MSBA Professor Arun Sundararajan recently contributed an op-ed to The Huffington Post entitled, “Will the On-Demand Economy Raise Global Living Standards?” Professor Sundararajan discusses the growing influence of the on-demand workforce which has become a substantial force within modern economies. Based on these changes, he states, there are two visions for the future: one in which entrepreneurs and workers are able to utilize technology and provide a wide range of new products and services while at the same time working more flexible hours, earning more money and creating a better work-life balance for themselves.
The second vision foresees the disenfranchisement of workers, job instability, low wages and a lack of social safety nets and labor laws. In partnership with Professor Marios Kokkodis of Boston College, Professor Sundararajan has conducted research that sheds light on workplace futures.
We have been monitoring hourly wage rates for over 10,000 workers across a range of different occupations on a popular U.S.-based online labour platform, comparing these to the corresponding levels documented by the U.S. Bureau of Labor Statistics. As of summer 2015, average on-demand wage rates remain higher, even after accounting for marketplace fees and differences in wage levels by geography and by profession. Put differently, you can generally expect to earn more per hour getting your freelance work through a digital labour market than by seeking it through traditional channels, even after you pay the platform its commission.
A closer look at the data, however, suggests that this on-demand wage premium is not uniform across occupations…while many [occupations] have higher wage rates, workers in others are making significantly less per hour than the national averages…The economic rationale is simple. If the presence of an online labour market increases the supply of labour without changing anything else, competition will drive down wage rates.
To read the complete Huffington Post op-ed, please click here.