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Runaway Capitalism Is Crushing American Workers

Sunday, 27 December 2015 00:00 By Mark Karlin, Truthout | Interview
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Uber app(Photo: Prathan Chorruangsak / Shutterstock.com)

As the "sharing economy" rapidly transforms into the "share-the-crumbs economy," multi-billion dollar companies like Uber and Airbnb are profiting from tax and legal loopholes while full-time, living-wage jobs disappear at an alarming rate. Learn the ugly details in Steven Hill's Raw Deal - order your copy today by making a donation to Truthout!

The following is a Truthout interview with Steven Hill, author of RAW DEAL: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers.

Mark Karlin: To start off, can you briefly define what you see as the emerging "shared economy" as exemplified by Uber and Airbnb?

Steven Hill: The sharing economy (which is also known as the gig or on-demand economy) includes a large number of companies spread across many industries and occupations. Those companies are engaged in activities as diverse as transport (taxi alternatives like Uber and Lyft), delivery (Postmates and Instacart), day labor (TaskRabbit, Upwork, Handy), rental and exchange (Etsy, Peerby, Parking Panda, Yerdle) and home rental (Airbnb, VRBO). The best-known companies are explicitly commercial and profit-making, others are projects with an environmental focus, aiming to reduce waste and consumption.

But virtually all of the sharing economy companies feature an innovative use of Web and app-based platforms to connect buyers and sellers (and swappers for noncommercial transactions) of goods, labor and services. The transactions often are called "peer to peer" - between you and another individual - rather than "peer to business," between you and a store or business, a digital space that was pioneered originally by websites such as eBay and Amazon. The company running the platform charges a fee for its matchmaker service (anywhere from 10 to 30 percent of the value of the transaction between buyers and sellers, depending on the company). The genius of this Web and app-based platform is that you can summon an Uber car, or a TaskRabbit to paint your picnic table, or rent an Airbnb room or a Spinlister bicycle, and have it show up at your door without ever dealing with a live human sales clerk or intermediary. These are like virtual stores, open for business 24-7, which raises "convenience for consumers" to a much-hyped level of significance. They also dramatically lower what is known as "transaction costs."

But the nature of this technology also means that these transactions, while tremendously convenient, are also highly impersonal and faceless. You don't get to know the local shopkeeper any more or chat with the sales clerk. Customer service is nearly non-existent. The online marketplace has lost nearly all vestiges of personal relations and Robert Putnam-like social capital - consumers and purveyors of goods and services are "buying and selling alone." Capitalism already has a strong tendency toward impersonal commodification of all that it touches; the digital technologies at the core of the "sharing" economy amplify these atomistic tendencies in a way that is not only "disruptive," as tech enthusiasts like to boast, but also unleashes disturbing elements.

For example, in reality the so-called "sharing" economy" is turning out to be a giant loophole that allows more businesses to dump their regularly employed (W-2) workers and more easily hire a lot more freelancers and independent contractors (1099 workers), cutting their labor costs by 30 percent because they don't provide any safety net for these workers (health care, Social Security, Medicare, unemployment and injured workers compensation, retirement or paid sick leave and vacations and more). One new economy booster clarified employers' new strategy: "Companies today want a workforce they can switch on and off as needed" - like one can turn off a television. If the employer-employee relationship used to be a sort of marriage, today it is becoming a series of one-night stands.

To achieve that, many of these app and Web-based platforms have set up the equivalent of a labor auction block - but it's an auction in which the lowest bids win. Freelancers and contractors bid against each other to win the job, and since the Internet is global, some of these labor brokerage websites put US workers into direct competition with workers in the Philippines, India and other places. The result is predictable: cheap, Third World labor undercuts developed-world wages. It's a race to the bottom, with many gig-preneurs complaining that, after the platform takes its cut and the workers subtract their expenses, sometimes they make less than minimum wage.

So companies like Uber, Postmates, Upwork and TaskRabbit claim that they are "liberating workers" to become "independent," "in business for themselves" and "the CEOs of their own businesses." In reality, the workers are vulnerable contractors, with no safety net benefits or job security, and they have little choice but to take ever-smaller jobs ("gigs" and "micro-gigs") and low wages while the company profits in what I call the "share the crumbs" economy.  

Steven Hill. (Photo: St. Martin's Press)Steven Hill. (Photo: St. Martin's Press)

Can you explain the plight of many of the increasing number of 1099 workers?

During the Great Recession of 2008, a lot of Americans lost their good "New Deal" jobs with decent wages, benefits and a degree of job security, and entered a new world in which many are now working as contractors and freelancers instead of as a regular employee; and others who are regular employees are "under-employed," meaning they are involuntarily working part-time rather than full time. This new reality has given rise to the term "1099 economy," since most of these precariously-employed workers don't receive a W-2 income tax form from the IRS; instead, they use the 1099-MISC form for the classification known as "independent contractor" ('MISC' is short for Miscellaneous Income). Under the pressures of the 1099 economy, even many regularly-employed part-time workers are being subjected to various tactics by employers to reduce labor costs and increase flexibility. One of these is called "just in time scheduling," in which part time workers often don't know when their next shift is from day to day or week to week. Like gig workers, such part-timers are basically on-call – it's difficult to plan your life, or even find a baby-sitter so you can work - and like 1099 workers, they are subject to job insecurity, low pay and little to no safety net.

The advantage for a business of using 1099 wage-earners and part-timers is that a business usually can lower its labor costs by 30 percent or more since it is no longer responsible for these workers' safety net benefits. Part time workers usually have to work above a certain number of hours per week to qualify, and employers make darn sure those workers never reach that threshold. Outsourcing to this growing multitude of 1099 and part-timers, in addition to creating jobs in low-wage countries oversees, has become the preferred method for America's business leaders to cut costs and maximize profits. In fact, one is the flip side of the coin from the other: businesses have been successful at reducing job quality here in the US by threatening to outsource more jobs overseas.

One of the best examples of how whacked out things have got­ten is the large pharmaceutical company Merck. Merck sold its factory in Philadelphia and the new owner fired all 400 Merck employees and rehired them as independent contractors (1099 workers). That company then contracted with Merck make the same antibiotics as before. These perverse incentives are threatening to destroy the middle class by turning tens of millions of workers into little more than day laborers. The sharing economy's app and web-based technologies have made it so much easier to hire and fire 1099 workers, and we are only at the initial stages of their impacts and how it will affect the labor force over the next several decades.

In my book, I have stories about different workers being negatively affected by these trends. For example, Chris Young is an assembly-line worker at Nissan's manufacturing plant in Smyrna, Tennessee. Young does the same jobs as many other Nissan employees, but he doesn't work for Nissan but for a private contractor. Young receives half the salary, less job security, and fewer safety net benefits than the regular Nissan employees. Nationwide, temps like Chris Young have provided nearly a fifth of the job growth since the recession ended, and increasingly, the temps aren't very temporary. Some have been employed at the same company for as long as 11 years, resulting in the term "perma-temps." Microsoft had to pay $97 million to settle a lawsuit for improperly denying benefits to over 8,000 perma-temps.

Fritz Elienberg worked for five years as a full-time employee installing cable and Internet service for RCN Corporation in Boston. Elienberg worked long days - 10 to 14 hours - yet he never received the overtime rate of time-and-a-half. Then, when a ladder fell on his foot and seriously injured it, workers' compensation would not cover his medical bills. Why? Because RCN did not regard him as a regular employee; instead, he was an "independent contractor." Elienberg's injury was not covered by injured workers' compensation because, legally speaking, he worked for himself and not RCN. Elienberg sued RCN for overtime pay and the value of lost benefits, and the company responded by firing Elienberg, adding retaliation to his list of grievances.

Charlie Pye tried to make a go of it utilizing TaskRabbit, Uber and other websites, but found himself running like a hamster on a wheel. "The wages offered look decent at first until you realize that you spend at least half your time commuting [from gig to gig] and/or dealing with flakes, neither of which is paid. Add in the 15 percent self-employment tax, the cut that the sites take [usually 10 - 20 percent of each gig], and it really starts to suck."

Things have gotten so topsy-turvy that even the most talented workers are noticing. Tina Brown, the flamboyant media mogul and former editor of Vanity Fair, The New Yorker and The Daily Beast, wrote at the Daily Beast that she noticed with disbelief the impact on her own associates and friends.

"Now that everyone has a project-to-project freelance career, everyone is a hustler," she says. "No one I know has a job anymore. They've got gigs," which she described as a "penny-ante slog of working three times as hard for the same amount of money (if you're lucky) or a lot less (if you're not). Minus benefits, of course." For a while, she added, "the downsized people I know went around pretending they enjoyed the 'freedom' and 'variety' of doing 'a whole lot of interesting things.' Twelve months later, nobody bothers with that cover story anymore."

More and more of these 1099 workers and part-timers have multiple employers, and their workdays are being segmented into shorter and shorter "micro-gigs."Indeed, in the jobs of the gig economy, working for companies like Uber, Lyft, TaskRabbit, Upwork, Postmates and others, some contractors and freelancers have multiple employers in a single day. Besides that, you don't get paid to look for the next job, or the one after that. These sorts of workers spend a heck of a lot of time searching for employment, always having to hustle, hustle, hustle. And as a 1099 worker, you also are now responsible for paying the employer's half of Social Security and Medicare, in addition to the employee's half, which deducts nearly 8 percent more from your paycheck.

That's not all. It's increasingly clear that this so-called "sharing" economy is unleashing a profound existential crisis in how we define work. In a regular job, a worker gets paid "on the clock" for an agreed-upon number of hours per day or week, like 9 to 5. Rest and bathroom breaks, staff meetings, training, even time at the water cooler, all those are paid time in a regular job. But the gig economy is massively overturning this. Suddenly the "extraneous" parts of a worker's day are being eliminated. "Micro-gigs" reduce workers' labor value to only those exact minutes someone is raking the leaves or designing that logo - engaged in a specific task. It's as if the Golden State Warrior's Steph Curry only got paid when he made a shot, or a chef got paid by the meal. It's piecework, like the type of work that predominated in the late 19th century, with no annual salaries, no payment for research or preparation. You are paid only for your exact productive moments, the rest is on your own time and dime. Many sharing economy gurus speak glowingly of this hyper-efficiency, but we have to ask - efficient for whom? How are we to define efficiency in a modern economy?

As part of this drive for efficiency, the new economy visionaries - who like Dr. Pangloss in Voltaire's Candide always see "the best of all possible worlds" - have a plan in place for us. We might not make much in wages earned from employment anymore, but don't worry, because the new economy gurus tell us we can "monetize our assets" - rent out our house, our car, our labor, our driveway, our spare drill and other personal possessions - using any number of brokerage websites and mobile apps to make extra money. This is the "sharing" economy in all its glory: contracted, freelanced, automated, Uber-ized, "1099-ed."

The next logical step in this race to the bottom is called "monetizing your downtime" via micro-gigs and nano-gigs. These are the smallest of jobs, such as labeling photos on Amazon's service Mechanical Turk for a nickel each. For example, you can describe women's shoes with words like "sandal" and "flats," which aids Internet search engines. Apps and websites like Spare5 allow you to "click and earn" while waiting for a latte at Starbucks or riding the bus home. The rate of pay? About two bucks per hour. But hey, it's just spare time, right? Who needs spare time?

In other words, markets are being created everywhere, and out of everything and everybody, producing  what technology critic Evgeny Morozov calls "psychotic entrepreneurs," always stressed out and groveling for the next gig, with every interaction recorded, ranked, and stored in an ever-shrinking jobs future.

Why do you call Uber a "ticking time bomb"?

In talking about Uber and ridesharing in general, the first thing that has to be acknowledged is that it is offering a service that has turned out to be better for the consumer than traditional taxi companies. The wait time for passengers is shorter, the fares are a bit less, and coverage in under-served neighborhoods (such as minority neighborhoods) in some cities has been more extensive. It turns out there haven't been enough taxis on the road, since the supply has been legally limited by a long-standing medallion system. But the supply of Uber and Lyft cars is not constrained by any law at all; in fact, these companies basically do not follow any livery laws. They are "disruptive" and proud of it.

But beyond better service, there are other aspects of Uber that consumers need to consider, particularly what I call Uber's "parade of horribles." Besides not paying livery taxes and following local laws, Uber has gotten away with using grossly underinsured drivers, faulty background checks (with no fingerprinting, a type of background check that the FBI has estimated has a 43 percent error rate), has made veiled threats to journalist critics, and has used passengers' personal data to track them (tellingly, Uber calls its tracking technology "God View" and "Creepy Stalker View"). Uber has literally gotten away with murder - when one of its drivers hit and killed six year old Sofia Liu as she was traversing a crosswalk in San Francisco, Uber washed its hands of any responsibility or liability. Why? Because the driver was an independent contractor, not an employee. Yet that driver had a reckless driving record in Florida, including being arrested for driving 100 mph into oncoming traffic while trying to pass another car, which Uber's faulty background check failed to uncover.

Uber seemed like a great idea at first, an American fantasy come true: that everyone can have their own low-cost chauffeur. But it comes with a price. The reason its drivers arrive so rapidly is because Uber has flooded the streets with cars. In city after city, whether San Francisco, New York, Seattle, Los Angeles or elsewhere, traffic has become more and more congested. Uber has put thousands of cars on the road - approximately 15,000 in San Francisco, 25,000 in New York City, with several thousand of those driving at any one time - and that has caused traffic to surpass the "congestion tipping point," making intra-city travel increasingly time-consuming and soul-draining. Studies have shown that many people are using Uber instead of public transit, bicycling or walking, so Uber is undermining many cities' carbon emissions goals as well.

On the labor side, these drivers are 1099 contractors, so they have no health care or any safety net protections. Uber drivers have been injured on the job, yet they aren't eligible for injured worker compensation and have to pay their own medical bills. Despite Uber's claims to the contrary, most drivers don't earn any more than taxis after drivers subtract their considerable driving expenses. Many drivers complain they don't even earn minimum wage.

Drivers also can be fired - cut off the app-based platform at any time - for any reason. Recently, Uber cut off hundreds of drivers in LA and San Francisco because those drivers' "acceptance rate" was too low. Many drivers have figured out that, given all of the traffic congestion, they don't make any money on short rides when they are stuck in traffic, so Uber fired all of these drivers without warning. Think about it: if these drivers really are the "CEOs of their own driving business," as Uber claims, shouldn't they be able to refuse a ride that they know will cause them to lose money? This speaks to how much control Uber exerts over its drivers, which appears to support the legal claim by drivers that they are employees, not contractors (this claim is the subject of a class action lawsuit by thousands of Uber drivers, which will go to trial next June). According to Uber's own numbers, half the drivers leave after a year. New drivers like the flexibility, but after a while Uber burns them out with frequent wage cuts and unfair treatment.

Not surprisingly, many Uber drivers have called for forming a union. Federal law doesn't allow workers who are classified as contractors to do that, but recent legislation passed in Seattle will permit NGOs to organize drivers. Uber fought this ferociously, dispatching its heaviest hitter to Seattle - David Plouffe, former campaign manager for President Barack Obama in 2008, who is now Uber's chief PR flak. In what has become a battle for the soul of the Democratic Party in the middle of a presidential election year, we saw a top Democratic leader take an anti-labor stance by opposing the right of these workers to collectively organize and bargain. 

So Uber is bad for the environment, bad on labor issues, and its CEO Travis Kalanick is the latest example of a virulent strain of Silicon Valley capitalism that has been infected by an Ayn Rand libertarianism. If you really must use ridesharing, use Lyft or Sidecar, which don't do business with the same arrogance as Uber.

And how about Airbnb? You've been critical of this service as well, yet so many millennials in particular seem to love it. What do you see as the downsides of the Airbnb model?

Airbnb started out as a good idea: helping "regular people" rent out a spare room in their home to make some extra money during the Great Recession. But at this point, Airbnb has been invaded by professional real-estate operatives who rent out multiple units, not just a spare bedroom. In a lot of cities, many Airbnb "hosts" control dozens of properties. An investigation by New York state attorney general Eric Schneiderman found that nearly 40 percent of Airbnb's revenue - some $168 million - came from hosts who had at least three listings on the site. One of those operators, Robert "Toshi" Chan, was the "host" of more than 200 apartments in dozens of different buildings, known collectively as Hotel Toshi. Airbnb allowed Toshi to flourish. Eventually, Toshi's illegal operation was shut down, and he agreed to pay a $1 million settlement for not obtaining proper hotel permits or insurance.

In San Francisco, various studies have found that 40 percent of revenue comes from Airbnb hosts with multiple listings. Similar results have been found in Los Angeles, Seattle, Portland and elsewhere. Often the professionals use various loopholes to evict longtime tenants from rent-controlled units, and then convert entire buildings into Airbnb tourist hotels, eating up the local housing stock. A leaked memo from Coldwell Banker Commercial that was sent to the real estate community revealed that if a landlord rents units of an apartment building to tourists instead of local residents they can earn over twice the profit - so the outrageous incentives are clear. While Airbnb isn't the only factor causing housing shortages and an affordability crisis, these cities have such a low housing vacancy rate that Airbnb's thousands of listings are devouring many of the few vacancies left. It is the straw that is breaking the camel's back.

The real shame is that Airbnb, which calls itself the "trust and belonging" company, knows all this and could easily clean up its act by:

1. "Evicting the evictors" - de-list from its website anyone operating multiple properties. Airbnb has the data and knows who they are.

2. Cooperate with cities like San Francisco and Portland, which require hosts to register with local agencies, by de-listing any of the thousands of unregistered hosts. Airbnb has refused to do this.

3. Pay the same taxes that hotels pay in all 34,000 cities in which Airbnb operates. Airbnb currently pays taxes in only about a dozen locations.

4. Stop refusing to hand over the data that cities need to enforce regulations and taxation, including the number of rental nights and rates charged by each host.

In short, Airbnb is no longer simply a platform of "regular people" hosts, it has morphed into a giant loophole for professional real-estate operatives. Airbnb is facilitating the snatching of housing from local people, while the professionals are laughing all the way to the bank.  

Can you define "Economic Singularity" and why you believe it is so dangerous?

Tech geeks and futurists like to fantasize about what they call the "Technological Singularity" - a future period predicted to occur around 2045 when the current "artificial intelligence explosion" will result in machines achieving true intelligence, and even surpassing their human inventors as they design ever smarter versions of themselves, causing a runaway effect that radically alters civilization in an event called the "singularity." In Raw Deal, I write about another horizon just as disturbing, what I call the "Economic Singularity" - the tipping point at which the economy implodes because the wealth has been captured by a handful of powerful economic players who extract the best of the nation for their own private use. That will result in too few consumers with enough money to buy up all the products and services produced by US businesses, because the vast majority of people will be left to scramble for the scraps via the "share the crumbs" economy, monetizing your assets (if you have any) and your downtime. Indeed, these two singularities may end up being two facets of the same future, a kind of techno-feudalism that threatens nearly everything good and true about the "American Dream."

The success of the postwar development model among developed nations was predicated upon a virtuous feedback loop, in which rising wages led to increased demand for products and services, which in turn helped drive continuous growth. A rising tide floated all boats. Today, 70 percent of the US economy is still driven by consumer spending. The economy pumps out nearly $17 trillion worth of goods and services, and ultimately all of those products must get purchased by someone. My spending is your income, and vice versa.

In fact, all workers are simultaneously consumers as well as producers - as workers we receive income, and as consumers we spend that income, buying up goods and services from businesses who receive that revenue and pay wages/salaries to its workers (or purchase inputs from other businesses, which then become those businesses' revenue and their workers' income). All in all it's a self-perpetuating cycle, a miracle in a way, but a delicate one that is always in a fragile entropic state of falling out of balance. So if there are not enough consumers to buy what businesses are producing, if demand is too low, the businesses will have to shut down and lay off its workers. If this happens on a vast scale, economic momentum would freeze, like an engine that seizes up without enough oil. The gears would grind to a halt. That's the Economic Singularity.

Getting more specific to today's situation: if both the quantity and quality of jobs for millions of 1099 workers is deteriorating, if millions of middle class workers are forced to turn to TaskRabbit, Upwork, Uber, Airbnb and other "share-the-crumbs" companies, or if we automate/robotize too many jobs, or if we push wages so low that fewer and fewer people have disposable income, then it will become increasingly tough for a modern mass-market economy to flourish. As jobs and incomes are relentlessly whittled away, at some point we will face the prospect of having too few viable consumers with enough purchasing power and demand to continue driving economic growth.

How close are we to this dangerous moment? Most likely it's still a ways away, but the trajectory is clear. And there are degrees of collapse along the singularity spectrum. Already the top 5 percent of households are responsible for around 30 percent of consumer spending, up from 23 percent in 1992. And this shift is accelerating; since 2009, the top 5 percent of income earners saw their household spending climb 12 percent, while spending for all other households fell 1 percent. Over the course of the Great Recession corporate profits climbed by 25-30 percent, while wages as a share of national income fell to their lowest point since World War II. Incomes were flat or falling between 2010 and 2013 for all but the top one-tenth of U.S. income earners. We are living through a time that has seen one of the greatest wealth shifts in U.S. history.

For decades the goal of the US Chamber of Commerce and business leaders has been to break unions and the workforce and bring them to heel, and they have largely succeeded. But that effort ultimately will backfire, resulting in the specter of an Economic Singularity.

What are examples of some solutions that would at least remediate the "shared economy," as outlined in chapters ten and eleven?

Raw Deal has two chapters of solutions. I really believe that with the right laws and regulations, we can make this high-tech economy work for the vast majority of people. Besides what I proposed earlier for Airbnb, here are a few more solutions that I think have promise.

Portable safety net. The most significant of my proposals, which has been endorsed in principle by 40 business, labor and NGO leaders and written about in the New York Times, is a plan for a "portable safety net"which would stay with a worker as she or he moves from job to job. For decades following the New Deal, most workers had a single employer who provided their safety net. But now more and more workers are working for multiple businesses, either as contractors, freelancers, temps or regularly employed part-timers. Our system was never set up to provide a safety net for these sorts of workers.

So what we can do is assign to each worker an Individual Security Account to which every business that hires that worker would pay a small "safety net fee," prorated to the number of hoursthe worker is employed by that business (the amount works out to about $2.50 per hour, beyond the wage, for service sector workers - not a lot of money, and much less than the increase in minimum wage to $15). That "hours bank" system would be used to pay for that worker's safety net, including health care, Social Security, Medicare, unemployment, injured worker compensation and a few days of paid sick leave and vacation.

What this solution does is create "legal parity" between all the different classifications of workers, making sure that all have a minimum safety net, whether a worker is a 1099 contractor or a regular W-2 employee. And it gets rid of the corrosive incentive that so many businesses have to hire 1099 workers or part-timers so that they can save the 30 percent on labor costs. My proposal could be passed at the local or state level, we don't have to wait for a Republican Congress to get its act together. It would do a lot to preserve the quality of life of the middle class, as well as extend to the poor a robust safety net that most have never had.

Job sharing. Sometimes known as "short work," this is a strategy that has been deployed extensively in Germany (where it's called Kurzarbeit), the Netherlands, Sweden and other places. The way it works is that current employees reduce their working hours by 5 to 10 percent so that other employees can be hired. In Germany, they even managed to do this without significantly reducing anyone's pay. Some workers are quite willing, even happy, to cut back their hours for a period of time, as it allows more leisure and family time. If we are going to have a "sharing" economy, then why not share our jobs?

From a macroeconomic standpoint, there is little difference between creating a new job or better sharing existing jobs, as long as aggregate wage levels are not significantly reduced. Job sharing can result in millions of people staying employed during an economic downturn, as it did in Germany following the crash in 2008. Even when the economy is running smoothly, job sharing can result in employment for those that don't have it, as well as greater flexibility for work-family balance for those who do have it. In the US, 28 states have passed laws that allow job sharing, yet they have not deployed it that much.

Especially if it turns out to be true that there is going to be an increase in "technological unemployment" due to more automation and robotization, then it makes sense to better utilize job sharing.

Vocational training and job placement. In a job-constrained future, it becomes all the more important to develop and expand the skills of workers, and target that training to the jobs that are available. Apprenticeships, in which inexperienced workers are paid to learn skills through on-the-job training, have worked extremely well in many advanced economies. Unfortunately, the US has long neglected this strategy, but Germany, Switzerland, Sweden, Finland, Austria and Denmark have ambitious vocational training and job-placement programs which foster a highly trained workforce for the global economy. In Germany, 65 to 70 percent of teenagers enter "dual track" apprenticeship programs, combining on-the-job training with classroom time. These nations have well-funded vocational and educational training for older workers as well. Meanwhile in the US, we have nothing comparable to such a comprehensive system. We spend a lower percentage of our national wealth on job retraining for the unemployed than any of the Western European nations, and our system of vocational training and apprenticeships is fragmentary at best.

In a job-constrained future, effective vocational and job training in the US could make the difference in whether millions of underskilled workers find suitable employment, and whether businesses find the skilled workers they need. It has been especially odd that conservatives and Republicans, who see themselves as pro-business, have not been supporting these efforts. Now is the time to step forward, before the full impact of job losses resulting from automation and job-brokerage websites strikes.

Codetermination and works councils. Germany, Sweden and other European countries have pioneered a limited form of economic democracy by deploying institutions such as codetermination, which gives the workers significant representation on corporate boards of directors, and works councils which provide worker representation at the job site level (in addition to representation by more traditional labor unions). In Germany for example, workers at all major corporations elect up to half of the representatives on the boards of directors, who sit side by side with stockholder representatives. Imagine if Walmart workers got to elect up to 50 percent of Walmart's board of directors - it's unimaginable for Americans, yet many European nations deploy some version of this as standard procedure. That in turn has fostered a "culture of consultation," which has made it possible to deploy other strategies such as job sharing and vocational training (see above), yet maintain the flexibility needed to adapt to the global economy.

Only the "visible hand" of representative government has the constitutionally bestowed power to bring together the different sectors of society, including business leaders, labor leaders, community leaders, neighborhood activists and everyday Americans, and seek consensus on these crucially important matters. Government, with all of its shortcomings and challenges, is still where all Americans meet. Sitting around the Big Roundtable, we must negotiate a new relationship, and a new social contract, between workers and employers, between companies and communities and between fellow Americans.

Copyright, Truthout. May not be reprinted without permission.

Mark Karlin

Mark Karlin is the editor of BuzzFlash at Truthout. He served as editor and publisher of BuzzFlash for 10 years before joining Truthout in 2010. BuzzFlash has won four Project Censored Awards. Karlin writes a commentary five days a week for BuzzFlash, as well as articles (ranging from the failed "war on drugs" to reviews relating to political art) for Truthout. He also interviews authors and filmmakers whose works are featured in Truthout's Progressive Picks of the Week. Before linking with Truthout, Karlin conducted interviews with cultural figures, political progressives and innovative advocates on a weekly basis for 10 years. He authored many columns about the lies propagated to launch the Iraq War.


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Runaway Capitalism Is Crushing American Workers

Sunday, 27 December 2015 00:00 By Mark Karlin, Truthout | Interview
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Uber app(Photo: Prathan Chorruangsak / Shutterstock.com)

As the "sharing economy" rapidly transforms into the "share-the-crumbs economy," multi-billion dollar companies like Uber and Airbnb are profiting from tax and legal loopholes while full-time, living-wage jobs disappear at an alarming rate. Learn the ugly details in Steven Hill's Raw Deal - order your copy today by making a donation to Truthout!

The following is a Truthout interview with Steven Hill, author of RAW DEAL: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers.

Mark Karlin: To start off, can you briefly define what you see as the emerging "shared economy" as exemplified by Uber and Airbnb?

Steven Hill: The sharing economy (which is also known as the gig or on-demand economy) includes a large number of companies spread across many industries and occupations. Those companies are engaged in activities as diverse as transport (taxi alternatives like Uber and Lyft), delivery (Postmates and Instacart), day labor (TaskRabbit, Upwork, Handy), rental and exchange (Etsy, Peerby, Parking Panda, Yerdle) and home rental (Airbnb, VRBO). The best-known companies are explicitly commercial and profit-making, others are projects with an environmental focus, aiming to reduce waste and consumption.

But virtually all of the sharing economy companies feature an innovative use of Web and app-based platforms to connect buyers and sellers (and swappers for noncommercial transactions) of goods, labor and services. The transactions often are called "peer to peer" - between you and another individual - rather than "peer to business," between you and a store or business, a digital space that was pioneered originally by websites such as eBay and Amazon. The company running the platform charges a fee for its matchmaker service (anywhere from 10 to 30 percent of the value of the transaction between buyers and sellers, depending on the company). The genius of this Web and app-based platform is that you can summon an Uber car, or a TaskRabbit to paint your picnic table, or rent an Airbnb room or a Spinlister bicycle, and have it show up at your door without ever dealing with a live human sales clerk or intermediary. These are like virtual stores, open for business 24-7, which raises "convenience for consumers" to a much-hyped level of significance. They also dramatically lower what is known as "transaction costs."

But the nature of this technology also means that these transactions, while tremendously convenient, are also highly impersonal and faceless. You don't get to know the local shopkeeper any more or chat with the sales clerk. Customer service is nearly non-existent. The online marketplace has lost nearly all vestiges of personal relations and Robert Putnam-like social capital - consumers and purveyors of goods and services are "buying and selling alone." Capitalism already has a strong tendency toward impersonal commodification of all that it touches; the digital technologies at the core of the "sharing" economy amplify these atomistic tendencies in a way that is not only "disruptive," as tech enthusiasts like to boast, but also unleashes disturbing elements.

For example, in reality the so-called "sharing" economy" is turning out to be a giant loophole that allows more businesses to dump their regularly employed (W-2) workers and more easily hire a lot more freelancers and independent contractors (1099 workers), cutting their labor costs by 30 percent because they don't provide any safety net for these workers (health care, Social Security, Medicare, unemployment and injured workers compensation, retirement or paid sick leave and vacations and more). One new economy booster clarified employers' new strategy: "Companies today want a workforce they can switch on and off as needed" - like one can turn off a television. If the employer-employee relationship used to be a sort of marriage, today it is becoming a series of one-night stands.

To achieve that, many of these app and Web-based platforms have set up the equivalent of a labor auction block - but it's an auction in which the lowest bids win. Freelancers and contractors bid against each other to win the job, and since the Internet is global, some of these labor brokerage websites put US workers into direct competition with workers in the Philippines, India and other places. The result is predictable: cheap, Third World labor undercuts developed-world wages. It's a race to the bottom, with many gig-preneurs complaining that, after the platform takes its cut and the workers subtract their expenses, sometimes they make less than minimum wage.

So companies like Uber, Postmates, Upwork and TaskRabbit claim that they are "liberating workers" to become "independent," "in business for themselves" and "the CEOs of their own businesses." In reality, the workers are vulnerable contractors, with no safety net benefits or job security, and they have little choice but to take ever-smaller jobs ("gigs" and "micro-gigs") and low wages while the company profits in what I call the "share the crumbs" economy.  

Steven Hill. (Photo: St. Martin's Press)Steven Hill. (Photo: St. Martin's Press)

Can you explain the plight of many of the increasing number of 1099 workers?

During the Great Recession of 2008, a lot of Americans lost their good "New Deal" jobs with decent wages, benefits and a degree of job security, and entered a new world in which many are now working as contractors and freelancers instead of as a regular employee; and others who are regular employees are "under-employed," meaning they are involuntarily working part-time rather than full time. This new reality has given rise to the term "1099 economy," since most of these precariously-employed workers don't receive a W-2 income tax form from the IRS; instead, they use the 1099-MISC form for the classification known as "independent contractor" ('MISC' is short for Miscellaneous Income). Under the pressures of the 1099 economy, even many regularly-employed part-time workers are being subjected to various tactics by employers to reduce labor costs and increase flexibility. One of these is called "just in time scheduling," in which part time workers often don't know when their next shift is from day to day or week to week. Like gig workers, such part-timers are basically on-call – it's difficult to plan your life, or even find a baby-sitter so you can work - and like 1099 workers, they are subject to job insecurity, low pay and little to no safety net.

The advantage for a business of using 1099 wage-earners and part-timers is that a business usually can lower its labor costs by 30 percent or more since it is no longer responsible for these workers' safety net benefits. Part time workers usually have to work above a certain number of hours per week to qualify, and employers make darn sure those workers never reach that threshold. Outsourcing to this growing multitude of 1099 and part-timers, in addition to creating jobs in low-wage countries oversees, has become the preferred method for America's business leaders to cut costs and maximize profits. In fact, one is the flip side of the coin from the other: businesses have been successful at reducing job quality here in the US by threatening to outsource more jobs overseas.

One of the best examples of how whacked out things have got­ten is the large pharmaceutical company Merck. Merck sold its factory in Philadelphia and the new owner fired all 400 Merck employees and rehired them as independent contractors (1099 workers). That company then contracted with Merck make the same antibiotics as before. These perverse incentives are threatening to destroy the middle class by turning tens of millions of workers into little more than day laborers. The sharing economy's app and web-based technologies have made it so much easier to hire and fire 1099 workers, and we are only at the initial stages of their impacts and how it will affect the labor force over the next several decades.

In my book, I have stories about different workers being negatively affected by these trends. For example, Chris Young is an assembly-line worker at Nissan's manufacturing plant in Smyrna, Tennessee. Young does the same jobs as many other Nissan employees, but he doesn't work for Nissan but for a private contractor. Young receives half the salary, less job security, and fewer safety net benefits than the regular Nissan employees. Nationwide, temps like Chris Young have provided nearly a fifth of the job growth since the recession ended, and increasingly, the temps aren't very temporary. Some have been employed at the same company for as long as 11 years, resulting in the term "perma-temps." Microsoft had to pay $97 million to settle a lawsuit for improperly denying benefits to over 8,000 perma-temps.

Fritz Elienberg worked for five years as a full-time employee installing cable and Internet service for RCN Corporation in Boston. Elienberg worked long days - 10 to 14 hours - yet he never received the overtime rate of time-and-a-half. Then, when a ladder fell on his foot and seriously injured it, workers' compensation would not cover his medical bills. Why? Because RCN did not regard him as a regular employee; instead, he was an "independent contractor." Elienberg's injury was not covered by injured workers' compensation because, legally speaking, he worked for himself and not RCN. Elienberg sued RCN for overtime pay and the value of lost benefits, and the company responded by firing Elienberg, adding retaliation to his list of grievances.

Charlie Pye tried to make a go of it utilizing TaskRabbit, Uber and other websites, but found himself running like a hamster on a wheel. "The wages offered look decent at first until you realize that you spend at least half your time commuting [from gig to gig] and/or dealing with flakes, neither of which is paid. Add in the 15 percent self-employment tax, the cut that the sites take [usually 10 - 20 percent of each gig], and it really starts to suck."

Things have gotten so topsy-turvy that even the most talented workers are noticing. Tina Brown, the flamboyant media mogul and former editor of Vanity Fair, The New Yorker and The Daily Beast, wrote at the Daily Beast that she noticed with disbelief the impact on her own associates and friends.

"Now that everyone has a project-to-project freelance career, everyone is a hustler," she says. "No one I know has a job anymore. They've got gigs," which she described as a "penny-ante slog of working three times as hard for the same amount of money (if you're lucky) or a lot less (if you're not). Minus benefits, of course." For a while, she added, "the downsized people I know went around pretending they enjoyed the 'freedom' and 'variety' of doing 'a whole lot of interesting things.' Twelve months later, nobody bothers with that cover story anymore."

More and more of these 1099 workers and part-timers have multiple employers, and their workdays are being segmented into shorter and shorter "micro-gigs."Indeed, in the jobs of the gig economy, working for companies like Uber, Lyft, TaskRabbit, Upwork, Postmates and others, some contractors and freelancers have multiple employers in a single day. Besides that, you don't get paid to look for the next job, or the one after that. These sorts of workers spend a heck of a lot of time searching for employment, always having to hustle, hustle, hustle. And as a 1099 worker, you also are now responsible for paying the employer's half of Social Security and Medicare, in addition to the employee's half, which deducts nearly 8 percent more from your paycheck.

That's not all. It's increasingly clear that this so-called "sharing" economy is unleashing a profound existential crisis in how we define work. In a regular job, a worker gets paid "on the clock" for an agreed-upon number of hours per day or week, like 9 to 5. Rest and bathroom breaks, staff meetings, training, even time at the water cooler, all those are paid time in a regular job. But the gig economy is massively overturning this. Suddenly the "extraneous" parts of a worker's day are being eliminated. "Micro-gigs" reduce workers' labor value to only those exact minutes someone is raking the leaves or designing that logo - engaged in a specific task. It's as if the Golden State Warrior's Steph Curry only got paid when he made a shot, or a chef got paid by the meal. It's piecework, like the type of work that predominated in the late 19th century, with no annual salaries, no payment for research or preparation. You are paid only for your exact productive moments, the rest is on your own time and dime. Many sharing economy gurus speak glowingly of this hyper-efficiency, but we have to ask - efficient for whom? How are we to define efficiency in a modern economy?

As part of this drive for efficiency, the new economy visionaries - who like Dr. Pangloss in Voltaire's Candide always see "the best of all possible worlds" - have a plan in place for us. We might not make much in wages earned from employment anymore, but don't worry, because the new economy gurus tell us we can "monetize our assets" - rent out our house, our car, our labor, our driveway, our spare drill and other personal possessions - using any number of brokerage websites and mobile apps to make extra money. This is the "sharing" economy in all its glory: contracted, freelanced, automated, Uber-ized, "1099-ed."

The next logical step in this race to the bottom is called "monetizing your downtime" via micro-gigs and nano-gigs. These are the smallest of jobs, such as labeling photos on Amazon's service Mechanical Turk for a nickel each. For example, you can describe women's shoes with words like "sandal" and "flats," which aids Internet search engines. Apps and websites like Spare5 allow you to "click and earn" while waiting for a latte at Starbucks or riding the bus home. The rate of pay? About two bucks per hour. But hey, it's just spare time, right? Who needs spare time?

In other words, markets are being created everywhere, and out of everything and everybody, producing  what technology critic Evgeny Morozov calls "psychotic entrepreneurs," always stressed out and groveling for the next gig, with every interaction recorded, ranked, and stored in an ever-shrinking jobs future.

Why do you call Uber a "ticking time bomb"?

In talking about Uber and ridesharing in general, the first thing that has to be acknowledged is that it is offering a service that has turned out to be better for the consumer than traditional taxi companies. The wait time for passengers is shorter, the fares are a bit less, and coverage in under-served neighborhoods (such as minority neighborhoods) in some cities has been more extensive. It turns out there haven't been enough taxis on the road, since the supply has been legally limited by a long-standing medallion system. But the supply of Uber and Lyft cars is not constrained by any law at all; in fact, these companies basically do not follow any livery laws. They are "disruptive" and proud of it.

But beyond better service, there are other aspects of Uber that consumers need to consider, particularly what I call Uber's "parade of horribles." Besides not paying livery taxes and following local laws, Uber has gotten away with using grossly underinsured drivers, faulty background checks (with no fingerprinting, a type of background check that the FBI has estimated has a 43 percent error rate), has made veiled threats to journalist critics, and has used passengers' personal data to track them (tellingly, Uber calls its tracking technology "God View" and "Creepy Stalker View"). Uber has literally gotten away with murder - when one of its drivers hit and killed six year old Sofia Liu as she was traversing a crosswalk in San Francisco, Uber washed its hands of any responsibility or liability. Why? Because the driver was an independent contractor, not an employee. Yet that driver had a reckless driving record in Florida, including being arrested for driving 100 mph into oncoming traffic while trying to pass another car, which Uber's faulty background check failed to uncover.

Uber seemed like a great idea at first, an American fantasy come true: that everyone can have their own low-cost chauffeur. But it comes with a price. The reason its drivers arrive so rapidly is because Uber has flooded the streets with cars. In city after city, whether San Francisco, New York, Seattle, Los Angeles or elsewhere, traffic has become more and more congested. Uber has put thousands of cars on the road - approximately 15,000 in San Francisco, 25,000 in New York City, with several thousand of those driving at any one time - and that has caused traffic to surpass the "congestion tipping point," making intra-city travel increasingly time-consuming and soul-draining. Studies have shown that many people are using Uber instead of public transit, bicycling or walking, so Uber is undermining many cities' carbon emissions goals as well.

On the labor side, these drivers are 1099 contractors, so they have no health care or any safety net protections. Uber drivers have been injured on the job, yet they aren't eligible for injured worker compensation and have to pay their own medical bills. Despite Uber's claims to the contrary, most drivers don't earn any more than taxis after drivers subtract their considerable driving expenses. Many drivers complain they don't even earn minimum wage.

Drivers also can be fired - cut off the app-based platform at any time - for any reason. Recently, Uber cut off hundreds of drivers in LA and San Francisco because those drivers' "acceptance rate" was too low. Many drivers have figured out that, given all of the traffic congestion, they don't make any money on short rides when they are stuck in traffic, so Uber fired all of these drivers without warning. Think about it: if these drivers really are the "CEOs of their own driving business," as Uber claims, shouldn't they be able to refuse a ride that they know will cause them to lose money? This speaks to how much control Uber exerts over its drivers, which appears to support the legal claim by drivers that they are employees, not contractors (this claim is the subject of a class action lawsuit by thousands of Uber drivers, which will go to trial next June). According to Uber's own numbers, half the drivers leave after a year. New drivers like the flexibility, but after a while Uber burns them out with frequent wage cuts and unfair treatment.

Not surprisingly, many Uber drivers have called for forming a union. Federal law doesn't allow workers who are classified as contractors to do that, but recent legislation passed in Seattle will permit NGOs to organize drivers. Uber fought this ferociously, dispatching its heaviest hitter to Seattle - David Plouffe, former campaign manager for President Barack Obama in 2008, who is now Uber's chief PR flak. In what has become a battle for the soul of the Democratic Party in the middle of a presidential election year, we saw a top Democratic leader take an anti-labor stance by opposing the right of these workers to collectively organize and bargain. 

So Uber is bad for the environment, bad on labor issues, and its CEO Travis Kalanick is the latest example of a virulent strain of Silicon Valley capitalism that has been infected by an Ayn Rand libertarianism. If you really must use ridesharing, use Lyft or Sidecar, which don't do business with the same arrogance as Uber.

And how about Airbnb? You've been critical of this service as well, yet so many millennials in particular seem to love it. What do you see as the downsides of the Airbnb model?

Airbnb started out as a good idea: helping "regular people" rent out a spare room in their home to make some extra money during the Great Recession. But at this point, Airbnb has been invaded by professional real-estate operatives who rent out multiple units, not just a spare bedroom. In a lot of cities, many Airbnb "hosts" control dozens of properties. An investigation by New York state attorney general Eric Schneiderman found that nearly 40 percent of Airbnb's revenue - some $168 million - came from hosts who had at least three listings on the site. One of those operators, Robert "Toshi" Chan, was the "host" of more than 200 apartments in dozens of different buildings, known collectively as Hotel Toshi. Airbnb allowed Toshi to flourish. Eventually, Toshi's illegal operation was shut down, and he agreed to pay a $1 million settlement for not obtaining proper hotel permits or insurance.

In San Francisco, various studies have found that 40 percent of revenue comes from Airbnb hosts with multiple listings. Similar results have been found in Los Angeles, Seattle, Portland and elsewhere. Often the professionals use various loopholes to evict longtime tenants from rent-controlled units, and then convert entire buildings into Airbnb tourist hotels, eating up the local housing stock. A leaked memo from Coldwell Banker Commercial that was sent to the real estate community revealed that if a landlord rents units of an apartment building to tourists instead of local residents they can earn over twice the profit - so the outrageous incentives are clear. While Airbnb isn't the only factor causing housing shortages and an affordability crisis, these cities have such a low housing vacancy rate that Airbnb's thousands of listings are devouring many of the few vacancies left. It is the straw that is breaking the camel's back.

The real shame is that Airbnb, which calls itself the "trust and belonging" company, knows all this and could easily clean up its act by:

1. "Evicting the evictors" - de-list from its website anyone operating multiple properties. Airbnb has the data and knows who they are.

2. Cooperate with cities like San Francisco and Portland, which require hosts to register with local agencies, by de-listing any of the thousands of unregistered hosts. Airbnb has refused to do this.

3. Pay the same taxes that hotels pay in all 34,000 cities in which Airbnb operates. Airbnb currently pays taxes in only about a dozen locations.

4. Stop refusing to hand over the data that cities need to enforce regulations and taxation, including the number of rental nights and rates charged by each host.

In short, Airbnb is no longer simply a platform of "regular people" hosts, it has morphed into a giant loophole for professional real-estate operatives. Airbnb is facilitating the snatching of housing from local people, while the professionals are laughing all the way to the bank.  

Can you define "Economic Singularity" and why you believe it is so dangerous?

Tech geeks and futurists like to fantasize about what they call the "Technological Singularity" - a future period predicted to occur around 2045 when the current "artificial intelligence explosion" will result in machines achieving true intelligence, and even surpassing their human inventors as they design ever smarter versions of themselves, causing a runaway effect that radically alters civilization in an event called the "singularity." In Raw Deal, I write about another horizon just as disturbing, what I call the "Economic Singularity" - the tipping point at which the economy implodes because the wealth has been captured by a handful of powerful economic players who extract the best of the nation for their own private use. That will result in too few consumers with enough money to buy up all the products and services produced by US businesses, because the vast majority of people will be left to scramble for the scraps via the "share the crumbs" economy, monetizing your assets (if you have any) and your downtime. Indeed, these two singularities may end up being two facets of the same future, a kind of techno-feudalism that threatens nearly everything good and true about the "American Dream."

The success of the postwar development model among developed nations was predicated upon a virtuous feedback loop, in which rising wages led to increased demand for products and services, which in turn helped drive continuous growth. A rising tide floated all boats. Today, 70 percent of the US economy is still driven by consumer spending. The economy pumps out nearly $17 trillion worth of goods and services, and ultimately all of those products must get purchased by someone. My spending is your income, and vice versa.

In fact, all workers are simultaneously consumers as well as producers - as workers we receive income, and as consumers we spend that income, buying up goods and services from businesses who receive that revenue and pay wages/salaries to its workers (or purchase inputs from other businesses, which then become those businesses' revenue and their workers' income). All in all it's a self-perpetuating cycle, a miracle in a way, but a delicate one that is always in a fragile entropic state of falling out of balance. So if there are not enough consumers to buy what businesses are producing, if demand is too low, the businesses will have to shut down and lay off its workers. If this happens on a vast scale, economic momentum would freeze, like an engine that seizes up without enough oil. The gears would grind to a halt. That's the Economic Singularity.

Getting more specific to today's situation: if both the quantity and quality of jobs for millions of 1099 workers is deteriorating, if millions of middle class workers are forced to turn to TaskRabbit, Upwork, Uber, Airbnb and other "share-the-crumbs" companies, or if we automate/robotize too many jobs, or if we push wages so low that fewer and fewer people have disposable income, then it will become increasingly tough for a modern mass-market economy to flourish. As jobs and incomes are relentlessly whittled away, at some point we will face the prospect of having too few viable consumers with enough purchasing power and demand to continue driving economic growth.

How close are we to this dangerous moment? Most likely it's still a ways away, but the trajectory is clear. And there are degrees of collapse along the singularity spectrum. Already the top 5 percent of households are responsible for around 30 percent of consumer spending, up from 23 percent in 1992. And this shift is accelerating; since 2009, the top 5 percent of income earners saw their household spending climb 12 percent, while spending for all other households fell 1 percent. Over the course of the Great Recession corporate profits climbed by 25-30 percent, while wages as a share of national income fell to their lowest point since World War II. Incomes were flat or falling between 2010 and 2013 for all but the top one-tenth of U.S. income earners. We are living through a time that has seen one of the greatest wealth shifts in U.S. history.

For decades the goal of the US Chamber of Commerce and business leaders has been to break unions and the workforce and bring them to heel, and they have largely succeeded. But that effort ultimately will backfire, resulting in the specter of an Economic Singularity.

What are examples of some solutions that would at least remediate the "shared economy," as outlined in chapters ten and eleven?

Raw Deal has two chapters of solutions. I really believe that with the right laws and regulations, we can make this high-tech economy work for the vast majority of people. Besides what I proposed earlier for Airbnb, here are a few more solutions that I think have promise.

Portable safety net. The most significant of my proposals, which has been endorsed in principle by 40 business, labor and NGO leaders and written about in the New York Times, is a plan for a "portable safety net"which would stay with a worker as she or he moves from job to job. For decades following the New Deal, most workers had a single employer who provided their safety net. But now more and more workers are working for multiple businesses, either as contractors, freelancers, temps or regularly employed part-timers. Our system was never set up to provide a safety net for these sorts of workers.

So what we can do is assign to each worker an Individual Security Account to which every business that hires that worker would pay a small "safety net fee," prorated to the number of hoursthe worker is employed by that business (the amount works out to about $2.50 per hour, beyond the wage, for service sector workers - not a lot of money, and much less than the increase in minimum wage to $15). That "hours bank" system would be used to pay for that worker's safety net, including health care, Social Security, Medicare, unemployment, injured worker compensation and a few days of paid sick leave and vacation.

What this solution does is create "legal parity" between all the different classifications of workers, making sure that all have a minimum safety net, whether a worker is a 1099 contractor or a regular W-2 employee. And it gets rid of the corrosive incentive that so many businesses have to hire 1099 workers or part-timers so that they can save the 30 percent on labor costs. My proposal could be passed at the local or state level, we don't have to wait for a Republican Congress to get its act together. It would do a lot to preserve the quality of life of the middle class, as well as extend to the poor a robust safety net that most have never had.

Job sharing. Sometimes known as "short work," this is a strategy that has been deployed extensively in Germany (where it's called Kurzarbeit), the Netherlands, Sweden and other places. The way it works is that current employees reduce their working hours by 5 to 10 percent so that other employees can be hired. In Germany, they even managed to do this without significantly reducing anyone's pay. Some workers are quite willing, even happy, to cut back their hours for a period of time, as it allows more leisure and family time. If we are going to have a "sharing" economy, then why not share our jobs?

From a macroeconomic standpoint, there is little difference between creating a new job or better sharing existing jobs, as long as aggregate wage levels are not significantly reduced. Job sharing can result in millions of people staying employed during an economic downturn, as it did in Germany following the crash in 2008. Even when the economy is running smoothly, job sharing can result in employment for those that don't have it, as well as greater flexibility for work-family balance for those who do have it. In the US, 28 states have passed laws that allow job sharing, yet they have not deployed it that much.

Especially if it turns out to be true that there is going to be an increase in "technological unemployment" due to more automation and robotization, then it makes sense to better utilize job sharing.

Vocational training and job placement. In a job-constrained future, it becomes all the more important to develop and expand the skills of workers, and target that training to the jobs that are available. Apprenticeships, in which inexperienced workers are paid to learn skills through on-the-job training, have worked extremely well in many advanced economies. Unfortunately, the US has long neglected this strategy, but Germany, Switzerland, Sweden, Finland, Austria and Denmark have ambitious vocational training and job-placement programs which foster a highly trained workforce for the global economy. In Germany, 65 to 70 percent of teenagers enter "dual track" apprenticeship programs, combining on-the-job training with classroom time. These nations have well-funded vocational and educational training for older workers as well. Meanwhile in the US, we have nothing comparable to such a comprehensive system. We spend a lower percentage of our national wealth on job retraining for the unemployed than any of the Western European nations, and our system of vocational training and apprenticeships is fragmentary at best.

In a job-constrained future, effective vocational and job training in the US could make the difference in whether millions of underskilled workers find suitable employment, and whether businesses find the skilled workers they need. It has been especially odd that conservatives and Republicans, who see themselves as pro-business, have not been supporting these efforts. Now is the time to step forward, before the full impact of job losses resulting from automation and job-brokerage websites strikes.

Codetermination and works councils. Germany, Sweden and other European countries have pioneered a limited form of economic democracy by deploying institutions such as codetermination, which gives the workers significant representation on corporate boards of directors, and works councils which provide worker representation at the job site level (in addition to representation by more traditional labor unions). In Germany for example, workers at all major corporations elect up to half of the representatives on the boards of directors, who sit side by side with stockholder representatives. Imagine if Walmart workers got to elect up to 50 percent of Walmart's board of directors - it's unimaginable for Americans, yet many European nations deploy some version of this as standard procedure. That in turn has fostered a "culture of consultation," which has made it possible to deploy other strategies such as job sharing and vocational training (see above), yet maintain the flexibility needed to adapt to the global economy.

Only the "visible hand" of representative government has the constitutionally bestowed power to bring together the different sectors of society, including business leaders, labor leaders, community leaders, neighborhood activists and everyday Americans, and seek consensus on these crucially important matters. Government, with all of its shortcomings and challenges, is still where all Americans meet. Sitting around the Big Roundtable, we must negotiate a new relationship, and a new social contract, between workers and employers, between companies and communities and between fellow Americans.

Copyright, Truthout. May not be reprinted without permission.

Mark Karlin

Mark Karlin is the editor of BuzzFlash at Truthout. He served as editor and publisher of BuzzFlash for 10 years before joining Truthout in 2010. BuzzFlash has won four Project Censored Awards. Karlin writes a commentary five days a week for BuzzFlash, as well as articles (ranging from the failed "war on drugs" to reviews relating to political art) for Truthout. He also interviews authors and filmmakers whose works are featured in Truthout's Progressive Picks of the Week. Before linking with Truthout, Karlin conducted interviews with cultural figures, political progressives and innovative advocates on a weekly basis for 10 years. He authored many columns about the lies propagated to launch the Iraq War.


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