Putting-out with smartphones II

The pre-Industrial putting-out system and its parallels to the modern gig economy

There’s not a lot of high quality evidence, but it seems plausible to me that the putting-out system was better for workers than the factory system and that most gig workers would prefer more standard employment.

They have driven us away from our houses and gardens to work as prisoners in their factories and their seminaries of vice. Thomas Exell, 1838

Intro

Last time, we reviewed the putting out system—a pre-industrial system of manufacture used in England where workers would take intermediate products home, refine them in some way, and return them to a merchant so that some other worker could perform the next step in the production process. Then, I suggested that this system sounds a lot like the modern gig economy.

Which left us with the question: Why is the gig economy worse than regular, full-time employment (for workers), but putting-out was better than factories (for workers)? We can resolve this tension by either finding that contemporary praise of the putting out system is wrong, finding that criticism of the gig economy is wrong, or (hint, hint) highlighting the disanalogies between the systems.

Was putting-out actually preferred to factories?

Direct evidence

Obviously, we can’t answer this question definitively and our direct evidence1 is weak. One piece of direct evidence we do have is contemporary complaints about the factory system like that in the epigraph. Of course, these are only anecdotes and it’s hard to generalize or be sure they’re representative, but, try as I might, I couldn’t find any anecdotes on the other side of the issue—there were no early factory workers singing praises of child labor and 14 hour days.

Another piece of information which tends to reveal preferences is: “[W]here alternatives to factory employment were available, there is evidence that workers flocked to them. […] [D]espite the abysmally low level to which wages fell [in the non-factory cotton weaving industry], a force of domestic cotton weavers numbering some 250,000 survived well into the nineteenth century.” (Marglin 1974) It is, of course, impossible to be certain that worker aversion to factories is what drove this behavior.

One last claim from this angle: It seems widely acknowledged that workers struggled to transition to the factory model. Factory work was perhaps never fully accepted by adults forced to transition to it and was only accepted by children who had grown up working in factories or expecting to work in factories (a la “Science advances one funeral at a time.”). “The early industrial capitalists spent a great deal of effort and time in the social conditioning of their labor force” (Mokyr 2001).

Indirect evidence

Last time, we covered some of the reasons that factory work might have been unappealing.

I trust that the reader can call to mind or find lots more about the abysmal conditions of early factories.

An objection

One objection the attentive reader might raise is: If the workers didn’t like factories, why did they transition to them? Standard economic logic dictates that actors don’t make self-defeating choices so they must have actually preferred factories. The story here is that the productivity of factories was so great and decreased prices so much that the comparatively inefficient putting-out system was no longer sustainable. Factory driven changes in market conditions meant workers were faced with the choice of penury or factory work. (Mokyr 2001)

Summation

I’ll readily admit that no particular piece of evidence here is impressive. In the aggregate though, I’m still fairly ready to believe that workers preferred the putting-out system to factory work.

Is FLSA work actually preferred to gig work?

(FLSA stands for Fair Labor Standards Act and we’ll use work where these rules apply as a conceptual shorthand for ‘normal’ work.)

Sadly, the intervening centuries don’t mean that we’re drowning in evidence on these questions. Everyone in the nascent gig economy literature seems to lament that the best source of data is a 2005 (!) BLS report on Contingent and Alternative Employment Arrangements (Labor Statistics (BLS). 2004). Obviously, there wasn’t much of a gig economy in 2005 so data from that report is best interpreted with caution.

Direct evidence

Caveats aside, here’s a key finding: By their narrowest definition of contingent worker (wage and salary workers who indicate that they expect to work in their current job for 1 year or less and who have worked for their current employer for 1 year or less) 63% of workers in these contingent and alternative arrangements would have preferred a job that was permanent. A somewhat broader definition of contingent worker (includes the self-employed) drops that to 57%.

Another story you can tell as to worker attitudes on contingent work: “When workers were in a strong bargaining position from 1995 to 2001, the share of contingent workers fell. Gig jobs declined as a share of the economy when workers had more bargaining leverage during the employment boom—the first internet boom—of the second Clinton Administration. This suggests that it is employers, not employees, who are pushing the gig economy.” (Friedman 2014)

Indirect evidence

There are, of course, many disadvantages to gig work which might cause workers to dislike it. For one, gig workers tend to earn less than traditional employees after controlling for education (Friedman 2014).

There’s also a whole bundle of benefits mandated by the FLSA in the U.S. Gig workers are not guaranteed these things. The benefits include:

  • minimum wage
  • overtime compensation
  • unemployment compensation
  • family and medical leave
  • employer payroll taxes
  • collective bargaining rights

Furthermore, a majority of workers in FLSA positions are offered the following benefits:

  • health insurance
  • retirement
  • life insurance
  • paid sick leave
  • paid vacations

Of course, the arguments in favor of gig work are very similar to those advanced in favor of putting-out in the previous post in the series.

Summation

Ultimately, though I’m far from certain, I find the evidence above somewhat persuasive. It seems likely to me that most workers in the gig economy would prefer other arrangements.

Conclusion

It’s hard to be certain, but it seems that both claims might be true. Putting-out was better than factories for workers and gig work is worse than FLSA employment for most workers. That means our only way out is to discern the crucial differences between now and then. Next time.


Friedman, Gerald. 2014. “Workers Without Employers: Shadow Corporations and the Rise of the Gig Economy.” Review of Keynesian Economics 2 (2). Edward Elgar Publishing Ltd: 171–88. https://www.researchgate.net/profile/Gerald_Friedman/publication/276191257_Workers_without_employers_Shadow_corporations_and_the_rise_of_the_gig_economy/links/5731c7bf08ae6cca19a3081f.pdf.

Labor Statistics (BLS)., Bureau of. 2004. “Contingent and Alternative Employment Arrangements.” https://www.bls.gov/news.release/pdf/conemp.pdf.

Marglin, Stephen A. 1974. “What Do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production.” Review of Radical Political Economics 6 (2). Sage Publications Sage CA: Thousand Oaks, CA: 60–112. http://scholar.harvard.edu/files/marglin/files/review_of_radical_political_economics-1974-marglin-60-112_0.pdf.

Mokyr, Joel. 2001. “The Rise and Fall of the Factory System: Technology, Firms, and Households Since the Industrial Revolution.” In Carnegie-Rochester Conference Series on Public Policy, 55:1–45. 1. Elsevier. https://cpb-us-e1.wpmucdn.com/sites.northwestern.edu/dist/3/1222/files/2016/06/The-Rise-and-Fall-of-the-Factory-System-Nov-2000-1dey3ic.pdf.


  1. By direct evidence, I mean evidence about the preferences of workers. This contrasts with indirect evidence where we find what working conditions were like and infer how workers must have felt about those conditions.