Is the Gig Economy Working?—For Some, But Not For Most Workers

From this month’s The New Yorker magazine by Nathan Heller:

The American workplace is both a seat of national identity and a site of chronic upheaval and shame. The industry that drove America’s rise in the nineteenth century was often inhumane. The twentieth-century corrective—a corporate workplace of rules, hierarchies, collective bargaining, triplicate forms—brought its own unfairnesses. Gigging reflects the endlessly personalizable values of our own era, but its social effects, untried by time, remain uncertain.

Support for the new work model has come together swiftly, though, in surprising quarters. On the second day of the most recent Democratic National Convention, in July, members of a four-person panel suggested that gigging life was not only sustainable but the embodiment of today’s progressive values. “It’s all about democratizing capitalism,” Chris Lehane, a strategist in the Clinton Administration and now Airbnb’s head of global policy and public affairs, said during the proceedings, in Philadelphia. David Plouffe, who had managed Barack Obama’s 2008 campaign before he joined Uber, explained, “Politically, you’re seeing a large contingent of the Obama coalition demanding the sharing economy.” Instead of being pawns in the games of industry, the panelists thought, working Americans could thrive by hiring out skills as they wanted, and putting money in the pockets of peers who had done the same. The power to control one’s working life would return, grassroots style, to the people.

The basis for such confidence was largely demographic. Though statistics about gigging work are few, and general at best, a Pew study last year found that seventy-two per cent of American adults had used one of eleven sharing or on-demand services, and that a third of people under forty-five had used four or more. “To ‘speak millennial,’ you ought to be talking about the sharing economy, because it is core and central to their economic future,” Lehane declared, and many of his political kin have agreed. No other commercial field has lately drawn as deeply from the Democratic brain trust. Yet what does democratized capitalism actually promise a politically unsettled generation? Who are its beneficiaries? At a moment when the nation’s electoral future seems tied to the fate of its jobs, much more than next month’s paycheck depends on the answers.

Read the entire article here.

What the Poverty Rate Tells Us About the Overall Economy

From yesterday’s NYT “The UpShot” Blog by Jared Bernstein:

On Tuesday, the Census Bureau will tell us whether the share of population that’s officially in poverty went up, down or stayed the same in 2013. There’s tons of other data in the release, like the change in the real income for the median household and information on health insurance coverage.

Because the data is a year old, financial markets ignore it. But political markets pay a lot of attention, as do policy analysts and advocates who work on poverty and middle-class economics. And, of course, these being the early days of the Affordable Care Act, the health coverage data will doubtless also get a close look. My own interest is that of the policy wonk who focuses on the nexus between the overall, or macro, economy and living standards of middle- and low-income families.

It’s an important set of numbers. Although one must always be careful not to read too much into one year’s data, 2013 represents the fourth full year of an economic recovery that officially began in the second half of 2009. Yet this recovery has been uniquely unforthcoming for the poor, the unemployed and even many people in the middle class.

Poverty, as officially measured, has held steady at about 15 percent of the population since 2010, and unfortunately, I expect it to do so again this year. I expect the real median household income to do a little better, up by maybe 1 percent.

Why, if I’m right, should the poor and middle class have gained so little by Year 4 of the recovery? That relates to the answer I tend to give when someone asks me how the economy is doing: Whose economy are you talking about?

Yes, various indicators improved in 2013. Real G.D.P. was up, but no faster than the year before (a bit above 2 percent); same with payrolls. And while the unemployment rate fell seven-tenths of a percentage point in 2013, from 8.1 percent to 7.4 percent, more than half of that was from people dropping out of the labor force. That’s not exactly a sign of strength. In fact, the share of the working-age population with a job barely budged last year.

The real wages of low-wage workers were generally as torpid in 2013. For example, if we look at the hourly wage of those in the bottom third of the pay scale, it averaged a bit above $10 per hour over both 2012 and 2013. However, a stagnant low wage is actually an improvement, because real low wages fell sharply earlier in the recovery. And the real median hourly wage went up 1 percent last year, providing a slight bump to the middle class.

Government policy didn’t help much in 2013, though the official poverty rate captures only some of the antipoverty spending by federal and state governments. For example, unemployment insurance benefits are counted, but the value of nutritional support or the earned- income tax credit (a wage subsidy for low-wage earners) is not.

Fiscal drag — fiscal policy that slows economic growth — was actually a big negative last year, taking 1.5 percentage points off economic growth by most estimates. The relevant parts of that policy for low- and middle-income households would include the ending of a tax break for wage earners (the payroll tax holiday) and less in unemployment insurance benefits.

I used statistical models that forecast the 2013 poverty rate based on the movements of the variables discussed above. Because it’s hard to make a case that the rising tide lifted too many rowboats last year, the models I run predict no statistically significant change in the poverty rate. (The rate could tick down a tenth or two, but that would be statistically indistinguishable from no change at all).

That said, there’s some chance the poverty rate will come down more than I expect. First, there’s just the momentum of a cyclical variable: Eventually the recovery sprinkles at least some of its benefits on low-income households and poverty falls a bit.

Also, there were some changes in the composition of the population last year relative to earlier years that could push the rate down. There was slower growth in immigration and a smaller share of the population in mother-only households (both groups have higher-than-average poverty rates).

Finally, inflation was low in 2013, only 1.5 percent, and that means a smaller nominal gain in income becomes a larger real gain. That’s one reason I predict that nominal median household income grew a bit faster than 2 percent last year. So it is possible they eked out a small real gain thanks in part to such minimal price growth. I expect real growth in the median household income in the 0.5 to 1 percent range.

It’s important to put these results in historical context. I expect poverty to still be 2.4 percentage points above its rate of 12.5 percent in 2007; that’s an additional 7.5 million poor. And even if I’m right about the bump in the real median income, it will still be 7.6 percent below the 2007 level, representing a loss of over $4,000.

In other words, if I’m in the ballpark, Tuesday’s release will be another reminder of why many Americans still feel pretty gloomy about the recovery: It hasn’t much reached them.

Summer Job Isn’t What It Used to Be

From NYT “OpTalk” Blog, September 9, 2014 by Anna Altman:

Once upon a time, hard-working high school students who took a summer job or worked part-time during the school year got an edge over their unemployed peers. Not only did they earn some pocket money — which many students saved for college — but they were also likely to see increased earning potential long after they graduated.

Not only that, teenagers would prove their work ethic, make professional connections, increase their self-confidence and become more likely to graduate from high school in the first place.

But according to a recent article by Jessica Leber in Fast Company magazine, a summer paycheck no longer comes with many of these advantages. Ms. Leber cites a study published last month by Charles L. Baum and Christopher J. Ruhm for the National Bureau of Economic Research. The study looked at two groups, one of high school students in 1979 and another of students in 1997. It shows that, today, high school seniors who also work 20 hours a week are less likely to have increased earning potential later on than they might have been in 1979.

In concrete terms, the 1979 group was likely to see an 8.3 percent increase in wage-earning capacity, compared with a 4.4 percent increase for the 1997 cohort.

Furthermore, the earlier group was more likely to move into better-paying fields. “Senior year employment was predicted to decrease the probability of subsequently working in the relatively low-paid service sector for the 1979 cohort but to increase it for the 1997 cohort,” Mr. Baum and Mr. Ruhm write. For the latter group, the increase in the likelihood of low-paid service work offset “a portion of the benefit of the early work that otherwise would have occurred.”

Overall, Mr. Baum and Mr. Ruhm’s study concludes that working as a student isn’t what it once was: “Work experience during the high school senior year continues to predict positive effects on labor market outcomes 5-11 years after the expected date of high school graduation, but these beneficial consequences have attenuated fairly dramatically over time.”

That students who work during high school may be at a disadvantage for later earnings seems to confirm the degree to which the economy is proceeding on two tracks: one for low-wage earners, and another for students who are in a financial position to pursue internships or other opportunities that lead to connections.

Wages for Housework?

From today’s NYT “Room For Debate” Blog:

Housework is a necessary labor for families, but it is largely unpaid, except when others are hired to do it. Families may pay others to cook, clean or take care of their children, but they don’t pay themselves. This year, Italyconsidered a proposal in which the government, or in some cases the husband or partner, would pay wives for this thankless task. And a few years ago, India considered a similar bill.

Should the family member who does most of the housekeeping be compensated?

Read different perspectives on this provocative question here.

Fast-food protests: Dozens of workers are arrested in strike for higher pay

From LA Times September 4 by Shal Li, Tina Susman, and Tony Perry.

Dozens of fast-food workers from Los Angeles to Manhattan were arrested as they escalated a fight for better pay Thursday with strikes, rallies and acts of civil disobedience.

Police took 10 people into custody after the protesters linked arms and sat down in front of a McDonald’s in downtown Los Angeles. The sit-in capped a midday march through the urban core by hundreds of workers and their supporters.

In San Diego, 11 marchers were arrested for blocking an intersection in the blue-collar neighborhood of City Heights. They were cited for unlawful assembly and released.

Ralllies and sit-ins occurred outside McDonald’s restaurants across the country, including Rockford, Ill.; Hartford, Conn.; Boston; Philadelphia; Atlanta; and Miami. Elsewhere, 19 fast-food workers were arrested in New York; 42 in Detroit; 23 in Chicago; 11 in Little Rock, Ark.; and 10 in Las Vegas.

In downtown Los Angeles, protesters seeking wages of $15 an hour staged a lunchtime march before converging in front of a McDonald’s on Broadway. To the sounds of a beating drum, they cycled through chants such as “We want 15 and a union!” and “Si se puede!”

After police warned the crowd to stop blocking traffic lanes, nine fast food workers and a minister remained seated. They were arrested and led away, their hands bound with plastic zip-ties behind their backs.

It was just one of several demonstrations that were planned in the Southland.

Before dawn, more than 100 workers converged on a McDonald’s in L.A.’s Exposition Park to join the nationwide protests. They went inside the store for 10 minutes as workers stood stone-faced behind the cash registers.

The protesters held up signs and chanted slogans like “Get up! Get down! Fast-food workers run this town!” near a scrum of media trucks outside the McDonald’s.

Fanny Velazquez, 36, said she was participating in the protest to fight for better wages to support her family. A single mother with three children, ages 11, 14 and 16, she said she struggles to make her $9.34-an-hour pay cover all the bills.

The South Los Angeles resident has been working at McDonald’s for eight years doing a variety of jobs, usually working 20 hours a week, she said. But lately, Velazquez said, the company has often cut her hours to 15 a week. She also qualifies for welfare and food assistance.

“It’s difficult, it’s not enough to pay my bills,” she said.

A series of protests funded in part by the Service Employees International Union and local activist groups have sought to spotlight the plight of low-wage workers and push for higher pay by staging protests and walkouts in more than 100 cities in the one-day demonstration.

Read the entire article here.

Some Retail Workers Find Better Deals With Unions

From NYT September 7 by Rachel Swarns:

By now, the hardships endured by retail workers at clothing stores across New York City are achingly familiar: the frantic scramble to get assigned enough hours to earn a living on painfully low wages; the ever-changing, on-call schedules that upend child care arrangements, college schedules and desperate efforts to find second jobs.

Workers and government officials around the country are increasingly pushing for change. But for an example of more humane workplaces, there is no need to jet to Sweden or Denmark or Mars. We need look no farther than Midtown Manhattan, no farther than Herald Square.

Ladies and gentlemen, step right onto the escalators and glide on up to the sixth floor. Allow me to introduce you to Debra Ryan, a sales associate in the Macy’s bedding department.

For more than two decades, Ms. Ryan has guided shoppers in the hunt for bedroom décor, helping them choose between medium-weight and lightweight comforters, goose-down and synthetic pillows, and sheets and blankets in a kaleidoscope of colors.

But here is what’s truly remarkable, given the current environment in retail: Ms. Ryan knows her schedule three weeks in advance. She works full time and her hours are guaranteed. She has never been sent home without pay because the weather was bad or too few customers showed up for a Labor Day sale on 300-thread-count sheets.

This is no fantasy. This is real life, in the heart of New York.

“I’m able to pay my rent, thank God, and go on vacation, at least once a year,” Ms. Ryan said. “There’s a sense of security.”

So what makes this Macy’s store so different? Its employees are represented by a union, which has insisted on stability in scheduling for its members. (Union workers enjoy similar scheduling arrangements at the Bloomingdale’s, H&M and Modell’s Sporting Goods stores in Manhattan.)

Now, I know the term “union” is a dirty word in some circles, even in this city, where labor still has considerable clout and has catapulted many workers into the middle class. But no one can deny that these union workers savor something that is all too rare in the retail industry right now: guaranteed minimum hours — for part-time and full-time employees — and predictable schedules.

This is no accident.

Read the entire article here.

Fast-Food Workers Seeking $15 Wage Planning Civil Disobedience

From NYT September 1 by Steven Greenhouse:

The next round of strikes by fast-food workers demanding higher wages is scheduled for Thursday, and this time labor organizers plan to increase the pressure by staging widespread civil disobedience and having thousands of home-care workers join the protests.

The organizers say fast-food workers — who are seeking a $15 hourly wage — will go on strike at restaurants in more than 100 cities and engage in sit-ins in more than a dozen cities.

But by having home-care workers join, workers and union leaders hope to expand their campaign into a broader movement.

“On Thursday, we are prepared to take arrests to show our commitment to the growing fight for $15,” said Terrence Wise, a Burger King employee in Kansas City, Mo., and a member of the fast-food workers’ national organizing committee. At a convention that was held outside Chicago in July, 1,300 fast-food workers unanimously approved a resolution calling for civil disobedience as a way to step up pressure on the fast-food chains.

“They’re going to use nonviolent civil disobedience as a way to call attention to what they’re facing,” said Mary Kay Henry, president of the Service Employees International Union, which has spent millions of dollars helping to underwrite the campaign. “They’re invoking civil rights history to make the case that these jobs ought to be paid $15 and the companies ought to recognize a union.”

President Obama, in a Labor Day speech in Milwaukee, mentioned the fast-food campaign, saying, “All across the country right now there’s a national movement going on made up of fast-food workers organizing to lift wages so they can provide for their families with pride and dignity.”

Mr. Obama added that if he had a service-sector job, and “wanted an honest day’s pay for an honest day’s work, I’d join a union.”

Fast-food chains and many franchise operators have said that $15 an hour was unrealistic and would wipe out profit margins at many restaurants. Some business groups have attacked the campaign as an attempt by a fading union movement to rally a new group of workers.

Some franchise operators have dismissed the walkout, saying that in previous one-day strikes, only a handful of employees at their restaurants walked out, barely disrupting business. But organizers say that workers walked out at restaurants in 150 cities nationwide during the last one-day strike in May, closing several of them for part of the day, with solidarity protests held in 30 countries.

The S.E.I.U., which represents hundreds of thousands of health care workers and janitors, is encouraging home-care aides to march alongside the fast-food strikers. The union hopes that if thousands of the nation’s approximately two million home-care aides join in it would put more pressure on cities and states to raise their minimum wage.

“They want to join,” Ms. Henry said. “They think their jobs should be valued at $15.”

S.E.I.U. officials are encouraging home-care aides to join protests in six cities — Atlanta, Boston, Chicago, Cleveland, Detroit and Seattle. Union leaders say the hope is to expand to more cities in future strikes.

Jasmine Almodovar, who earns $9.50 an hour as a home-care aide in Cleveland, said the $350 she took home weekly was barely enough to support herself and her 11-year-old daughter. “I work very hard — I’m underpaid,” she said. “We deserve a good life, too. We want to provide a nice future to our kids, but how can you provide a good life, how can you plan for the future, when you’re scraping by day to day?”

Within the S.E.I.U., there has been some grumbling about why has the union spent millions of dollars to back the fast-food workers when they are not in the industries that the union has traditionally represented.

But Ms. Henry defended the strategy, saying that underwriting the fast-food push has helped persuade many people that $15 is a credible wage floor for many workers. She said it prompted Seattle to adopt a $15 minimum wage and that San Francisco was considering a similar move. She also said the campaign helped persuade the Los Angeles school district to sign a contract for 20,000 cafeteria workers, custodians and other service workers that will raise their pay, now often $8 or $9 an hour, to $15 by 2016.

“This movement has made the impossible seem more possible in people’s minds,” Ms. Henry said. “The home-care workers’ joining will have a huge lift inside our union.”

The Changing Face of Temporary Employment

From NYT  “TheUpshot” Blog August 31 by Steven Greenhouse:

Temps aren’t just employees who sort mail and answer the boss’s phone.

The work of temping has changed vastly — today 42 percent of temporary workers labor in light industry or warehouses. And there are more of them. The number of workers employed through temp agencies has climbed to a new high — 2.87 million, according to the Bureau of Labor Statistics, and they represent a record share of the nation’s work force, 2 percent.

Labor groups fret that the trend signals the decline of full-time and permanent jobs with good benefits. But what is happening with temp employment is no sharp break with the past.

Temp employment has traditionally followed the business cycle, though in an exaggerated way. Temps are disproportionately thrown out of work when there is a slowdown, but when the economy starts to pick up — with businesses still wary of committing to making permanent hires — they disproportionately hire temps.

More than five years into a recovery marked by halting growth, many businesses are still adding temp jobs rather than permanent ones. “This is a reflection of business uncertainty, that businesses need to be more responsive, and part of that is keeping their work force flexible,” said Steven Berchem, the chief operating officer of the American Staffing Association.

Read the entire article here.

When Tech Makes Work Worse

From yesterday’s NYT “Op-Talk” Blog by Anna North:

When we talk about robots taking people’s jobs, we often mean it almost literally — we envision if not the humanoid androids of science fiction, then at least machines programmed to do tasks once done by humans. But technology may also be altering Americans’ working lives in another way, via the software and hardware that companies use to determine when and how they work.

Read the entire article here.

New Rules for Part-Time Work?

From the July 23, 2014 NYT “Room for Debate”:

Part-time jobs often come with fluctuating, on-call schedules and – because of the uncertain hours – inconsistent pay. This can make it hard for workers to schedule weekly routines, childcare or other means of employment for themselves.

Legislation in the House, proposed this week, would ensure employees get two weeks notice about their work schedules, as well as extra pay to compensate for last minute changes.

Should there be a law limiting unpredictable schedules for hourly and part-time workers?

Read the different perspectives of this debate here.