This mix is perhaps partly at the heart of the housing crisis and other issues. In his 2015 book, “Raw Deal, How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers,” Steven Hill points out how this new economy has been undermining the American workforce. While our current advances in technology have helped provide strides of economic growth, the misuse of technology have caused instability.
This reporter when stumbling upon the book was taken aback at the detailed history of the American workforce that Hill provided. He outlines a subtle, but systematic undermining of the American worker that goes as far back as the 1980s. The emergence and then prominent use of ‘the Temp’ worker in the 1990s, in some ways set the path to where the American worker is now, with low pay, few if any benefits and no guarantee of job security.
I was able to reach Hill and asked him a few questions. The first question being the most obvious. Is it technology that has done this to our American workforce?
I became more focused by saying…is it technology that is the problem or is it a human problem? Much of what you point out, I said to Hill, is people taking advantage of technology and ignoring laws, ethics and social mores.
“It is both,” he said. “In some cases it is how humans are using the technology, but in other cases, it is the technology itself that warrants strong oversight and regulation.”
Hill then said. “Look at Elon Musk’s warning about artificial intelligence – ‘we are summoning the demon,’ he said in his now-famous phrase. Because of what this technology is capable of. We already put a lot of oversight and regulation around cloning, steroids in sports, various weapons and more. Technology has always been regulated, and indeed it is necessary if we are to fully harness what is good about technology.”
Hill notes in “Raw Deal…” and other books and articles he has written that technology has enabled companies and moguls to side-step established labor laws. While the growth of the entrepreneur in the American economy has been a tremendous boost, it has also allowed previous safety nets that safeguarded the worker to be cut down.
“I am not a Luddite or anti-technology at all,” said Hill. “I love the technology. I use it in my life and that makes things more convenient.
“I also love chocolate cake – but if you eat the entire cake, you get sick. In other words, too much of a good thing can be a bad thing.”
Uber is just one example of how unregulated use of technology and its unforeseen consequences make a backlash upon the workforce in the larger scheme of things.
Which leads into my second question, I said to Hill. Does this mean that we need more bureaucracy and more laws or just enforce the ones already in place?
“We need to do both,” he said. “We need to enforce laws we already have, and in some cases modify those laws to account for the new digital technologies… Like for taxis. We have two sets of rules now. One for taxis with the medallion system, the other for ridesharing. And taxis are hurt by this dichotomy, because they have a limited supply and ridesharing has unlimited supply.”
While Hill exclaimed, “that’s just free market capitalism 101, making one competitor have an advantage over the other,” he also noted, “But that’s just one example of many where we actually need new laws, for example, to deal with the fact that ‘data is becoming the currency of the digital age.’ I give a lot of examples of this in my most recent book Startup Illusion, unfortunately that is in German,” he said. “And I imagine you do not speak German.”
Still as he continued to point out, “in this and other writings I have done, you will see the types of new laws I have proposed for Airbnb-type businesses. The old ones we have for that will simply not work,” he said.
“In fact, numerous cities have already passed laws, using the ‘old paradigm’ to try and regulate Airbnb and none of that has worked.”
The Los Angeles Times reported in February of this year that regulating companies like Airbnb is a top priority for the City of Los Angeles. Yet it is at the state-level such as with the California State Legislature that has cities like LA frustrated. Not much has been done either to become more strict or to be lenient. As tech-fueled businesses like Airbnb and Uber continue to find ways around local laws established by cities and towns, seeking the help of the state has only stalled the ability to take decisive action. Bills proposed at the state level before the California assembly of law makers only gets diffused by more debate and delay.
Hill says, “The reason is that without the data from this company that tells you who is renting, for how many nights, and how much they are charging per night, You can’t regulate or tax this company. After all, if someone wants to set up a bed-and-breakfast in their home, they have to go down to City Hall and register that business. There are good reasons for doing that, safety, taxation, tracking of commercial activity and more. More cities have realize that, and in trying to regulate Airbnb (and Uber) data is needed. But without the data, said Hill, which only the company can provide, it has proven to be impossible.”
So, then I asked Hill, with the current political climate do you think change will only occur at the grassroots level?
“Certainly in the U.S. we will not see any positive changes at the federal level. We might see some good laws and regulations passed at the local level, in cities, and perhaps in a few states,” he said. “I’m actually more optimistic that we will see the right regulations and laws passed in Europe on these matters, rather than in the U.S.
Already we have seen the European commission (which is the head of the federal government in Europe) cracking down on Google recently, with a $2.7 billion fine because Google manipulated it’s search results. It also has tried to crack down on Apple using Ireland as an overseas tax haven.”
Hill went on to say, “we see more movement in a big way in Europe, then we do in the U.S. Even in a state like California, where Gov. Jerry Brown loves Silicon Valley.”
“We see mistakes being made in terms of regulations. For example, Gov. Brown passed a law legalizing ridesharing at the state level, and took away the ability of local governments, such as San Francisco to regulate this service and these companies as they see fit. And consequently, now that cities like San Francisco and Los Angeles are being swamped by traffic congestion, substantially due to ridesharing, they cannot put a limit on the number of cars like they are able to do for taxis.”
Back in January of this year The San Francisco Examiner reported that the City of San Francisco at various levels has been stymied by the inability to establish and enforce regulations. It is very tricky especially when things change so quickly. For example as The Examiner noted, at first Uber and Lyft were the ride-sharing platform of private vehicles. Now Uber/Lyft drivers can use car rental companies to make their cab-service rounds.
The impact this and other unforeseen consequences from technology is not only undermining the American Workforce it has a ripple effect on other businesses. While Uber and Airbnb can keep costs down by utilizing ‘subcontractors’, hence other people’s resources, the economic equilibrium goes haywire. This results in high rents for both residents and merchants and difficult overhead costs for others.
Take for example the ever-growing Amazon.com. Traditional retail can’t compete, as noted earlier this year by Crain’s New York Business report back in January.
While these trends have large scale repercussions going from Coast to Coast, Hill still views the lack of direction at the local-state level as a problem.
Pointing again to Gov. Brown and the CA State Legislature’s short-sightedness, (regarding Uber in particular) Hill said, “This was a huge mistake that California did. It was one of the first to pass a law legalizing this, so I suppose one could say that they did not have much experience with it and so crafted a bad law. As a result, San Francisco in other cities are paying a price. Think about it: Why would you have a restriction on the number of taxis but not on ridesharing cars, which is just another form of taxi?”
The result is obvious – there are about 1800 taxi cabs in San Francisco, and 45,000 uber and lyft drivers. And, that is with anywhere from 8,000 to 9,000 of those drivers being on the streets at any one time. This is a situation that obviously cannot be sustained.
The repercussions of this is a tremendous workforce even if only part-time or seasonal is left vulnerable to the whims of a multi-billon dollar company that has no obligations to its workers. The trend of workers becoming a ‘1099’ versus a ‘W-2’ employee saves the company money but it does little to secure or safeguard the worker from neglect or abuse – including not getting sick pay or overtime hours.
Wall Street may view the expanded use of technology in all sectors as a ‘win-win’ but more thoughtful minds such as Hill and many others, clearly see a ‘Brave New World’ of a future with some frightening consequences if things continue to go unchecked and out of balance. To learn more about Steven Hill, his book “Raw Deal, How the ‘Uber Economy’ and Runaway Capitalism Are Screwing American Workers,” and other books he has written visit his web site.
