Workplace flexibility for workers

It’s been true for some time that all that ‘flexibility’ everyone said was so important in the labour market was mostly flexibility for bosses. And it was flexibility that raised risks and inconvenience for workers. That’s not a knockdown argument against it of course, but it does raise the question of whether workers were adequately compensated for the loss. Some were. Presumably some weren’t. But it’s always struck me as a huge deal that in the new ‘gig’ economy a lot of the flexibility is to the advantage of the worker. Working for Uber you go driving if and only if you want to. How important is this in terms of worker utility. Perhaps for some it’s negative because they need the discipline of being ordered around. But you’d imagine it would be a huge boon for many who can order their work around other priorities. And so it seems to be.

The Value of Flexible Work: Evidence from Uber Drivers by M. Keith Chen, Judith A. Chevalier, Peter E. Rossi, Emily Oehlsen – #23296 (IO LS PR)

Participation in flexible contract work has increased dramatically over the last decade, often in settings where new technologies lower the transaction costs of providing labor flexibly. One prominent example of this is the ride-sharing company Uber, which allows drivers to provide (or not provide) rides anytime they are willing to accept prevailing prices for this service. An Uber-style arrangement offers workers flexibility in both setting a customized work schedule and also adjusting it throughout the day. Using high-frequency data of hourly earnings for Uber drivers, we document the ways in which drivers utilize this real-time flexibility and we estimate the driver surplus generated by this flexibility. We estimate how drivers’ reservation wages vary in high frequency from hour to hour, which allows us to study the surplus and supply implications of both flexible and traditional work arrangements. Our results indicate that, while the Uber relationship may have other drawbacks, Uber drivers benefit significantly from real-time flexibility, earning more than twice the surplus they would in less flexible arrangements. If required to supply labor inflexibly at prevailing wages, they would also reduce the hours they supply by more than two-thirds. The implications of our findings for the future of flexible work are discussed.

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