharing driver gets in an accident? Is there a mortgage broker who will work with someone who has income from three sharing economy sources? And how does a sharing-economy worker plan for retirement?

“There’s a new class of worker, and by some estimates it’s 2 million workers globally making $10 billion a year,” said Shelby Clark, executive director of Peers. “We think there are major gaps for workers in the sharing economy, and we want to create solutions.”

Solutions, indeed. What the fugleman from Peers is counting on is nobody in the readership pausing to do a brief calculation.

So let’s do it for them.

If you consider Shelby Clark’s figure of earnings accurate even though there is no reason to do so, 10 billion divided by 2 million equals $5,000/year.

In the United States, where the cost of living is high, that optimistic new piecework wage, technology enabled, boils down what’s left of the middle class to well below the poverty level.

Where can you live in the US on $5,000/year?

Certainly not in southern California.

Piecework jobs have always existed. Corporate America has a love affair with them because they do away with labor protections, paying of benefits and decent pay for a days work.

Most recently the Economic Hardship project, a journalism effort led by author Barbara Ehrenreich, developed this story, published in Elle called Hypereducated and on Welfare.

The people in the story don’t need the sharing economy and smartphone apps to provide work, to lift them up. They already have work that takes up all their time, provides no security, no benefits, and leaves them broke.

An excerpt:

Much political rhetoric these days is devoted to the importance of broadening access to college—and there is plenty of evidence that it’s still better financially to have a degree than not—but in the postcrash world of 2014, a good education may not keep you from hovering near the poverty line. The number of people with graduate degrees receiving food assistance or other forms of federal aid nearly tripled between 2007 and 2010, according to the U.S. Census. More specifically, 28 percent of food-stamp households were headed by a person with at least some college education in 2013, compared with 8 percent in 1980, according to an analysis by University of Kentucky economists.

In the US, people earning the kind of money theoretically attributed to the sharing economy are eligible for the Earned Income Tax Credit, EBT (food stamps), WIC (women, infants and children food program) and the Obamacare Medicaid expansion.

These services make up part of America’s poor social safety net. But altogether they are much better than any clip job services offered by tech industry start-ups.

People beneath the poverty line certainly can’t pay mortgages and they don’t get and can’t afford to pay extra for workman’s compensation, another cracked rip-off proffered in the Mercury News piece.

Pay day loans, dollar stores and food banks are what people who drop into the $5,000/year category use. These services exist for the poor. There is no improvement to be gained from trivial Silicon Valley start-ups entering the same area.

Indeed, how would a smartphone app that deducts a fee for use fit into a dollar store economy other than as another fee squeezed from the working poor?

In the Nineties when I first moved to southern California I had a job sifting quarterly federal tax returns for the Internal Revenue Service.

Normally, this had been a civil service job. But the IRS had outsourced some of it in California to Manpower, making you a more poorly payed contract worker. A pieceworker. With no benefits.

Like the snake-oil salesman of the sharing economy, Manpower offered the contract employees what it call “benefits” and “services.” You could buy a health insurance policy through them, deducted from your wage, already reduced from what full civil service employees with benefits received.

It was a junk insurance program that paid zero except a bit in a catastrophic illness which inevitably would lead to your death. These types of policies, theoretically, were outlawed by Obamacare.

And earlier this year I posted on the tech business, Captricity, that received a contract from the FDA that reduced digitization of documents to piecework performed by crowd-sourcing on Amazon’s Mechanical Turk.

Think of it this way: It was the exchanging of civil service labor with pieceworkers earning nickels and dimes for the same process.

From it:

Marvel at the promotional video uploaded by the Empire of Bezos to showcase “Amazon Web Services.” It’s awesome in that it has the FDA’s Chief Health Informatics Officer, Taha Kass-Hout, going on for four minutes about the miracle of “turning manual submissions from the public into machine-readable information with 99.7% accuracy” without once mentioning Mechanical Turk or that the work is performed by digital sweat-shopping.

Instead Kass-Hout relates how the FDA had a “19th century problem” of backlogged paperwork …

It’s truly Orwellian, releasing a stink of vague obfuscation so that people who don’t know a thing about what’s going on in the background are led to believe it’s just another marvelous technical wonder on the road to the glorious future…

The Obama administration has put on a public populist face, one that chides the Republican Party and corporate America for allowing inequality to balloon and the compensation of workers to flat-line. And here is the man from the FDA, talking about a technical work-around that simply relies on paying people virtually nothing for record transcription work.

Implemented by a crappy and very small tech firm in the Silicon Valley, one that laughably maintained a blog with a post entitled “Evidence-Based Research to Combat Global Poverty.”

“We think there are major gaps for workers in the sharing economy, and we want to create solutions,” the person from Peers tells the Mercury News reporter.

“The Peers website allows people to find work in the sharing economy and manage their new lives as micro-entrepreneurs,” continues the newspaper. “Peers links to scores of sharing economy startups, including Vayable, where you can earn money by leading cultural experiences for travelers, and Urbansitter, a platform for nanny and baby sitting jobs.”

Much like TaskRabbit, another sharing economy start-up and old-fashioned Craigslist. And, of course, a tech platform that allows you to earn cash for stuff you don’t need anymore has always existed: It’s called eBay. Or the yard sale, of which there are many, in Pasadena.

Poverty wage workers have always been provided with services with which to liquidate their lives. Clip job service additions courtesy of the tech industry are not progress, innovation or wonderful.

“How does a scamming sharing economy worker plan for retirement”? asks reporter Dana Hull.

Pieceworkers can’t plan for retirement. How does one have a retirement on a couple insecure free-lancer jobs, with no benefits, that earn, at best — $5,000/year, plan for retirement?

It’s utterly ridiculous.

3 Comments

  1. anon said,

    December 8, 2014 at 3:24 pm

    My hope is that the people who try working these “jobs” are doing them as part-time gigs, in the hope of earning “pocket” money while they are busy being a student or something. As a primary source of income, it would be hopeless.

    They would be better off making or delivering pizzas. For a pay rate of $8 per hour, doing 12 hours a week, they would gross just under $5,000 a year, with no vacation time, of course.

  2. George Smith said,

    December 8, 2014 at 4:47 pm

    Certainly, some of them must be. Baby-sitter jobs come to mind. But tech industry clip-a-percentage hardly seems fair to inflict on them considering how it’s worked for, what, a century? I posted a link to a story on a SF Uber driver who quit because she couldn’t make a living.

    It would be similar in Los Angeles which is why you’re beginning to see protests by Uber drivers who want to unionize. They’ve figured out they’re getting to beat up their car, an expensive investment, for not a great of compensation, less than cabbies so Travis Kalanick can have his riches. And we’ll not spend a lot of time imagining working with the minds of people who thought putting “Rides of Glory,” statistics on Uber passengers who, it had been determined, had used the service over a holiday weekend for a little hotel trysting, on their blog. They’re as bad as their publicity leads you to believe.

    It’s the same with all these sharing economy jobs. I ridiculed the Arthur Brooks column in the Times, he of the great intellect, who dug up an AirBnB micro-entrepreneur of the “helping industry”, subletting her place while she depended on being able to sleep for free at her parents or a friend’s place.

    These are all “innovations” fit for a desperation economy, nothing else.

  3. Ted Jr. said,

    December 9, 2014 at 9:22 pm

    Well, here in polyglotistan, the ‘independent contractor’ meme is all the rage. The Pizza delivery people provide their own vehicles and are expected to drive around with the corporate logo attached to their roof to show they are ‘on delivery’. The problem of course stems from that tiny little fact that the auto insurance providers want a commercial policy if you are delivering items for money. If you get in an accident and you have the domino/hut/boston etc logo on your roof, you are likely to discover your company will pay no claims arising from your accident.

    The last time I did the math in my head, the payment for delivery did not do anything more than pay the vehicle overhead which means the only money a driver would actually make is from the tips.

    No wonder they advertise them as ‘business opportunities’ because they sure don’t fit the definition of ’employment.