The current situation of the US economy shows that already more and more people are preferring to work in the gig economy, meaning that they do not have an official working place for a certain organization. The majority of the population prefers working as independent workers rather than being hired (Petriglieri, Ashford & Wresniewski, 2018). The predictions are that the next five years, almost half of all organizations in the US will expand the use of temporary employees. This expansion will most likely lead to about 43% of woking age population being active in the gig economy (Katz & Krueger, 2016).
However, the gig economy is not as promising as people think it is, for instance working for Amazon. Due to the fact that Amazon is using crowd workers they avoid being responsible for unsafe or unfair conditions for these workers. Furthermore, people working for Amazon are earning 19% lower wages than the living wage in their region and their work is often dehumanizing, including critically high production rates.
Furthermore, the gig economy includes crowd working and work on demand via apps types of work. This paper will focus on the first mentioned type of work.
Crowd working can be explained as completing a series of tasks by using online platforms. Crowdwork is relatively simple work, thus mostly done by unskilled workers (Kalleberg & Dunn, 2016). As mentioned above, the future of these unskilled workers is somewhat unclear and needs some clarification. Moreover, there are lots of short- and long-term implications of the gig economy, both positive and negative. But in this paper the focus is going to be on the future of the unskilled crowd workers, which leads to the following question: To what extent will crowd work change the employment opportunities for unskilled workers?
To answer this question, a literature review will be used, which contains academic articles about the gig economy and crowd working and the positive and negative effects for the future of unskilled workers. In the Theoretical framework the gig economy, the role of digital platforms and crowd work will be described. In the third section the short- and long-term implications of the gig economy for the future of work will be analyzed (both positive and negative). Moreover, the role of digital platforms from crowd working will be explained as well. In the last section the research question will be answered and recommendations and limitations for further research will be given.
First of all, the gig economy will be described in more detail. As mentioned earlier, working in the gig economy means that people are not working for a certain organizations. Moreover, there are few permanent workers so most of the work is for a short term, which includes flexible arrangements. Due to the fact that most work is for a defined time, there is almost no connection between the workers and the employer (Friedman, 2014).
Furthermore, digital platforms have an important role in the gig economy and the number of searching jobs on digital platforms is rising. By the use of digital platforms, an employer can easily find suitable workers for particular jobs, pay them a particular amount and then get rid of them (Graham, Hjorth & Lehdonvirta, 2017). Another advantage of the use of digital platforms is that not only employers can easily find new workers, but that the workers easily can find new jobs or top up their salaries as well (Aloisi, 2015).
To become more specific about the gig economy, crowd work is going to be explained. Crowd working can be defined as completing a series of tasks with the use of online platforms, who connects an indefinite number of requesters with workers on a global basis (Prassl & Risak, 2015). ’Microtasks’ is a term that is very often associated with crowd work and can be defined as short term jobs with a particular function and often simple and monotonous work (De Stefano, 2015). Due to the fact that crowd work is not a hard job to fulfill relatively many workers can take the job.
However, the future of these unskilled workers is somewhat uncertain. Some people think that the future of unskilled workers is good, for instance for immigrants. These unskilled immigrants are able to benefit more when finding a job due to the gig economy. By the use of the gig economy they can protect themself for discrimination as there is no face-to-face relation between workers and employers. However, there are also negative questions about the future, such as Sundarajan (2015) said: ‘Hard questions about workplace protections and what a good job will look like in the future, fearing that the gig economy portends a dystopian future of disenfranchised workers hunting for their next wedge of piecework’ (as mentioned in Kalleberg & Dunn, 2016). The economist states that the future does not look very promising, because people need to desperately search for jobs to earn some money and they need to compete with each other to get a working place, which is particularly not favorable for unskilled workers.
Moreover, technological development plays a role in business as well. As mentioned in Furman and Seamans (2018), Artificial Intelligence (AI) is extremely growing in recent years, whereby technological skills and the work of humans are involved. The work of humans can be replaced by the use of AI and robotics, which leads to a big concern for the working people. Furthermore, new technological advancements leads to increasing productivity. People are concerned about the fact that technology changes switch the work from humans to robotics, although many technological changes are only replacing a certain task of a job and not a whole job. In addition, new technologies can create new jobs. For instance, Mandal (2017) mentioned that there are indeed job losses in brick-and-mortar department stores but that these losses can be replaced by a lot more new jobs in call centers (as mentioned in Furman and Seamans, 2018). However, in Figure 1 you can see that the work with low hourly wages can be automated much more easily than work with higher hourly wages, which leads to a greater job uncertainty for unskilled/ low skilled people (Furman and Seamans, 2018).
Finally, the theory of Coase, a British economist and professor, will be explained and there will be explained how this theory is applicable for crowd work. Coase (1973) explains why firms exist. According to the professor, firms exist to become more efficient in production through hierarchy than through the market and to reduce transaction costs. Transaction or marketing costs can be defined as costs that need to be made when trade takes place while performing in a market. Examples of transaction costs are negotiation and searching costs.
To relate his theory to crowd work, the main advantage of contracts with independent contractors or crowd workers is that the transaction costs are decreasing. In addition, there is a lot of flexibility as well. Thus, due to the use of online platforms the flexibility of the employer as well as for the customer are increasing and the employer still has control over the production process to keep the marketing costs on a minimal level. Although, this can only be achieved if two conditions are met. The first condition is that there always have to be enough crowd workers, which also means that there have to be sufficient competition to maintain low prices. The second condition includes ‘digital reputation’. Digital reputation can be defined as a system to select crowd workers efficient. This system is important for crowdsources, because otherwise they maybe select not the best workers for the task. Thus, through crowd working the transaction costs can be further minimized and this minimization is an important aspect of Coase theorem (Prassl & Risak, 2015).
There are many short- and long-term implications, which can be either positive or negative, for the future of work of the gig economy, especially for unskilled workers.
First to start with the short term implications. As Friedman (2014) mentions, gig-workers are often doing the same job as that they did when they had a traditional contract. With a traditional contract, time and memory were important aspect. If an employer wants to hire an employee, past performance are taken into account and earnings are based on how long a worker is working. Moreover, the current achievements of a traditional worker determined their bonuses and if they can get a higher position in the future. Conversely, past performance are not important for employers who hire gig workers and the employers are not going to take care of future work, legacy pay or deferred compensation for the workers. Since past performance are not important for people who are crowd working, low skilled people can earn a job much more easily than when their past performance are taken into account. Although, these crowd workers do not have any social security. However, for a firm can this either be a negative and a positive aspect. Negative because they do not know for sure if they are hiring the right worker, positive because they do not have to pay compensations and promise their workers work in the future.
Another positive effect from the firms perspective is that firms do not need to contract people for a long period, as in traditional firms, but they can hire a crowd worker in a couple of minutes for a short period. The firm can get immediately rid of the workers when the task is done, so hire and fire a worker is a lot less time consuming for digital firms than for traditional firms (De Stefano, 2015).
When employees are crowd workers, they benefit from a lot of freedom, which contains structuring their own time and career paths easily on their own. They can for instance: choose the kind of work they want to do, where they want to perform this certain job and at what time they want to do this. The only thing needed to become a crowd worker is a computer with a good internet connection. The entry and exit barrier are low for the crowd workers as well as for the firms, whereby low skilled workers can enter the employment market very easily (Felstiner, 2011).
Due to the fact that there is so much flexibility, the payment that the workers receive is very little. Moreover, they have more problems such as information asymmetry, deception and privacy. Thus, firms do not know for sure if they hire the right worker. When this happens there is information asymmetry. For the workers, particularly for the unskilled workers, is this a positive aspect. They can earn the job more simple than with a traditional job, where prior achievements are taken in to account. For high skilled people is the information asymmetry rather a bad aspect, there is a change that company’s are choosing a person who has less skills than they have over them. Only, the little payments is for every worker a bad aspect (Prassl & Risak, 2015).
With ‘microtasks’, large tasks have been reduced to smaller tasks that can be independently worked on. After the reduction of the tasks, crowd workers can find them on platforms and perform them. Although a survey research has found that people value these tasks very low and that the average wage is around 2$ per hour (Prassl & Risak, 2015). In addition, they mention that through many competition the wages are very low but the quality is high. For low skilled people this could be a negative and a positive implication. On one hand negative, because it it hard for them to get the job. On the other hand positive, due to the fact that some skilled labor is replaced by unskilled labor because large tasks are diminished to smaller, easier tasks. Looking from the firm’s perspective, it is positive. The firm’s are getting high quality workers for little money (Kittur et al., 2013).
Sometimes, workers are taking a job for which they do not have the suitable experience or skills, so they ignore the fact that they are not skilled enough for a particular micro task, all for earning some money. Although, unskilled workers performing a particular task can lead to insignificant inputs and not fully reliable outputs, whereby resources and time are wasted both of the employee as well as for the firm (Gadiraju, Fetahu & Kawase, 2015).
Now that the short term implications are explained, the long term implications are going to be explained. The creation of new jobs and opportunities is an important aspect for the future or the long term effects of crowd working. These new jobs needs to contain both satisfaction of the working people as well as organizational performance. When crowd workers achieve both feedback from their associates and requesters about specific tasks and when the workers can get new opportunities, they are able to learn from their mistakes and create better results than before. Because of this, workers satisfaction and better result, thus better organizational performance are accomplished. Moreover, the feedback from requesters and peers can result in better performance, so the unskilled workers are maybe able to improve themself and earn better jobs in their future career (Kittur et al., 2013).
Another positive implication in the long term has to do with new technological developments. Kittur et al. (2013) mentions that due to the fact that crowd work is often online, people from all over the world can take the job, thus workers who life in a stagnated economy can work through this online platforms as well. Because of these new developments, unskilled workers who life in a country with a stagnated economy have more opportunities and changes. In the long run, these workers are able to earn a lot more money and therefore create a better life for themself.
However, there are also negative aspects for the crowd workers in the long term. As result of the gig economy, wages are more flexible. This includes that employers can shift the uncertainty of economic fluctuations from them (in traditional employment) to the workers. For instance, when a recession takes place in the future, the wages will decline as well as the employment rate, a lot of crowd workers have to deal with this uncertainty (Friedman, 2014).
Conclusion, Recommendations and Further Research
In this section of the paper, the research question is going to be answered: To what extent will crowd work change the employment opportunities for unskilled workers? This question is based on the uncertainty of the employment changes for unskilled people through the use of crowd work.
First, there are positive as well as negative implications for unskilled workers working as a crowd worker that need to be weighted up against each other. To begin with a summary of the most important arguments in favor of the unskilled workers. The past performance of crowd workers are not taken into account, whereby they can get jobs faster and easier (Friedman, 2014). In addition, they have a lot of freedom and flexibility with low entry and exit barriers (Felstiner, 2011). Moreover, Kittur et al. (2013) states that through crowd working a lot of big tasks can be reduced to a couple of small task that can be performed properly by unskilled people, due to this and feedback from peers and requesters, low skilled workers are able to develop themself and create better employment opportunities in the future. Finally, even in stagnated economies people are able to perform crowd work behind their computer screen (Kittur et al., 2013).
Now that the positive implications are summarized, the negative implications are going to be summed up. The first disadvantage for unskilled crowd workers is that there is a lot of competition in the gig economy whereby it is sometimes harder for unskilled workers to get a job and whereby the payment is very little (Prassl & Risak, 2015). Secondly, the workers often take any job to earn some money, although sometimes they do not have the right experiences, whereby time is wasted (Gadiraju, Fetahu, Kawase, 2015). The third negative implication is that the crowd workers do not have any social security or future promises (Friedman, 2014). Fourthly, digital firms are able to fire the workers immediately when they are not necessary anymore (De Stefano, 2015). The last negative implication is that during a recession wages and employment opportunities will fall extremely (Friedman, 2014).
Now that all the implication are summarized, the research question can be answered: the employment opportunities for unskilled crowd workers are not changed to a large extent. This is due to the fact that there are more negative than positive implications and these negative implications together outweighs the positive implications.
Furthermore, some recommendations to lessen the negative implications will be given. To overcome the problem of little payments, a minimum wage could be implemented. A second recommendations is that firms need to be forced to give the crowd workers some short of certainty, such as social security.
Moreover, the answer that it given on the research question is still provisional and there are a couple of limitations about the research. The first limitation for this research is that a lot of arguments, both positive and negative, are not particularly only for unskilled workers but for crowd workers in general which means that there is almost no prior research about this certain topic, a lot of research is done for the gig economy and crowd working but not in particular for unskilled crowd workers, due to this it was hard to find relevant articles. Another implication is about time. For this paper we had a certain deadline to complete it. However, if there was no time at all, the research would have been more reliable. Finally, a literature review is used which means that this whole paper is based on evidences from prior researchers and not from evidence that is conducted through own experiments. To come to an end, these limitations can be improved in further research to achieve a more reliable research.
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