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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9 Comments

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

    • 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.

  8. Over the past decade, the internet has revolutionized society’s standard of living. From providing real-time information, to enhancing our communication, the internet is undoubtedly one of the most important innovations in the twenty-first century. Specifically, this article examines the impacts of digital labor on the economy, which has become increasingly popular on the web. Semuels raises a fair argument addressing how digital labor sites, such as Fiverr, are damaging labor competition as workers like “graphic designers… and marketers have to keep lowering their rates to compete.” Internet services has unfavorable impacts on the labor market that effects a wide range of industries.

    Uber and Lyft are two digital-dependent service companies that has recently caused controversy concerning their impact on the economy. Specifically, New York City is planning to establish a quota on the number of ride-hailing firms allowed in the city, after recent uproars calling for a new bill (https://www.wsj.com/articles/new-york-city-council-votes-to-cap-uber-and-lyft-1533759263). Companies like Uber and Lyft are disrupting competition for taxi cab drivers who are unable to compete with the low prices. Because taxi medallions are expensive and rare in New York City, taxi drivers cannot compete fairly with low-priced competitors who are not regulated. Furthermore, Uber and Lyft services has also caused mass traffic flooding in the city, making it difficult to drive. The internet has also established the same type of competition in services like tutoring, therapy, and consulting. It is apparent that a major drawback of digital based services is that it establishes a channel for companies to outsource labor globally, as well as domestically, for cheaper prices. Despite the disadvantages, it is also crucial to note that digital services also help enhance the economy with increased competition. Online services that can be provided at cheaper prices stimulates consumer spending, as these services become increasingly available to the public.

    A major concern I have with the rise of digital labor is the issue related to employment benefits. For example, Uber and Lyft drivers are not provided any worker benefits because they are legally registered as employees with these companies. Many individuals who depend on digital platforms services for income are often left with no benefits such as employment healthcare. YouTube is another platform that does not take liability for content creators who often work full-time to publish content. The fact that these types of workers are not provided any benefits concerns me since many of these individuals work full-time on these platforms. I understand that issue is complicated on a legal aspect, but I believe that this issue should be addressed before the matter gets more complicated.

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