Housing and the Gig Economy
Many of the same forces delivering insecurity and growing economic inequality within labour markets have also been brought to bear on Australian housing markets. In this article, Ben Spies-Butcher examines the relationship between the growth of the gig economy, it's relationship to social security and growing instability in housing.
Housing and the Gig Economy
Our lives at work have been changing radically, just as our housing system has been changing too. In both cases stability and predictability are giving way to flexibility, insecurity and, increasingly, greater inequality. These changes are not a coincidence, both are driven by the same macroeconomic emphasis on deregulation; and increasingly insecurities at work are reinforcing problems in our housing system.
From Stability to Insecurity
For much of the twentieth century Australia had a unique approach to jobs and housing focused on what we might call pre-distribution rather than re-distribution. By regulating financial and labour markets households received more equitable access to jobs and housing before the need for government spending.
In housing, strong regulation of banks (including public ownership), land release policies and preferential policies for home buyers supported a high rate of home ownership (the most secure form of tenure) and low rate of private renting (the least secure). In employment, a formal commitment to full employment and centralized wage fixing gave workers, especially those with less bargaining power, a bigger say. In both areas, most of those policies have been dismantled.
The last 30 years have seen a dramatic increase in ‘non-standard’ forms of employment. This includes part-time jobs, and casual and contract employment. These new jobs allow some workers to combine work and other commitments (like caring for family), and can mean more control over how we work. But there is growing evidence that for many these changes just mean less security and less bargaining power.
The days of full employment have long since gone. Australia’s unemployment rate barely rose above 2% for the three decades following WWII, it has barely fallen below 5% since. Underemployment is also on the rise; even those with work want more hours. And because jobs are more ‘flexible’, they are also less stable, so we are less sure we will still have a job in the future. When you combine these trends with falling union membership it is unsurprising wages are barely growing, despite steady economic growth. Flat wage growth is now one of the major drivers of rising inequality.
The Rise of the Gig Economy
We are witnessing an increase in the ‘gig economy’, where workers are employed on a very short-term basis. Uber is replacing taxi drivers, and Airtasker is replacing everything from ‘handy person’ work to editing and graphic design. A similar trend has emerged in housing as well – through AirBnB. Because all of these examples use the internet to change the way we do things, the gig economy is often linked to fears automation will decimate paid employment.
The gig economy and automation, however, are distinct trends. As Jim Stanford argues, new technology plays a relatively minor role in most gig jobs, focused largely on connecting buyers and sellers. The handy person and Uber driver do much the same things they did before. The service itself is almost identical – what has changed is the way we connect workers and consumers. Whereas in manufacturing, the nature of the work itself has changed dramatically as computers and robots replace people.
Why are gig jobs growing so quickly if they involve so little change? One explanation is that these online platforms circumvent the rules we have developed to regulate labour and housing markets. Airtasker workers and Uber drivers are legally independent contractors (although this is increasingly being challenged). They pay all their own overheads and have to manage all their own cash flow. If you are only doing this on the side for a bit of spare cash, that’s fine, but if it replaces more stable jobs, it is a problem.
Gig Jobs and Housing
Job insecurity reinforces housing insecurity. As more people work in less stable jobs – either on short-term contracts, or as casuals or in the ‘gig’ economy – so they can find it harder to access stable housing. First, without a stable job it is difficult to get a mortgage, which means you cannot buy a house. Australia now has one of the highest household debt to GDP ratios in the world, driven almost entirely by mortgage debt. And unlike most other similar countries, debt is still rising after the financial crisis. Expensive housing and high debt make insecure work a bigger problem.
Insecure work is just as much a problem for renters. If your income fluctuates every week it is hard to manage your finances to ensure you can cover the rent in periods where you have fewer hours or no work. Low paid and underemployed workers, who have less of a financial buffer when things get tight, are more likely to have insecure forms of employment. It is not surprising this leads to a growing number of people scarifying essentials to pay the rent.
Insecure jobs also challenge our system of social security. Most government payments are highly targeted – meaning only those on low incomes get help, and support is withdrawn as you start to earn income. This creates two big problems. Working an extra shift can mean little extra cash, because benefits are withdrawn at higher rates than apply for taxation. Second, it can be hard to predict what you will earn, and government systems are often slow in responding. This can mean you lose benefits based on previous earnings just as you lose shifts – leaving you with no money, or even a debt.
These problems also effect social housing. Little government investment and rising need has created long waiting lists. The main government strategy for ‘reducing’ waiting lists is tightening eligibility. As a consequence, only those on very low incomes generally qualify. If you are in social housing and you start to earn more, then you risk losing your home.
Our meager system of social security is not designed for a world of insecure work. Low benefits leave no room for insecurity; and our social housing system does not have the flexibility to match people’s work lives. Fixing our housing system will require more social housing and greater security for private renters, but it also needs more security at work.