new serfs
servant economy

Meet The New Serfs, Same As The Old Serfs

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Once upon a time there were things called jobs, and they were well understood. People went to work for companies, in offices or in factories. There were exceptions — artists, aristocrats, entrepreneurs — but they were rare.

Laws, regulations, and statistics were based on this assumption; but, increasingly, what people do today doesn’t fit neatly into that anachronistic 1950s rubric. I’ve had the pleasure of trying to explain to border officials that my “job” consisted of contracting in Country A for a client in Country B, while also writing books and selling apps. I don’t recommend it.

This disconnect will just keep getting worse. The so-called “sharing economy” mediated by sites and apps like Lyft, TaskRabbit, Thumbtack, Postmates, Mechanical Turk, etc etc etc., replaces “consistent work for a single employer” with “an agglomeration of short-term/one-time gigs.” That doesn’t really map to the old-economy assumptions at all. And even relatively high-skill professions are now being nibbled at by shared-economy software; consider Disrupt winner YourMechanic.

I say “so-called” because, let’s face it, “sharing economy” is mostly spin. It mostly consists of people who have excess disposable income hiring those who do not; it’s pretty rare to vacillate across that divide. Far more accurate to call it the “servant economy.” (Not to be confused with the “patronage economy” — Kickstarter, Indiegogo — which deserves its own post.)

It’s not surprising that relatively-wealthy techies like me have created apps and services which make relatively-wealthy techies’ lives a little better, instead of solving the real and hard problems faced by poor people. But it is a little surprising that these apps effectively echo what’s happening on a massive scale in the corporate world.

Did you know that “the hiring rate of temp workers is five times that of hiring overall in the past year” and “The number of temps has jumped more than 50 percent since the recession ended”? Meanwhile, in the UK, “The median hourly earnings for the self-employed are £5.58, less than half the £11.21 earned by employees.”

The Harvard Business Review points out:

This “ephemeral workforce” phenomenon isn’t just American; the UK has also set records in the contingently employed. Something profoundly structural is going on. Even healthier economic growth won’t make it go away.

We already know how software will eat manufacturing (robots and 3D printing) and transportation (self-driving vehicles.) This new servant economy shows us how software will eat much of the service sector; by turning many of its existing full-time jobs into a disconnected cloud of temporary gigs.

In many ways this is inarguably a good thing. I may not think much of Uber’s CEO’s politics but I think even less of the insane medallion system that rules taxi industries across America for no good reason. (Anyone who believes taxi companies’ claims that they’re safer probably also believes the TSA’s claims that security theater keeps you safe.) I applaud the leveling of that demented regulatory wall.

What’s more, when the New Temps no longer require companies like Manpower to connect them to their actual employers, but can pick and choose on the fly among competing third parties, that too will be a huge benefit for all concerned. It’s entertaining to read Manpower’s CEO dismissal of this trend as “somewhat niche…I don’t think it’s going to take over the world” in a recent Wall Street Journal piece. I suspect that quote will sound fantastically dense in ten years’ time.

And yet this trend makes me uneasy. The slow transformation of a huge swathe of the economy from steady jobs to an ever-shifting maelstrom of short-term contracts with few-to-no benefits, for which an ever-larger pool of people will compete thanks to ever-lower barriers to entry, in a sector where most jobs are already poorly paid…does this sound to you like it will decrease inequality and increase social mobility? Maybe, in certain specialized high-skill areas. But across the spectrum? I doubt it.

It does sound like it will reduce prices…but, unlike Wal-Mart, servant-economy providers are rarely servant-economy customers. (As prices drop, their incomes drop too, keeping the now-cheaper services still out of reach; a vicious circle.) The people who benefit are, surprise, surprise, the techies, the professionals, the bankers, the steadily dwindling middle class. You know. People like you and me. And, of course, the companies hiring the armies of temps.

I don’t want to sound like a pessimistic Luddite; I do believe that this will ultimately be better than the status quo for most people. But it seems to me that — like many of the other economic shifts triggered by new technologies, as I’ve been arguing for some time — the vast majority of the benefits will accrue to a small and shrinking fraction of the population.

Is that inequality such a bad thing? If the techno-economic tide is lifting all boats, does it really matter if it lifts the yachts higher than the fishing boats, and the super-yachts into the stratosphere? It seems to me that the answer depends in large part on whether the fishing boats have any realistic prospect of achieving yachtdom:

Unfortunately, social mobility is actually significantly lower in America than in other rich nations…and so far I see no reason to believe that the combination of tomorrow’s technology and today’s economic architecture will change that. In fact I have a nasty gut feeling that the opposite is true, both in America and worldwide.