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Independent work: Another cause of inequality?

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Between Mitt Romney’s tax returns, Goldman’s bonuses and Occupy Wall Street, income inequality in America has been getting a lot of attention lately. Experts are debating how much of a problem it is (Americans in general, pollsters tell us, are pretty concerned about rising levels) as well as the root causes of rising inequality, with tax and regulatory policy, and a changing labor market which puts a higher premium on education and has less to offer the marginally skilled often getting the blame.

But recently ,Canadian current affairs magazine Maclean’s offered another possible contributing factor, one that gets a lot of consideration here on WebWorkerDaily. “Could the rise of independent work be partly to blame for the rise of inequality?” the article asks in an article entitled “The End of the Job.”

The rise of the contract worker may also be having a more wide-scale impact than previously realized. A growing gap between rich and poor in countries like Canada has been blamed, in part, on a growing number of poor quality jobs. There’s also mounting evidence to suggest that the rise of the throwaway worker has made recent recessions more painful and longer-lasting. Temp jobs? More like a temporary economy.

“It all amounts to a sea change in corporate attitudes about what constitutes a job in the first place,” concludes the article, noting the death of the job-security-for-loyalty model of previous decades. This move toward more independent and contract work is not only another contributing cause of inequality, but also of the general economic doldrums:

The concern is that all of this impermanence risks creating an economy built not on bedrock, but shifting sand….  Companies see contract employment as the answer to uncertain times, but [professor at the School of Labor Studies at McMaster University Wayne] Lewchuk says it may be a case of the medicine being worse than the disease. People who don’t earn as much money spend less, which isn’t good for the economy. “If people stop buying, then companies stop producing and lay off more workers,” he says. “You get yourself into a quicker and deeper hole. Meanwhile, on the other side of a recession, when you start bringing people back, you’re doing it at lower wages and they don’t have the kind of purchasing oomph necessary to get the economic engine started again.”

Of course, the need for companies to grow leaner, including by utilizing more independent workers, is driven by larger economic forces like globalization and better, cheaper technology, so it’s difficult to argue that independent work itself is the root cause of the problem. Pretty clearly it’s an effect rather than a driver of change. But Maclean’s contention that independent work may be a piece of a destructive cycle that’s both increasing inequality and holding back growth seems worth considering.

How much is the rise of independent work contributing to increased inequality? To economic stagnation?

Image courtesy of Flickr user _PaulS_.

2 Responses to “Independent work: Another cause of inequality?”

  1. Alyson B. Miller

    Ongoing discussion among friends and colleagues: what are the ethical implications of hiring cut-rate contractors here or from third-world countries for pennies on the dollar? Chicken: these contracts may represent opportunities and income that the contractors would not otherwise have. Egg: if your western venture cannot thrive by paying a living wage to employees / contractors is it really viable and have a reason to exist? Since the economy is shifting so dramatically away from traditional capitalist tenets, we are operating in the uncertainty of what conditions constitute business viability AND social responsibility.

  2. This is an intriguing concept and yet, one must really pin-point which is the cause and the effect in this scenario: The contract work or the income inequality? It’s like the chicken-and-egg case that got us running in circles. Perhaps, what we need is a revamp of traditional methods, or even the old law, to cope up with the fast changes that new technology brings with it. Personally, I think that independent work is a stepping stone to entrepreneurship.. to the rise of startups and small businesses trying to contribute to the ailing economy – so I don’t see it as a negative factor.