Gig economy, crowd work and new forms of labour

Mandela Initiative newsletter (Issue 4, December 2017)


Extracted from the “4th Build Ubuntu - Close the pay Gap” workshop report on “Proportionate income differentials: A long walk to social justice“, hosted by the Mandela Initiative in partnership with the Labour and Enterprise Policy Research Group and the Institute of Development and Labour Law (University of Cape Town), and the Social Law Project (University of the Western Cape.

Liebman shared her expertise on new forms of labour and the development of the ‘gig economy’, and she discussed their impact on working conditions in the U.S. Companies aimed at disrupting existing economic arrangements launch with rapidity, employing digital technology, and platform-based business models that instantly bring together buyers and sellers in an unending stream of enterprises that supply labour and services on demand.

Even before Uber burst on the scene, crowd-work platforms offered opportunities for matching workers to work. Work options on crowd-work platforms range from low skill, low-pay microtasks (sometimes referred to as cognitive piecework), as on Amazon Mechanical Turk; to online freelancing, as on Upwork; to complex, more remunerative scientific challenges and competitions, as on Topcoder and InnoCentive. These crowd-work platforms, as well as gig economy companies like Uber, typically rely not on regular employment relationships with individuals who work through the platform, but rather on short-term, episodic contracting arrangements, often for paltry pay.

Ride-hailing ‘app’ Uber has grabbed public attention with its nearly $70 billion valuation


Unlike online marketplaces for real-world services performed in local labour markets (like Uber), crowd-work platforms allow their clients to access a truly global crowd of workers to take on work performed exclusively online. This means that workers in high-wage countries may be competing against those in low-wage countries.

Crowd-work platforms allow clients to access a global crowd of workers who perform work exclusively online; workers in high-wage countries thus may be competing against those in low-wage countries

Liebman explained that the gig economy has triggered multiple policy debates in the U.S.: what it actually is; how big it is; whether it offers promise or peril – good jobs or bad jobs; what impact these new forms of work will have on the labour market; what it means for persistent and deep inequality; whether gig workers should properly be classified as ‘employees’ under workplace laws (with all the rights, benefits and protections that classification entails); if existing legal doctrines are adequate for a changing workplace and labour market; what all of this means for the future of work, economic security, labour standards, social protections and worker bargaining power; whether the government should respond to the digital transformation, and, if so, how and when; and if this in fact is a new phenomenon, or is it just a continuation of existing trends?

The business model is glorified for promoting economic growth, offering firms and workers flexibility, and expanding opportunities, especially in the developing world. But, said Liebman, increasingly the model is under scrutiny, and particularly the power imbalances between platform and participants and the economic insecurity faced by platform workers. Platform earnings may be below the statutory minimum wage. If the model continues to grow, more and more individuals will be working without the rights, protections and benefits of employment status, and increasingly labour standards may be set on the basis of these practices. The online platform economy workforce may still be small in the U.S., but it is growing, and its potential to disrupt the labour market and reinforce downward trends demands attention.

Liebman pointed out that more than three decades of stagnated wages have been a key driver of increasing income inequality, as have a weakening of collective bargaining and a decline in the share of corporate income that has gone to worker wages. Since 1980, only the top 1% have seen their incomes rise. Critics believe that gig economy arrangements will worsen these trends by perpetuating workplace practices of the last 3 – 4 decades that have made work more precarious – including the accelerating use of nonstandard work arrangements (like contract workers, temporary help agency workers, independent contractors, on-call workers), or what has been called the “fissured workplace.”*Accurate data are limited, but recent surveys show that from 2005 – 2015, the incidence of these alternative work arrangements – both offline and online – increased by 50% in the U.S., accounting for all net employment growth.

Numerous lawsuits have been filed in U.S. courts against platforms like Uber alleging that their service providers should be treated as “employees” under workplace laws. Preliminary decisions have been generally favourable, but the legal questions are far from finally resolved. To date, only one such case has been filed against a crowd-work platform and that settled at an early stage without resolving the status issue. These cases are complex, costly and time consuming to litigate, with results uncertain. Legal challenges may likely yield answers that are either ambiguous or place platform workers outside the scope of protections. Compounding the difficulties is that the participation agreement that many platform workers (like Uber drivers or Amazon Mechanical Turkers) must sign to work on a platform blocks their access to the courts, including a waiver of their right to bring legal claims in court and to proceed on a class action basis.

If the “gig economy“ grows, more individuals will be working without the rights, protections and benefits of employment status

Meanwhile, a broader future of work debate has been catalysed. Attention has focused on the limits of the existing “employment” boundaries of workplace laws, which exclude many workers, and the need to reach beyond the existing ambiguous legal tests to provide some governance in this unregulated sector of the economy. Also, as millions of the self-employed work without a safety net, a range of proposals have surfaced to construct a system of social protections de-linked from employment – from universal access to portable and prorated benefits, with mandatory contributions for all work performed, to wage insurance and a guaranteed basic income. Further, restoring worker voice and power is increasingly seen as critical to improving labour standards, especially, as with platform work, in a regulatory vacuum.

In the City of Seattle, an ordinance was enacted that allows Uber-type drivers (who are independent contractors) to engage in collective bargaining. Taking another approach, an independent drivers’ guild in New York City entered into a five-year agreement with Uber, providing some support and benefits for drivers. Other groups are pursuing possibilities for worker ownership of platforms.

Creative approaches to empower and assist those excluded from workplace laws are being tested

Liebman suggested that there are more questions than answers at this point in the ongoing gig economy debates, and that what we are facing is a mix of both continuity and change. But she cautioned, pointing to the disruption and obvious discontent that the 2016 election of Donald Trump exposed, that we ignore the transformation at our peril. Globalisation and technological change have created winners and losers, and the gig economy is widening the digital divide. As more people feel left behind, political risk escalates: “We are sitting on a tinderbox, and various pressures could ignite it: the fear that technology will eat jobs, the growth of new forms of labour and the end of standard employment, increasing income inequality, and a populist backlash.” She concluded that the implications of these pressures urgently need to be attended to, and wise policy choices made. The ongoing exploration of public and private strategies is a start and will test what is possible.

Read the article about the first day of the action dialogue on proportionate income differentials, which focused in particular on the available legal framework to address pay inequalities in South Africa.

Wilma B. Liebman was designated by former President Obama to be Chairman of the U.S. National Labor Relations Board (NLRB) on 20 January 2009. First appointed as a Member of the NLRB in 1997 by former President Bill Clinton and reappointed by former President George Bush, she served as Chairman until 27 August 2011 when her third term expired. Since then, she has been engaged in various advisory roles and consulting projects and has taught at several universities. She presently serves as a Visiting Distinguished Scholar at Rutgers University’s School of Management and Labor Relations.


*Weil David (2014) The Fissured Workplace: Why work became so bad for so many and what can be done to improve it. Cambridge, MA, Harvard University Press.