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Balancing profits and human dignity in the gig economy

Balancing profits and human dignity in the gig economy
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Cities have been ecosystems to improve trade and connect humans since the earliest days of civilization. As they evolved, cities developed protocols to ensure their denizens would experience more dignified, livable conditions. Historically, they have grappled with labor fairness and conquered issues of disease and poverty — moving from the “Dickens economy” to one in which labor can organize and achieve benefits such as improved wages and health care. 

Yet, over the past decade and especially with the rise of the gig economy, our collective position on the value of labor has changed — and we argue that this change has not been positive in all aspects. The question we should ponder as we move into a new decade is how we can strike a balance between profits and human dignity in the on-demand workforce.

Yes, thanks to new gig-economy, services like Uber, Lyft, DoorDash, Gigwalk, Amazon and others, it has never been easier to get what you want when you want it, and at a lower cost — be it food, accommodation or a ride. Although gig-economy companies in many cases generate ample wealth for their executives and investors, the costs of that wealth creation are only now being fully realized. We increasingly rely on free package delivery and low-cost rides — yet where do these savings come from?  

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Providers are discovering that the unit economics to deliver these services cheaply and efficiently are very tight, a reality that leads to squeezing wages and worker benefits. This has led to ample debate over such issues as driver wages and labor standards.

For example, a much debated 2018 working paper suggested that rideshare drivers might make $8.55 to $10 per hour when considering vehicular depreciation. Likewise, Instacart workers have been shown to make as little as $7. And there have been critiques of the high cost of free shipping, particularly when the cost of delivering a product exceeds its value (e.g. the $6 jar of Nutella that costs $100 to ship). 

Examples like these raise critical societal concerns for lifestyle and dignity in the modern metropolis — questions about wealth distribution and the fairness of shifting all the benefits of automation toward profit, as opposed to the wellness of people. Can we not harness the value of new technology for the betterment of society, to shape where we want to go both environmentally and socially? 

While there are glimmers of hope from companies like Facebook, Google and Apple (which have committed billions of dollars to partner in solving the scarcity of housing in cities where they run corporate operations), and from the state of California (which passed a November 2019 law requiring companies to employ contract workers and provide them with health care), there are also depressing trends. 

Despite a growing sentiment that gig-economy workers warrant more rights, Uber executive Nicholas Valentino was recently quoted describing his drivers not as employees but as independent companies. “They are not Uber drivers,” he said, “they’re independent, third-party transportation providers.” While this may be technically correct, he manifests a glaring insensitivity to the challenges of the drivers who make Uber work, particularly in light of movements like those in California to establish basic rights for gig-economy workers. 

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While companies ranging from DoorDash to Lyft have lined up to oppose such regulations, we offer a counterpoint: What if we could generate profit while treating employees with dignity? What if we could innovate socially and economically at the same time? There are companies that are doing this — that are harnessing the power of data without treating people as if they were disposable.  

For example, one U.S.-based data-driven corporate relocation company is hiring on-demand employees who receive transparent wages and receive full health benefits. Two transportation companies – one offering electric mini-pod taxis, based in Stockholm, and the other a U.S.-based data-driven vehicle service – use the value generated from their technologies not to expand the workforce to a vast peer-to-peer network, but to make drivers and mechanics more efficient and to educate, train and retain them as employees.  

These counterpoints to the traditional expansive peer-to-peer gig service are not a panacea; they do present challenges. But they also show a different path for companies going forward. They offer a way of thinking about human dignity and an on-demand workforce that is not only capitalistic but compassionate. We believe these ideas can coexist — that profit does not have to exploit human beings and that capitalism can be both socially and environmentally conscious.

As cities and companies search to define new policies on labor, we challenge them to treat humans with dignity and to keep the human as a valued part of the data-driven economy. 

William Riggs, Ph.D., is a professor at the University of San Francisco School of management and a consultant, focusing on future mobility, smart transportation, housing, economics and other urban development issues. His most recent book is “Disruptive Transport: Driverless Cars, Transport Innovation and the Sustainable City of Tomorrow” (2019).

David Batstone, Ph.D., is a professor of entrepreneurship & innovation at the University of San Francisco School of Management. He is founder and president of Not For Sale, a nonprofit that combats human trafficking, and founder and managing director of Just Business, a social-impact investment firm. He received the United Nations Women for Peace Association award in 2017. He is the author of several books, including “Not For Sale: The Return of the Global Slave Trade -- and How We Can Fight It” (2007).