A Blog by Jonathan Low

 

Aug 4, 2020

The Reason the Gig Economy Is Failing In the Covid-Driven Depression

"Freedom's just another word for nothin' left to lose," Janis Joplin, Me and Bobby McGee. 

The ''hustle' or 'passion' economy is being touted as a pandemic-driven successor to the gig economy, but the new boss is pretty much the same as the old boss and the pay is no better. JL

Caitlin Dewey reports in One Zero:

While the shift toward more flexible, internet work has happened in the margins, decades of self-employment data show the internet has not “liberated” workers from conventional, W-2 employment in any great numbers. Economic and labor policy forced the rise of temporary, gig, and contract jobs, more than either preference on the part of workers or any new platform or app. Workers in the hustle economy remain wholly dependent on the platforms that supposedly empower them. Is the platform a tool used by the worker — or is the worker a tool used by tech executives?
“I spent the entire first week crying. What else could I do about it?”

It’s not enough, really — but Briggle said it helps. Her career plan now includes Patreon “for as long as possible,” even after Soma reopens.

 

Such products range from ebooks and meal plan templates to online classes, podcasts, membership clubs, newsletters, and porn. They proliferate on platforms including Patreon, Twitch, Substack, Etsy, Teachable, Knowable, Podia, Thinkific, Supercast, Lulu, Smashwords, Outschool, OnlyFans, and Gumroad. 

These platforms generally take a cut of each sale made, ranging from 5% to 50%, or charge a recurring fee to sellers for accessing their market. Tech investors have dubbed this the “passion economy,” a place where anyone can profit doing what she loves. But because that term risks both exaggerating the payoffs of this work and obscuring its ties to the gig economy, the last great labor “disruption,” we might better call it the “hustle economy:” an online labor market in which platform-dependent workers create and monetize their own digital products. Like Uber drivers or Instacart shoppers, workers in the hustle economy need a platform to succeed. But their work is individualized, self-directed, and on their own schedule — one “creator” can’t substitute for another. 

The hustle economy is also not new. Since the late 1990s, tech futurists like the former Wired editor Kevin Kelly have predicted that social networking and online payment platforms would open up a range of new, and newly fulfilling, career choices. Writing in the Harvard Business Review in 1998, the organizational theorist Thomas W. Malone claimed “electronic networks” would dissolve the corporation as the main unit of the economy, and replace it with “flexible, temporary networks of individuals” who self-select their work. The next decade saw dozens of platforms launch with some version of that goal, from Upwork to Etsy and Kickstarter. 

Tech investors have dubbed this the “passion economy,” a place where anyone can profit doing what she loves. 

In 2017, the economic advisory firm Sonecon estimated that nearly 17 million Americans made some money off digital platforms. And since then, argues Li Jin, a former partner at the venture capital firm Andreessen Horowitz, a wave of new startups has launched to capitalize on this “model of internet-powered entrepreneurship.” 

To Jin, hustle economy platforms represent an opportunity to commoditize a once-worthless or near-worthless resource — think bottled water. Every person on earth has some deep knowledge or experience or skill in something, she argues. If platforms can funnel that into a product that consumers want, then the value of the hustle economy balloons into the hundreds of billions of dollars. 

“Anyone with noncommoditized skills can do this,” Jin told OneZero

For workers, the premise of hustle economy work is equally seductive. Just like gig work, you can choose your own hours. But with the hustle economy, you can really be your own boss, and spend time only on projects you like and feel proud of. While both the gig economy and conventional employment “stripped workers of their autonomy and agency,” Jin said, hustle economy platforms “empower” them. The movement’s rhetoric often, and ironically, echoes Karl Marx: Only liberated workers with control of production can soak up the full spiritual and financial benefits of their labor. 

Better yet, in the midst of a protracted economic crisis, hustle economy work offers a safety net — a second income independent of a corporate employer, or even the physical environment. If Patreon and its ilk once promised flexibility or the chance to “do what you love,” they now also promise workers like Amit Levit a paycheck the next crisis can’t interrupt. 

Levit, an instructor at Boston’s 305 Fitness, a cardio-dance studio, launched a Patreon in March on the advice of her employer, who couldn’t pay salaries during the shutdown. Though she loves the studio, Levit now plans to keep teaching on Patreon: “I am looking to move toward having two strings of income,” she said, “rather than just the one I had before.” 



“People see how fragile their connection to the economy is. Their job could go at any second,” said Len Markidan, the chief marketing officer at Podia, a hustle economy platform that helps its workers set up classes, newsletters, storefronts, and other products. One of its marquee names, the physical therapist Emma Shapiro, has built an empire teaching other health care workers how to create hustles of their own. 

In the past three months, Markidan added, “the baseline for this industry accelerated by 10 years.” His company hit benchmarks it didn’t expect to meet until 2026 or 2027. Economists say they’re not surprised by those figures: Workers often flock to “alternative” work during economic downturns. 

But if the pandemic also acclimates consumers to new digital products — and new relationships with the workers who make them — then the shift could prove more permanent, said Susan Houseman, a labor economist at the Upjohn Institute for Employment Research. 

“This time could be different,” Houseman said. “It’s a temporary crisis, at least until we have herd immunity or a vaccine or some kind of treatment… but the way people do business is going to change. We’re already seeing that.”


That was the case for James Fraser and Jessica Overton, professional ballet dancers from South Africa who now live in Australia. The couple launched a YouTube channel in 2016, where for several years they posted travel vlogs and performance videos. But the channel never quite broke through, and they gradually stopped uploading new material. The pandemic prompted them to try again, but with a discrete product: online ballet classes for aspiring professional dancers. The two film them on their days off from The Australian Ballet, where they have worked since January, and post the classes to Patreon.

“We started because of this situation, but we have wanted to do it for like a year and a half,” Fraser said. “We just didn’t have any rush or incentive. Coronavirus kind of forced us to start… We wanted a safety net.”

Other new hustle economy workers describe similar experiences, of projects deferred or backup plans hastened. Success varies as much as the workers themselves. As of mid-July, Fraser and Overton had seen no money from Patreon and decided to again refocus their efforts on their free YouTube channel. In San Francisco, Kerry Crowley, a 25-year-old sports reporter, launched a long-planned Teachable class about journalism after his company announced furloughs. He has made more than $4,000 for roughly 200 hours of work. Across the country, in northeast Pennsylvania, 18-year-old Kenzie Piacenti, an aspiring teacher, left her job at Lowe’s to teach on Outschool, a live course platform for K-12 students. She makes $1,000 per week for roughly 15 hours of classes — and is no longer worried about exposing her family to the virus.

In Omaha, Nebraska, Erick Landa — a 27-year-old chef who had long dreamed of ramping up his cooking channel on the streaming platform Twitch — doubled-down on the project in March, after his restaurant cut shifts. The economics are daunting. Landa pockets half of every $4.99 subscription to his channel, he said. Meanwhile, he spends roughly $400 per month on groceries for the channel, in addition to the equipment he’s already purchased, like an XLR microphone, a boom, a laptop stand, and a moveable kitchen island.

At Landa’s current rate, he’d need hundreds of subscribers to break even, and thousands to replace his restaurant income. If he continues to sign on five to six new subscribers each month, it will take years to earn back what he’s already invested.

“It’s going to be a lot of hard work,” Landa said. “But streaming would really allow me to flourish with my ideas, and do the kind of cooking I like. I have a very imaginative style of cooking. So I want to do this full time.”




But it’s far from clear whether the hustle economy represents a triumph of technological innovation and human creativity — or a failure on the part of the traditional economy and the social safety net. In his 2018 book Temp, the labor historian Louis Hyman argues that economic and labor policy forced the rise of temporary, gig, and contract jobs, more than either preference on the part of workers or any new platform or app. 

By the time Uber launched in 2009, decades of “lean” corporate organization had spun up a large, unstable, and underemployed workforce, and millions of workers were discovering, in the wake of the Great Recession, exactly how disposable they were. “Uber is a symptom, not a cause,” Hyman wrote. The same might be said of hustle economy work. 

In the view of academics like Ron Eglash, a professor at the University of Michigan, it’s not even clear what differentiates platforms like Patreon or Etsy from Uber and DoorDash before them. Workers in the hustle economy remain wholly dependent, Eglash notes, on the platforms that supposedly empower them. To further paraphrase Karl Marx: Is the platform a tool used by the worker — or is the worker a tool used by tech executives? 

It isn’t just that hustle economy platforms take a cut of workers’ earnings. Workers like Erik Landa, James Fraser, and Jessica Overton also bear enormous up-front costs and risks to produce their work. There is no such thing as a minimum wage. There are no benefits. Should the platform choose to change anything — from a payment processing fee to a recommendation algorithm — workers have no real power to influence those decisions. 

“It all feels very precarious,” said Evelyn Herndon, a 36-year-old music teacher and single mom who has made “about $80” from her new Patreon. By some accounts, that’s a fair return: Of the more than 100,000 users to join the platform since March, Graphtreon data show half have yet to sign on a single patron. (A Patreon spokesperson disputed these figures, noting that they do not account for users who have made their earnings private.) 

Hustle economy founders and investors say they’re aware of this precarity, though they generally believe creative people will manage to find a way. Markidan, the Podia CMO, predicts an ecosystem of support services will spring up around the hustle economy, much as it did around Airbnb. Amir Nathoo, who founded Outschool, said his company aspires to eventually provide or subsidize some equipment and support services itself. In the meantime, “we should be talking about the trade-offs and what the upsides and downsides are,” he said. 

But workers may have other downsides to weigh right now: The official U.S. unemployment rate hit 13.3% in May, and remained above 11% in June. On June 8, the World Bank declared that the coronavirus pandemic had “plunged the global economy into a severe contraction.” In one of her first Patreon videos, Amber Briggle, the Texas massage therapist, narrates a relaxation technique for people anxious about work. 

“If you’re anything like me, you probably haven’t been able to sleep well the last couple weeks, not really knowing what’s going to come next, if your job is going to be secure,” she said. “Sometimes — often, you know — you wake up in the middle of the night and your brain is spinning and as hard as you try to get back to sleep it just feels impossible.” 

Briggle doesn’t want to be on Patreon forever. This was never her “dream,” she said. At one point during the shutdown, her husband asked her what she’d like to do if she started over — and she cried because she’d open Soma again. 

Soma did reopen with much of the state in mid-May, though the process has been painful. Briggle lost one of her two locations during the shutdown, as well as most of her contracted therapists. In May, she installed a medical-grade HVAC unit, blowing through the cash the studio made on early pandemic gift card sales. It could “a very long time,” until she pays herself a salary again, she’s realized.

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