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Author Says The Rise Of The `Gig Economy' Leaves Workers Without A Safety Net

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Elaine Thompson
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AP Photo
In this March 14, 2014 file photo, Jerad Bernard hands out cards to passersby offering one free ride through the Lyft ridesharing service in Seattle.

The ride-app company Uber says it now has 10,000 active drivers in the Seattle region. It’s an example of what’s come to be called the “gig economy,” in which people use apps such as Uber or Airbnb to make some extra dough.

But author Steven Hill says these workers who are classified by the companies as independent contractors are being left behind because they lack benefits and the safety net of traditional employment. Workers such as these are sometimes called “1099 workers” because of the tax form they file instead of the regular W-2 form that employees use.

Hill, author of "Raw Deal: How The `Uber Economy’ And Runaway Capitalism Are Screwing American Workers", will speak at Town Hall Seattle Monday night at 7:30 pm.

Hill has first-hand experience with the gig economy. He was working for a think tank in Washington, D.C., when the program he was running lost the bulk of its funding and was shut down. At first, he said it didn’t seem like such a big deal because he was busy promoting a new book and had a lot of writing assignments.

“Slowly, it started dawning on me that, `Wow, I’ve stepped off the safe lifeboat of having a good, paid, steady-employed job into being a freelancer; where suddenly as a freelancer, you have to look always for your next job,” Hill said.

The Gig Economy

Not just that. Hill discovered he had to pay both the employer and employee portions of Medicare and Social Security for himself, which amounted to an almost eight percent extra deduction from his income.

“I no longer had paid vacations, sick days, holidays, nor could I benefit from unemployment or injured workers compensation,” Hill wrote in his book. “Instead of receiving a paycheck from a single employer, now I had to track my many and varied sources of income, making sure that unscrupulous editors didn’t stiff me.”

And Hill witnessed the transformation from employee to independent contractor among his friends and acquaintances, as well. One of them, a prize-winning photographer for the San Francisco Chronicle, got laid off and then decided to “monetize his assets” by renting out his Marin County home on Airbnb and picking up passengers in his Prius using the Lyft app.

“You think, `Well, it’s good he had access to some money,’ but here’s the thing – this professional, award-winning photographer, suddenly he’s an innkeeper in his own home in which 40 percent of the month, he’s got to shutter himself into a little rabbit hole in his house while complete strangers have the run of his house,” Hill said. “So there are some real downsides to this gig economy and monetizing your assets in this way.”

`Race To The Bottom'

Hill said it’s even more difficult for people who don’t have a nice house to rent out or a new Prius to use to pick up passengers. Many of them compete on web sites such as Upwork and TaskRabbit for gig work such as designing a logo or writing a computer program, sometimes vying with people from developing countries where the standard of living is much lower.

“You can see worker after worker bidding lower and lower and lower and it just becomes a race to the bottom,” Hill said.

Solutions?

One thing that could help ameliorate these effects of companies’ rising reliance on temporary or contract workers is the creation of individual security accounts, Hill said. He’s proposed that companies pay an additional $2 or $2.50 more an hour for workers, whether or not they’re regular employees or in some kind of contract position without benefits, to go toward Medicare, Social Security, workers compensation, health insurance and paid time off.

“That money would be used for that worker to purchase his or her safety net,” Hill said. “This would allow the employers and the employee relationship to be much better than it is now when so many businesses are hiring these 1099 workers and treating them like they’re disposable who can be let go at a moment’s notice.”