Gig Economy Platforms are disrupting established industries in cities all over the world. But these successes are due less to revolutionary technology than to finding the fault lines in the existing labor market, according to Jason Jackson PhD ’13, the Ford Career Development Assistant Professor in Political Economy and Urban Planning in the MIT Department of Urban Studies and Planning.
“The technological changes we observe are less driving these changes and more revealing the underlying cleavages,” says Jackson, who serves on the MIT Task Force on the Work of the Future, an Institute-wide effort to understand and shape the way technology is changing jobs. Jackson is helping the task force complete a global study of the subject in part because he believes it’s critical that urban planners play a role in restructuring work. “It will become increasingly impossible for policy makers and planners to ignore these sorts of developments,” he says.
Winners and losers
Jackson’s research focuses on ride-hailing apps—the poster child for the disruption of established industries. But even outlining clear winners and losers in the taxi industry is complex, he says, citing a 2013 investigation by the Boston Globe highlighting the fraud and worker abuse rampant in the legacy taxi industry. So, while taxi drivers have seen major income losses, the picture for the labor market as a whole is much more complicated.
“Perhaps as many as 35 to 40 million people in the United States have taken part as providers in some part of the gig economy, of which the platform economy is a rapidly growing part,” Jackson says. “That’s in a rich country with a labor force of about 160 million.”
The interesting—and hard—question is: Why? The rise of the gig or platform economy coincides with the fallout from the 2008 financial crisis, when unemployment and general economic precariousness ratcheted up around the country.
“Those two things are likely related,” Jackson says. “We have to see it through the lens of structural unemployment and underemployment, that is, the extent to which people who have jobs don’t make enough in their jobs, don’t make a living wage. Are people participating in the gig economy because they want to make extra money to spend for fun—or are they forced into it because of background conditions related to their lives and livelihoods?”
In some ways, the gig economy takes us back to a time when everyone had to fend for him or herself, but with an important distinction. Instead of a handful of loosely organized independent entrepreneurs—informal cabs, for example—now there are multibillion-dollar global corporations controlling the platforms and the payment methods as well as lobbying governments and determining the rules of engagement, Jackson says.
Figuring out exactly how this changes the employment landscape is one of Jackson’s research interests—and a central question for the Task Force on the Work of the Future.
While labor market changes are not exclusively an urban phenomenon, they are more visible in big cities, says Jackson. Cities have been at the forefront of efforts to address both the underlying structural causes of the gig economy’s success as well as efforts to accommodate gig platforms in a way that is equitable and fair.
Cities have tools, Jackson explains, including taxes and incentives that can influence where companies set up shop, support alternative business arrangements like co-ops, and increase the minimum wage. His hope, as an urban planner and as part of the task force, is to encourage cities everywhere to be more forward-thinking about regulation while taking a labor-centric approach to policy and planning.
“The extent to which existing technologies and the technologies of the future are able to transform cities, urban life, and urban labor markets is a function of the ways that planners and urban politicians respond,” Jackson says.