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The Internet and The End of The Minimum Wage

Job bidding sites like Zaarly, Mechanical Turk and Taskrabbit have circumvented minimum wage laws and helped to create a new underclass of the underemployed. It’s time authorities took notice.

I am a Mechanical Turk. For a couple of cents, I will perform a mind-numbing, inaptly named “human intelligence task” a mind-boggling number of times, and at the end of the day I will have earned the minimum wage. In Bengladesh. Maybe. Still, the Amazon site mechanicalturk.com has tens of thousands of willing near-slaves, effectively working off the books (no 1099 until you get to $600, good luck with that) to supplement their unemployment and social security checks.

I also take surveys. For my half-hour effort to quantify my interest in, say, bookkeeping programs or disposable pen displays or fast-food restaurants, I can put a dollar or two in my online account. If you do the math, the “fee” you are paid for the survey is just about 30-50% of the federal minimum wage, give or take. Even more often, I am booted out of the survey for lack of arthritis, a motorcycle or erectile dysfunction. Sometimes you get a dime for this “failure”, sometimes nothing.

Not to put too fine a point on it, but it is no longer necessary for a corporation to go to a third-world country to outsource. There are plenty of 99-percenters who are willing to work for almost nothing. A number of sites ask potential workers to bid on jobs. Absurdly low pay is justified by calling the job “an adventure” or :”fun”, as Eric Koester, founder and chief operating officer of Zaarly.com, a mobile peer to peer job bidding site, said on the NPR program On Point recently.

Technology is supposed to be the great equalizer. In a recession, unions dissolve and workers compromise. But in this recession, something more devious is at work. Technology has become a one-way street. Suddenly the guy who wants someone to clean his basement has fifty bidders, some of whom are probably not eating very well these days. Three hours’ work may go for ten or fifteen dollars. Sweatshops in Indonesia have nothing on these “private” employers.

These absurdly low “negotiated fees” are really thinly disguised labor law violations. No legitimate employer could get away with paying $2.00 for a 1000-word article. But the sites are effective and the government winks at them, at least so far. Last fall, start-up Zaarly.com raised $14.1 million through private investment firm Kleiner Perkins and added former Ebay CEO Meg Whitman to its board of directors.

I’m not talking about time-banking or other barter systems, which value labor and services on a relative scale rather than a dollar amount. If a plumber and a lawyer want to exchange services, they are free to negotiate, and time-banking is merely a three-dimensional, indirect corollary. The operative word here is negotiate, and the parties are on a comparatively equal footing. In contrast, the internet’s ability to find a lowest common denominator creates the most unequal bargaining platform since the Emancipation Proclamation: Ebay in reverse, in a manner of speaking; no wonder Ms. Whitman’s input is so valuable.

At some point, sites like Zaarly, Mechanicalturk and Taskrabbit will become large enough to cause the feds, or maybe one or two of the more alert state attorneys general, to sit up and take notice. Meantime, the formation of a new underclass of wage-slaves appears both inexorable and permanent unless and until this economy generates decent jobs for nearly everyone.

I would not hold my breath.

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