The Gig Economy Will Destroy What’s Remaining of the Working Class
82% of Americans think the minimum wage should be raised, yet an overlooked and growing portion of the population doesn’t even make $7.25 an hour.
Happy Friday morning everyone! If you’re a regular reader of my newsletter you’ve probably noticed I haven’t sent one out in a while, and I apologize for that. I took some time off to study for a professional exam, and my plan was to resume writing after my exam. During my break from writing, I noticed that I actually enjoyed not having to write a newsletter twice a week. This is not to say that I no longer enjoy writing, but I realized I prefer writing on my own schedule.
Going forward, I will send out a newsletter whenever I feel like writing and have something to write about. Books, poems, articles, whatever I write, I’ll probably send it out, with a regrettably irregular frequency.
I would have written sooner, but I didn’t want to come empty-handed. Thanks for reading, and I hope you like today’s newsletter!
Back in 1978, Congress forever changed the United States by making a small addition to the Internal Revenue Code, section 401(k), that allowed employees to avoid being taxed on deferred compensation. That same year, traditional pension plans outnumbered defined contribution plans nearly 2:1 for plans with 100 or more participants. Fast forward to 2017, the last year data is available, and pensions are exceptionally rare; there are now over 10 times more defined contribution plans than there are traditional pension plans.
With the shift away from traditional pensions to 401(k) plans, the burden of saving for retirement also shifted - from employer to employee. Providing a secure retirement for employees who give their working lives to a company is a noble goal, but not a profitable one. Traditional pensions, now viewed as liabilities, were quickly replaced by defined contribution plans. The result of this change couldn’t be clearer; profits for large companies have never been higher and retirees have never been poorer. Nearly 75% of workers plan to work past traditional retirement age, and 40% of the middle class is at risk of living in poverty in retirement.
After shifting the burden of saving for retirement to their employees, companies are now completely satisfied with their profit margins and nothing much has changed since. Just kidding.
Large companies are always looking to make more money, and the single biggest expense on the balance sheet is labor, or employees. We are in the middle of another huge change for workers across the country, and like the shift away from pensions, this change will hurt low-income workers and what’s remaining of the middle class immensely.
In 2017, there were 55 million “gig workers” in the United States, a number projected to have increased to 70 million by this year (and that was before the pandemic; now, millions of previously fully-employed workers are scrambling to find work in a very competitive gig economy). At best, gig work provides an unpredictable stream of income with no employee benefits, which means no health insurance and no retirement plan. At its worst, gig employees receive wages comparable to some of the poorest countries in the world, if they receive a wage at all.
When you hear “gig work,” you probably think of companies like Uber or DoorDash, and you wouldn’t be wrong for doing so. These big companies have long drawn the ire of regulatory bodies for their treatment and classification of their...underlings? Colleagues? Associates? Whatever they are, gig companies want to make sure they aren’t classified as employees, even though they most definitely are.
ProPublica recently investigated a lesser-known gig employer, and one that may actually be far more dangerous and damaging than Uber. You’ve probably never heard of Arise Virtual Solutions unless you or a friend or family member has been unfortunate enough to call yourself an Arise “service partner.” (One of my favorite things about the gig economy is how every blood-sucking, good-for-nothing, human-rights-violating company seems to come up with a different name for “employees” to avoid paying them what is already a starvation wage.)
Arise works with giant corporations across the country to handle customer service calls. These companies include Airbnb, Comcast, Instacart, Disney, Amazon, Apple, AT&T, Barnes & Noble, eBay, Intuit, Home Depot, Staples, Princess Cruises, Peloton, Signet Jewelers, Virgin Atlantic, and Walgreens. A real who’s who of rugged American capitalism. If you live in the United States and own a telephone, chances are you’ve spoken to an Arise whatever-the-hell-they’re-called-but-definitely-not-an-employee on more than one occasion.
Arise’s business has been absolutely booming since the start of the pandemic. Vulnerable workers who lost their jobs or simply wanted to work from home so they wouldn’t contract a deadly virus and cease to exist have turned to companies like Arise to provide what is best described as an exploitative labor opportunity. Arise CEO Scott Etheridge said in a webinar this spring that the company is “changing the way the world works,” and he couldn’t be more right.
Arise realized that companies tend to pay for more than just labor when they hire employees. Add-ons like training, equipment, lunches, breaks, and basic human dignity can be expensive. Arise forces their “service partners”/employees to pay for everything out-of-pocket. And when I say “everything,” I do mean everything.
One of these service partners spent $1,500 on home office equipment, including headsets and a dedicated phone line, a background check (yes, these definitely-not-employees have to pay for their own background checks), introductory training, a certification course to provide customer service for AT&T (which she did for 44 unpaid days; her labor is not included in the $1,500), and an additional 10 days of unpaid training after that.
This poor woman (Arise loves to brag that the majority of humans they exploit are women (89% of their workforce) and people of color (64%)) spent $1,500 of her own money and months of her own time in hopes that she would one day receive income in return. A reasonable assumption, right? After three weeks of answering telephone calls for AT&T, the only work for which their service partners actually receive pay, she received a single paycheck for $96.12. Service partners like her might be working and available for calls 10 hours per day, but are only paid for time actually spent on the phone talking to customers. Other tasks of the job, like waiting for tech support, meeting with supervisors, or researching issues, goes unpaid.
Arise forces their employees to meet harsh performance measures, work a certain number of weekends and holidays, and submit to drug testing “at any time.” As you might guess, pay is often well below minimum wage. Since Arise’s service partners aren’t employees in the eyes of the law, all of this is completely legal (for the most part). If one of their service partners is struggling to meet performance measures, they can be “deskilled,” another word for fired.
I worked in a call center for over three years and it was the most stressful and hardest work I’ve ever done, and I was an employee paid an hourly wage. I can’t imagine doing similar work for pennies on the dollar. Customer service agents deal with verbal abuse and sexual harassment regularly, if not daily. Nobody ever calls AT&T or Comcast to talk about how their day’s been going; these underpaid (if they are even paid at all) workers deal with the anger and frustration of unhappy customers nearly every minute they’re on the phone.
In a few years, the majority of American workers may be participating in the gig economy (as of 2020, a projected 43% of the U.S. workforce participates). Most participate in more than one gig or have other jobs, not because they want to, but out of necessity. In an informal survey of gig workers, none of the respondents said their gig paid a livable wage.
I don’t want to live in a country where most people aren’t paid a living wage while others make billions of dollars in a single day. I don’t want to be part of an economic system that aims to squeeze every last drop of productivity and monetary value out of its workers.
Since section 401(k) was introduced in 1978, millions of workers have retired in poverty because their company either failed to provide adequate retirement benefits or failed to pay employees sufficient wages that would make saving for retirement possible. Today, millions more are working as hard and as often as they can and are still living in poverty with no hopes of ever retiring. Receiving minimum wage, a meager $7.25 an hour, would be an improvement for many workers in this country.
The working class can only be pushed so far, but corporations can never make enough money. This conflict will continue to intensify until real, structural changes are made. As the most important election of this generation approaches, it appears that the Democratic Party could win the White House, Senate, and House of Representatives. As the last four years have taught us, nothing is certain; however, if the party that calls itself the party of women, of persons of color, of the poor, is in power come January, they must do everything they can to make changes that benefit working class Americans.