The Online Gig Economy’s ‘Race to the Bottom’

from The Atlantic

You can buy almost any thing you want online—toothpaste, books, plastic devices that allow you to lick your cat. On digital work platforms like Upwork, Fiverr, and Freelancer.com, you can also buy nearly any service—often from someone halfway around the world, sometimes for just a few bucks. On Fiverr, one of the most popular of these platforms, you’ll find offers for someone who will write an e-book “on any topic”; a person who will perform “a Voiceover as Bernie Sanders”; someone who will write your Tinder profile for you, and someone who will design a logo for your real-estate company. The people selling this labor live in Nigeria, Mexico, the United Kingdom, and Bangladesh, respectively. Each of them charge $5 for these tasks.

For buyers, the appeal of these sites is obvious: They’re a great place to find skilled and semi-skilled sellers willing to work for cheap. They track when work has been completed, allow sellers to rate workers, and provide staff who can help resolve disputes. The people selling their skills win, too: Workers—especially those living overseas—can make a decent amount of money being paid in U.S. dollars. The proliferation of online freelance-job sites have allowed some people to leave poorly paying jobs in their home countries; it also allows students and those with little experience to sell their work, get good reviews, and start cultivating clients. It’s free to list services on most of these sites, and once freelancers start getting reviews—which they can get from actual clients, or from friends who buy their service, or from people through “Fiverr review” or other such Facebook groups—other buyers trust them and hire them.

More than 48 million people have registered globally on websites allowing them to sell their labor. Optimistic about the potential of the digital economy to lift people from poverty, countries like Malaysia and Nigeria have embarked on campaigns to train residents in how to use online labor platforms; Malaysia aims to have 340,000 workers, mostly from the bottom 40 percent of income earners, make a living from online freelancing by 2020.

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12 Responses to The Online Gig Economy’s ‘Race to the Bottom’

  1. Wilnir Louis September 14, 2018 at 12:20 pm #

    This article was about Fiverr, and how now the internet can be used to purchase freelance jobs and hire people. While reading this article, there was two details that I really questioned and a couple of thoughts that also crossed my mind. First, before I continue to write my reaction to this, I would just like to say that I never heard of Fiverr before. I read this article through a lens of ignorance because I did not know that there were sites dedicated to workers to sell their service online. I thought if you wanted to sell your service, that you just have to know people, or do it word of mouth or on eBay or something. So the idea of having a site dedicated to selling your service is very intriguing. I could see how someone of my age could use it to make some extra bucks on the side using these sites. However, one of the details that scare me is the fact that you could be paying someone that is on the other side of the world. That detail reminded me of what Professor Shannon said in one of the earlier class regarding work competition. Back in the day, a person was only in competition with people in their vicinity. Now, everyone is in competition with everyone, meaning that one single person is in competition with someone in their vicinity, someone in China, someone in Russia, someone in Australia, etc. This causes websites like Fiverr to be dangerous because someone from another country might not need as much money as someone in the United States, thus selling their services for way cheaper. Since their service is cheaper, more people would probably go to that person.
    Another detail that frightens me about these websites is the lack of regulations on them. There is no regulation on the prices that someone could offer; the only thing that is required is the fee that Fiverr gets. There is also no regulation on the information that you receive from the person. Since this is an online source, it’s so easy for someone to lie about their information and do a poor job and still get paid. It makes it difficult for someone to know who is good and who isn’t; besides the ratings that people get. This is why face-to-face exchanges are better.
    Overall, I would not use the service. There are a lot of YouTube videos and instructional videos for someone to watch to get the outcome that they want themselves. I believe that the best work is the work that you do yourself. Now if someone is busy or uncreative, then this site could be a good thing, but again I feel that someone should just do things like this from word of mouth or in person, not on a website where there are millions of people all over the planet.

  2. Tyler Peteraf September 14, 2018 at 5:34 pm #

    In today’s world, one thing that we can all probably say is that if we could get somebody to do something for us that involves some level of difficulty, we would probably take it. As this article goes over, more and more people today are involving themselves in the idea of internet freelancing. People are putting their various service’s online, whether it be graphic design or voice over work, and can offer work for a cheap price. People are able to make their services known to the world through platforms such as Upwork, Fiverr, and Freelancer.com. While this does seem like a win win for both the buyer and seller, there are some very notable downsides to trying to get involved in this field. While it is certainly a way for people in impoverished countries to try and start a better lives for them and their families, it can also be a very competitive field with very little stability. As more and more people become more tech savvy through the coming years, the increase in internet freelancers will coincide with it. With more people putting their services online, it will effectively create a competition that will create problems. Firstly, due to an increase in competition people will be forced to continually lower their prices in order to keep up with their competitors. This will also lead to people making less and less money for their services, and not making nearly as much as they should be.
    Does it makes sense for people to go into the field of online freelancing? Maybe. I am able to see the benefits of it and the negatives as well. Everyone knows that this world evolves around technology and anyone who want to have a substantial job in the future needs to understand it. This form of work is definitely a way for people who are struggling to get by, it offers an income that possibly wouldn’t be there. However, in my opinion it is way to risky to put all of your cards into it. By no means is it a stable job and it will only become more and more competitive. It is not a guaranteed income and you will never know how much you will have to drop your prices in order to compete with your competition. Would I personally do it? No. But I understand why people would try.

  3. Cassie Sibilski September 14, 2018 at 6:23 pm #

    I think that this article about websites where people are basically advertising to do freelance work internationally is interesting and really allows people all over the world to be able to connect. On websites like Fiverr, it’s basic internet tasks that are being advertised internationally for very inexpensive costs. It is extremely useful for people living in other countries to advertise their work and to get hired and to be paid in US dollars because it helps them if they have low paying jobs in other countries. Being able to do this freelance work gives people extra money. I think the benefit of skilled workers to be able to put themselves out there and gain clients for their work is a large pro to the situation, especially since the work can be reviewed. Then people will be able to sort through the many many advertisements. This provides a chance for new people in a field to get their work out there and start cultivating a following, through these websites, while gaining feedback through these online reviews and ratings from the public. The downside to these websites advertising freelance work is that there are so many people on these sites, that it is difficult to make enough money through these sites, and difficult to figure out which advertisements are legit. There are so many people advertising to do the same type of work that it is hard to know which person to choose when one needs a job to be done online. Even so, this is becoming an extremely big online market that has a lot of money involved in it. I can only see online markets like these growing and growing as technology gets more and more advanced. This is a new thing that’s been relatively recently introduced online and so far it has been quite successful.

  4. Shaunak Rajurkar September 14, 2018 at 7:09 pm #

    The gig economy, as well as the spread of internet access in underdeveloped areas is a critical part of globalism in the future. The website “Fiverr,” as described in this article, has gained traction in underdeveloped areas due to favorable currency exchange rates, and it has gained popularity in countries with strong economies due to the access to cheap labor. If powerhouses in the gig economy continue to spread in developing countries, their economies could shift drastically from being export based to being service based. The “service economy” standard will mark a new era in globalism where the export economies are dominated by automation.

    Economies that are already service heavy, including the United States, will likely attempt to automate services, while export economies will make an effort to further (and completely) automate the production of goods. If this happens too quickly, stability in each market becomes nonexistent. The article makes a reference to Malaysia selectively training around 340,000 workers specifically for online labor platforms. As a result of these actions, the author makes a case for an “oversupply of workers” causing them to compete with each other for lower prices. This “race to the bottom” is already causing mass instability among sellers, because buyers will obviously have a natural tendency to aim for the lowest prices.

    “If these sellers raise prices, they will lose buyers,” notes Semuels. Ultimately, they see other sellers as competitors, not colleagues. This is why they struggle to “advocate for better working conditions,” leaving wages in the dirt. A comparable amateur case in the United States suggested she would be living “under a bridge” if she had to make a living off of Fiverr. Professionals and college students alike have the ability to provide “Pro-Level” service to clients to make livable wages, but most who use it to supplement their income are rarely gratified by the service.

    Even if Fiverr provides an opportunity to earn decent wages in underdeveloped countries, sellers will struggle to improve their living and working conditions. Countries like Malaysia, who are already systematically training workers for online labor must aim to offer professional services in fields where automation does not threaten the industry in the future. These efforts may be arbitrary and fruitless, however. In the case of a system similar to one that supports Universal Basic Income, individual “gig” labor will not last in the future. AI and machine learning are quickly adapting to modern workforce standards, leaving millions of jobs in jeopardy. Other “gig” services, such as UBER, will have replace the need for humans completely. Services such as AirBnB, however, will not have the same problem due to the fact that most residential property is privately owned. This leads to another economic problem: inequality. If the rate of return (in growth) of assets is greater than the return on labor, inequality will constantly rise. At the moment, there is very little we can do to slow the gap between the middle class and the economic elites.

  5. Douglas Tkac September 14, 2018 at 7:09 pm #

    Even though that this article mainly focuses on the online workforce slowly growing and growing with a plethora of people looking for some type of work (whether it’s for graphic design purposes, teaching or tutoring purposes, or other types of assistance through Fiverr), the article itself only shows a glimpse of what the future holds for the ever-growing workforce, more so on the negative side.

    If you are a consumer through Fiverr and need some type of service done that is reliable and quality, then Fiverr may seem like one of the best things you could ever imagine coming across. However, with more and more people gaining access to the internet, it creates the problem with quantity demanded is higher than supply, which leads to hard-working people (such as Jalena, a teenager in Serbia offering services through Fiverr) lowering and lowering their prices just to make at least some type of money for herself. Even though this article makes it seem like this is a new and uprising problem, I feel as if this has been going on for a while now, and it’s gotten to the point where it is almost common to see people struggling to make money due to the insane amount of competition, whether the market is being drawn to one big competitor or millions of other humans offering the same services.

    I relate this to what is happening now with the rise of Amazon, as Amazon has been dominating online sales for just about anything and everything you can imagine, siphoning customers away from every other corporation out there, and even putting some corporations out of business completely (the biggest one being Toys”R”Us). With amazon being so easy to access and offering so many other perks along with using its services (such as Amazon Prime and having the ability to order groceries through Amazon and having them arrive hours later), I think it’s putting a chokehold on internet sales and services in general, as now Amazon is even expanding into the automobile services, such as selling motor oil (and at this rate, in 10 years I can probably drive into an Amazon warehouse and get my tires rotated).

    The reason why I bring Amazon up is because I think they are a big contributor to the problems mentioned in the article with Fiverr and it’s workforce: with so much physical work being eliminated and the access to internet increasing by the day, people are using the internet for all of their services and goods, and when a big company like Amazon puts plenty of companies out of business and people are left with no job, they have to resort to utilizing their talents elsewhere (such as Fiverr) in order to make ends meet. I don’t think this trend is going to end anytime soon unfortunately, so this may just be the calm before the storm.

  6. Henry Steck September 14, 2018 at 8:28 pm #

    This was a great article. As Amazon outshines Ebay, the “gig” economy is sometimes forgotten by media. We may not see websites like Fiverr as competitors to Amazon, but as this article highlights, 48 million people are registered on these sites to sell their talents and growing. These sites therefore are competitors.

    I have used Fiverr many times, especially for 3d renderings and other concept art that I could not create on my own. While it would be nice to be a photoshop wizard, I do not have time to learn the software, let alone spend the hours to become skilled in it. On the other hand, I can now pay someone who is highly skilled in concept art to build my render. I have submitted very specific instructions on Fiverr and gotten great results. There is also a “revisions” process, something this article missed, which allows the seller to communicate with me to ensure the gig is delivered as anticipated.

    This “revisions” process also allows sellers to upsell customers for additional services and allow for tipping. One gig I ordered was for a logo. After the revisions process, I realized I needed a .ai (adobe illustrator, super high-res) format of the work to be used in a banner. The seller was able to provide this super quickly, in this case overnight. With so many gig sellers coming from EM countries in Asia or the Middle East, work can be ordered at night US time and delivered by the morning due to how the days line up.

    Although not as common these days, I really like the tipping function Fiverr offers. I have received nice thank you notes from sellers. Look, if someone can deliver a great image or other service for just $5 on a tight timeline that is worth way more to me, an extra $5 goes a long way in saying thanks.

    My last thought is related to the rise of the freelancer, a topic I know we have spoken about, professor. Although this is a quickly growing area, especially in EM areas where it may be difficult to find work with large organizations, I thought the article overstated the transfer of jobs to freelancing.

  7. Nicholas Stefanelli September 14, 2018 at 8:28 pm #

    Having the internet readily available is probably one of the greatest accomplishments the world has to offer us. My generation has it so much easier than our parents, and I think we take it for granted. This article talks about how we are able to buy and sell services that are located all around the world. This seems like a blessing at first. Are we blind to the bigger picture though? I think my generation has one of the greatest opportunities but are we taking advantage of what we have and neglecting the bigger picture.
    Waking up and being able to just go out and have someone do work for us with a click of a button seems like it is the best thing to have. Also, to sweeten the deal it at a cheap price. This sounds like the perfect scenario for all of us but in hindsight, it is not. My generation is crippling their own chances at work and making the completive market for themselves bigger than it needs to be. We all want others to do work for us at a cheap rate but the only way for us to achieve this is by outreaching overseas. This is causing people who are skilled in the same type of work in our country not being able to keep up with the low process overseas and now the competitive market it the whole world and now from being a unique individual you become a number and a price. I think we all want to think we are more than just a number and a price, but nowadays it is hard to be recognized that more than just that.
    In conclusion, the internet and use of online to freelance are not going to go away. One thing we can do is use people from our own country and try to keep the competitive market within the country. This way we do not fall behind in economic growth and we keep the competitive market for jobs within our country. Finally, the internet is a great place but we should use it wisely and not take it for granted because it can come and haunt our decision later on.

  8. Joseph Capouch September 14, 2018 at 8:32 pm #

    After reading “The Online Gig Economy’s ‘Race to the Bottom’”, I found ideas that both support and refute that online freelancer’s severely threaten current jobs, pros and cons of sites like Fiverr, and overall an argument to be made for each side on every topic present in this article, making it an interesting read.
    First of all, the ability for people worldwide to get some experience, and put their talents to use to provide services to others online is an overall great idea with a lot of potential. As the article expressed some of these people were previously taken advantage of by employers, and were not properly compensated for their work. An alternative like Fiverr keeps them from feeling stuck in a job like that, and serves as a solution to their employment needs, or simply just a stepping stone to their larger goal. Either way, the choice is theirs depending on how they are able to use their talents, education, and other tools; something that I find extremely valuable.
    However, there is one flaw with interactions between people on this site that will keep it from being able to heavily impact the availability of work for high-skilled applicants. This flaw is the lack of personal connection between employers, and employees. This disconnection works fine for Fiverr, it allows them to keep a cut and stay in business, it prevents harassment between upset clients because they can’t directly contact people they have done business with, and it keeps the jobs moving quickly and smoothly. However, most employers will seek a more permanent employee in the long term, someone they can potentially get to know, work alongside, and have a long term business relationship with that allows both parties to flourish. I say this with confidence, coming from years of working with my parents at their small business, and seeing many employees come and go. When hiring new employees we could help them gain new skills, learn new information, and optimize them at their job, but none of that would be possible without a degree of trust, and connection between coworkers that simply isn’t possible with the type of business interaction that occurs on Fiverr.
    Overall the online freelancing market is an intriguing topic to follow moving into the future. It clearly has a place in the job market, but the extent of that seems limited yet hard to see with certainty.

  9. Kent Flores September 14, 2018 at 8:57 pm #

    Reading through this article allowed me to really see a difference in the direction that our economy is growing. Seeing that in poorer countries many people are deciding to opt for online labor has opened my eyes on how the future will reconcile and reshape the financial district. As I can tell from reading the article 40% of poor countries use online websites to sell their specialized skills such as creating a blog, computerizing a website, and writing a piece of paper for college student or so on so forth. Even though it might seem to the older generation that online labor is not as valuable as physical labor through the sense that you would have to go out get a real job clock in with in real time and have a boss on top of you, this online labor allows you to actually go out there and compete one on one with the world. I never gave it a thought of actually going out there and do an online labor until I read this article. Now I’m going to decide whether or not in the future if I ever owned in my own accounting firm I’m going to give the option of online accounting for businesses in a different part of the country or in a different part of the world. The real meaning behind this article is not to give us the a percentage number on how many people actually use online labor now a days, but rather to show that if the percentage is already at 40% by 2018 it will soon rise as the following year start to proceed. Thank you for advancing my technological knowledge.

  10. AmberStile September 16, 2018 at 3:42 pm #

    The gig economy is a brand new term to me, and freelance websites are eye-opening as well. The state of global internet access is increasing rapidly, as The Atlantic discussed, and this is having a drastic impact on the job market across the world. In some underdeveloped countries, the citizens may wonder why they even would want an education when they could learn one skill and be employed right off the bat. In spite of the poor wages, these freelance websites, such as Fiverr, are still heavily supplied with people willing to do all sorts of jobs. Workers originally thought, as the article mentions, that they could “auction off their work to whoever would pay the highest price for it”, but in reality they are being forced to low-ball their price just to be accepted. In order to get high reviews, positive comments, and make some sort of money, digital-labor markets force workers to lower their price below others to be hired. Afterwards, they leave with an even smaller amount than they charged.

    I know that, personally, I always filter my shopping from price low to high – nowadays, people may not see a difference between purchasing an article of clothing and hiring an overseas worker, and that’s disappointing. Rather than looking for the cheapest price, we should be using the digital-labor market to expand our options and look for who will do the best job within our price range, regardless of location. Also, as people seem to be so frustrated with educated citizens not being hired, there should be an experience mandate on these websites, so you know exactly what you are paying for. Why would someone hire a less experienced worker over someone more experienced, if the cost is the same? The only reason freelancers are considered experienced equals is because Fiverr doesn’t require honesty within biographies. This is cheating the system and it doesn’t seem right. I’m not saying people who post services on websites like Fiverr are being malicious, but it’s wrong to be deceitful – an online platform is no excuse. If there was a mandate on honest information being posted to these websites, it would make the job market more equal. As Graham states in the article, this “race-to-the-bottom effect” is due to an oversupply of workers which would be resolved if listing experience was required. If someone looking for a short story could filter through freelancers and find a retired author, they would pick them over someone with no experience, and then that retired author could charge more and actually be hired for a just price.

    Outside of the unethical habits, these digital-labor markets will drastically affect our education system and economy. As I stated previously, these markets will result in less drive to get a stronger education because it will no longer be required with the mandates currently in place. In the long run, this could cause universities to shut down and that would result in job loss. Anyone affected by this hypothetical job loss, could then turn to freelancing, which leads to my next concern within the economy. If the digital labor market becomes more popular than the physical labor market, the standard of living will be nearly impossible to meet. As a result, a depression could start due to lack of spending, and then quality of living would be harmed. It’s a far-fetched scenario, but it’s possible over the next 50 years for something like this to happen if there isn’t some change to the legal structure of these websites.

    • Mackenzie Greenfield September 16, 2018 at 7:06 pm #

      I do see the positive aspects of this gig work. It may provide work for people who otherwise cannot find any. It does give people the flexibility to work when they want to. They can also work on a variety of projects. However, I also see people being taken advantage of. Living in the United States, I am not sure that I, in good conscience, would be able to pay someone a few dollars for something that would cost hundreds or even thousands here. We established labor laws many years ago to be sure workers were being treated fairly. I feel like we are taken back to a time when slave labor was common. Back then people took these low paying jobs because they had no choice – it looks like something similar is happening here. But then I think about companies outsourcing certain activities – paying people pennies to do something that would cost much more here. We do allow that to happen so I guess this is not much different.

      The extensive growth in this area is a concern as people may be starting to rely on this as their main source of income. As the article indicates, the number of gig workers is increasing greatly creating competition among the workers. The competition will make it harder to find gigs but may also force people to take gigs for even lower wages. In addition, there are no benefits associated with these gigs.It seems to be downward spiral into an abyss.

      The article also indicates that countries like Malaysia and Nigeria are training their citizens on using these online digital platforms for work. So instead of trying to improve their country and its economy such that people can find jobs where they live, they are driving them to this gig work. I think they should focus their resources on increasing employment within their country.

  11. Tyler Miller September 19, 2018 at 5:58 pm #

    The blog, The Online Gig Economy’s ‘Race to the Bottom’, by Professor Shannon was a surprising because I have never heard of any of the sites discussed in the blog. One of the sites talked about was Fiverr, which is where a buyer can purchase various online services. The sellers on the website promote the sale of services such as writing a tinder profile from workers in overseas countries. First and foremost, I have never heard of the sites mentioned in this article before and now this has me wondering why they exist. Which leads to some points, I had two points that stuck out and had me doing a double take. The primary point that struck me was the realization of when or why I would need to purchase the services that she had mentioned in her blog. I am person who can be very stingy when it comes to where my money is spent and if it would take a great deal of convincing for myself to spend money to have someone “perform a voiceover as Bernie Sanders.” I then began to look at a different and more positive side of how these sites are used such as, how it has boosted the income of the workers. In turn, it makes it easier for them to forgo their low paying jobs that hold them hostage in their respective countries. The sale of their services through the websites, such as Fiveer, allow these employees to try to improve their life. Although, I view the sites as only being negative in fact that it doesn’t seem necessary, they seem to be positive because many people benefit from consumers being willing to buy anything nowadays.

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