Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers

373 Pages·2015·2.65 MB·English

by  Steven Hill

RAW DEAL HOW THE “UBER
ECONOMY” AND RUNAWAY
CAPITALISM ARE SCREWING
AMERICAN WORKERS STEVEN
HILL
St. Martin’s Press
New York
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Copyright Page
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To Maria Fernandes, former Dunkin’ Donuts worker and now a
star in the sky, showing us what we stand to lose; to my nieces
and nephews, in the hope that the world you inherit will still
provide as good a life as your parents and grandparents knew;
and of course to Lucy, always to Lucy.
INTRODUCTION
EARTHQUAKE IN SAN
FRANCISCO
“How do we eradicate the barriers which separate substantial minorities
of our citizens from access to education and employment on equal terms
with the rest? How, in sum, can we make our free economy work at full
capacity–that is, provide adequate profits for enterprise, adequate wages
for labor, and opportunity for all?”
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—President John F. Kennedy, 1962
I’m sitting in San Francisco, looking out my window into the chilly, grey fingers
of fog threading through the upper red spans of the Golden Gate Bridge. I’m
watching the world change before my eyes. The number of revolutionary
inventions and innovations emanating from the Bay Area is astonishing: Google
eyeglasses that turn your head into a mobile computer and surveillance camera;
self-steering cars that don’t need a driver; search engines that track your personal
interests (whether you want them to or not); robots that use increasingly
sophisticated software and algorithms to take on tasks once considered
exclusively human; stem cell research and regenerative medicine that, like Dr.
Frankenstein, seek to transform living tissue.
Of course, already ubiquitous are the wireless Harry Potter wands that put in
the palm of our hands everything from a communications revolution
(phone/text/email/tweets) to an information revolution (24/7
news/weather/entertainment) to a creativity revolution
(camera/video/audio/apps) to a powerful GPS system that makes it virtually
impossible to get lost. We have unprecedented capacity to record, publish and
mythologize our every waking moment in our bid for our 900 billion
nanoseconds (i.e., 15 minutes) of fame. As we became seduced by the iPhone
and Android’s charms, few of us realized that those same devices would provide
the means for the government, as well as corporations, to spy on us in ways the
Nazi Gestapo or Stalin’s NKVD could never have imagined. And now these
devices have spread outward from the tech nirvana in the Bay Area to every
corner of the world. The genie has been let out of the bottle, with seemingly no
way to stuff it back.
The Bay Area long has been an epicenter of disruption and revolution,
whether the source was the mad gold diggers of ’49, the Beat poets, woman’s
lib, gay marriage, the Black Panthers, antiwar protests, the free-speech
movement, free love, hippie flower power, LSD or psychedelic music. In
trendsetting San Francisco, the future has always been now. But today the
“revolution” is of a decidedly different nature. Brand names like Google, Apple,
Oracle, Facebook and Twitter dominate the accelerating digital arena, their
companies synonymous with business innovation, creativity and commercial
success. Upstart companies are finding ways to load software and algorithms
into just about everything, from automobiles to wristwatches, from drones to
home appliances, from music to movies, from hospitals to the Pentagon, from
agriculture to the assembly line floor. Robots and automation are boosting
productivity to unimaginable levels—and human redundancy along with it, as
the machines threaten to replace the humans.
In short, the science fiction of yesterday is racing up and down Highway 101
between Silicon Valley and the City, like a high-tech steamroller cruising at Indy
500 speeds. The tidal wave of innovation and GDP maximizers sweeping the
country seeks nothing less than to transform the ways we work, communicate,
create, inform, educate, entertain, shop and travel. The sweep of the disrupters is
historic; their ambitions are total. Tech trendsetter and venture capitalist Marc
2
Andreessen says, quite simply, “Software is eating the world.”
Now from the techno-wizards comes the latest groundbreaking trend, which
appears destined to further reshape the ways we work and live. It’s called the
“sharing economy,” sometimes referred to as the “peer-to-peer,” “collaborative-
consumption” or “on-demand” economy. The sharing economy is hot, a darling
of venture capitalist investors as well as the media, which reports in rapturous
tones on its every new development, including astounding company valuations
in the tens of billions of dollars for companies that have yet to make a penny of
profit. Its signature companies like Uber, Airbnb, TaskRabbit, Elance-Upwork,
Lyft, Zaarly, Etsy, Washio, Postmates and dozens more, which have all
incubated in the San Francisco Bay Area, are being hyped as the new avatars of
the way things will be. These Internet-based companies deploy online Web-and
app-based platforms to directly connect buyers and sellers of goods, labor and
services, cutting out any middle person in a way that has never been possible
before. Amazon and eBay pioneered this type of technology initially for selling
books and used stuff; now the sharing economy companies are extending this
powerful capability into the selling of dozens more services, goods and labor.
But its revolution is more than merely commercial—its leading visionaries say
that the sharing economy offers a viable alternative to laboring in the trenches of
Corporate America. Instead of selling your soul to the Man, you will be able to
work for yourself as your own microentrepreneur. With no middle man between
you and your customers, the work will come directly to your computer, via the
Web or via apps on your smartphone—all you have to do is wait and check your
app feed for the next paying gig. You will no longer be a lowly grunt, climbing
the ladder to enrich someone else—you will run your own microbusiness, able to
work when you want, doing what you want. This is why it’s also called the DIY
(do-it-yourself) economy, replacing the old postindustrial economy by
“liberating workers” to become “independent” and “work for ourselves,” with
promises that each of us can become the “CEOs of our own freelancing
business.”
Yes, according to the techno-visionaries, there’s gold in them thar hills. Brian
Chesky, a former bodybuilder who is Airbnb’s young 34-year-old billionaire
cofounder and CEO, likes to cast his company as saving the world. “I think
3
we’re in the midst of a revolution,” he told a conference in San Francisco.
Travis Kalanick, CEO and founder of the ridesharing company Uber, also
known for his rhetorical boldness, has boasted that his company will “make car
4
ownership a thing of the past.” Not to be outdone, Leah Busque, founder and
CEO of TaskRabbit, trumpets that all she wants to do is, well, “revolutionize
5
how people work.” And media outlets like The Economist, Forbes, Fast
6
Company, TechCrunch and Wired beat the drum for the changing of the guard.
Sitting here in San Francisco, I have a front-row seat at the epicenter of this
latest earthquake. But as the future that the tech geniuses have planned for us
comes slowly into view, it looks increasingly alarming. It’s not just the many
people evicted, including elderly and disabled tenants, to clear entire apartment
buildings to make rooms available for tourists via Airbnb, even as Airbnb has
disputed its obligation to pay local hotel taxes; or the desperate workers
scrambling like low-rent braceros—“arms for hire”—on jobs found via
TaskRabbit, Elance-Upwork, CrowdFlower and other job brokerage websites,
sometimes for less than minimum wage (according to some workers); or the
middle-and low-income households being forced to leave the Bay Area in a tech-
driven “Trail of Tears” because they no longer can afford the escalating costs; or
that Uber, which is valued at $51 billion—larger than Delta or United Airlines,
and approaching General Motors and Ford—has incorporated more than 30
different foreign subsidiaries, many of them no more than mailboxes in the
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Caribbean, as low-tax havens to greatly reduce its U.S. tax obligations.
No, the impact of the sharing economy goes way beyond that. The new
economy visionaries—a new genus that I have taken to calling the techno
sapiens—have conceived of nothing less than a wholesale redesign of the U.S.
workforce, the quality of employment and the ways we live and work.
Of course, they will admit when pressed, there will be short-term disruption
and dislocation. Schumpeterian “creative destruction” is their quasi-religious
creed, and already the new economy has overturned numerous housing, labor,
transportation and other laws and regulations in the San Francisco Bay Area,
New York City, Los Angeles and virtually everywhere else its tornado has set
down. As it spreads from the “left coast” across America, from blue to red
country, it is becoming increasingly clear that it offers to most Americans a raw
deal to replace the New Deal that created the middle class and made the United
States not only the envy of the world but the most powerful nation in the post–
World War II era. Much is at stake in the navigation of these turbulent forces
and trends.
In this book, I will challenge conventional thinking that is celebrating this new
economy by showing why the vision that the techno sapiens have planned for us
is a dead end for U.S. workers, as well as for the national economy. This book
will provide an exposé showing that the so-called sharing economy is just the tip
of an iceberg, looming ever closer; the iceberg itself is what I call the “freelance
society,” with the sharing economy increasingly central to this brave new world.
THE CREEPING ONSET OF THE FREELANCE SOCIETY IN THE
AFTERMATH OF THE GREAT RECESSION OF 2008, BOTH THE
RIGHT AND THE LEFT AGREE AT LEAST ON ONE THING: THE
AMERICAN WORKFORCE HAS BECOME MORE VULNERABLE.
WAGES ARE LOWER, WORKERS HAVE LESS SECURITY AND THE
SAFETY NET IS DISAPPEARING. ALARMINGLY, INCOME
8
INEQUALITY IS NOW AS BAD AS IT WAS IN 1928, JUST BEFORE
THE GREAT DEPRESSION, WITH THE TOP ONE-TENTH OF 1
9
PERCENT OF AMERICANS—A MERE 160,000 FAMILIES —NOW
OWNING NEARLY A QUARTER OF THE NATION’S WEALTH, A