Does The Future of Work Involve Crowdsourcing? Let’s Hope Not

I’m a big fan of the free market. I like negotiating deals, making money and buying services and deals in a voluntary, open market.

You don’t like my deal? You can go somewhere else. And even though we abuse the concept here in the U.S. (hello, corporate bailouts), I still think it is the best of many flawed systems.

That being said, every once in a while that foundation gets rocked a little by a new idea. Usually those ideas come in two forms: incredibly revolutionary or incredibly exploitative. The idea of crowdsourced labor clearly falls within the realm of the latter.

What is crowdsourced labor?

The Wall Street Journal had a recent piece on the practice and explained it like this:

Crowdsourced labor usually involves breaking a project into tiny component tasks and farming those tasks out to the general public by posting the requests on a website. Many firms that use crowdsourcing pay pennies per microtask to complete projects such as tagging or verifying data, digitizing handwritten forms and database entry. Dozens of services, such as Amazon.com Inc.’s Mechanical Turk and CrowdFlower, have cropped up in recent years to help companies cheaply crowdsource tasks.”

Of course, the main reason that companies are choosing to use these types of services relate to the cost of them in comparison to traditional labor. That same WSJ piece claimed that crowdsourcing labor can cost half of what traditional labor services can charge.

It doesn’t take a rocket scientist (or an accountant, I guess) to figure out where that savings is coming from: cheaper labor. And that’s not great.

Giving it a shot

I was first introduced to the idea of crowdsourced labor a few years ago when my wife was telling me she had heard about Amazon’s Mechanical Turk service. She tried it out and spent about an hour learning about it and then trying some tasks and expressed some dissatisfaction with it, making less than a dollar and seeing no way to speed up the process.

I tried it out again this week for about a half an hour just to see if the amounts or tasks had changed. The tasks I tried were simple ones: type in a search query or verify information on a web page. I went through several of the tasks, some for 5 cents and some for 25-35 cents and earned less than a dollar in a half an hour. I don’t think TLNT is in danger of losing my services.

You can try it out for free if you’re curious, by the way. Let me know if you can make it up to the minimum wage in your state.

Some of the larger tasks were almost more embarrassing — $5 for transcribing an 80-minute audio recording; $10 for five 400 word articles on travel tips; $7 for compiling a list of the 1,000 richest celebrities.

In defense of the practice, who cares if it isn’t my cup of tea? If it was so egregious, people wouldn’t take the tasks and they’d either have to raise what they are paying or work wouldn’t get done. And for some classes of workers like students and stay-at-home parents, a couple of dollars earned in between classes or children’s naps can work out okay. So what’s the harm?

Taxes, labor markets and digital sweatshops

Crowdsourced labor isn’t the only advantageous way that companies are looking to cut costs (outsourcing and offshoring of key functions have received most of the press) but it isn’t victimless either.

For one, you are responsible for the taxes on what you earn. Now depending on your tax status or income level, you might avoid paying taxes on it anyway. But you certainly aren’t contributing to social security and there could be repercussions if you are on a state or federal benefit plan that uses income to determine how much you receive (Correction 1/19: most if not all do contribute towards Social Security with the self-employment tax). And if you’re the company, you aren’t contributing to the tax base at all because you aren’t using actual employees.

And speaking of employees, this has a major impact on people who want to work with your standard W-2 arrangement. We can disparage the government for making it difficult to do the right thing, but using that excuse as an opportunity to shift traditional job opportunities to mass labor via contract is a net loss for everyone in the end. A jobless recovery is only exacerbated by these trends.

Lastly, the idea of digital sweatshops isn’t new. Kris Dunn covered the idea last year on the HR Capitalist. In the drive to reduce costs and get more productivity, we turn into some of the worst parts of the free market: killing creativity and thinking with mindless tasks shot at you like a Randy Johnson fastball. Whether that is writing five articles for $2 a piece, typing a search, or verifying information for the equivalent of a few bucks an hour if you get fairly good, it doesn’t mean that’s a good future for our workforce.

What skin do you have in the game? As long as you never have to worry about having skilled employees, then I guess nothing.