The Online Gig Economy’s ‘Race to the Bottom’

You can buy almost any thing you want online—toothpaste, books, plastic devices that allow you to lick your cat. On digital work platforms like Upwork, Fiverr, and Freelancer.com, you can also buy nearly any service—often from someone halfway around the world, sometimes for just a few bucks. On Fiverr, one of the most popular of these platforms, you’ll find offers for someone who will write an e-book “on any topic”; a person who will perform “a Voiceover as Bernie Sanders”; someone who will write your Tinder profile for you, and someone who will design a logo for your real-estate company. The people selling this labor live in Nigeria, Mexico, the United Kingdom, and Bangladesh, respectively. Each of them charge $5 for these tasks.

For buyers, the appeal of these sites is obvious: They’re a great place to find skilled and semi-skilled sellers willing to work for cheap. They track when work has been completed, allow sellers to rate workers, and provide staff who can help resolve disputes. The people selling their skills win, too: Workers—especially those living overseas—can make a decent amount of money being paid in U.S. dollars. The proliferation of online freelance-job sites have allowed some people to leave poorly paying jobs in their home countries; it also allows students and those with little experience to sell their work, get good reviews, and start cultivating clients. It’s free to list services on most of these sites, and once freelancers start getting reviews—which they can get from actual clients, or from friends who buy their service, or from people through “Fiverr review” or other such Facebook groups—other buyers trust them and hire them.

More than 48 million people have registered globally on websites allowing them to sell their labor. Optimistic about the potential of the digital economy to lift people from poverty, countries like Malaysia and Nigeria have embarked on campaigns to train residents in how to use online labor platforms; Malaysia aims to have 340,000 workers, mostly from the bottom 40 percent of income earners, make a living from online freelancing by 2020.

The global digital-labor force will only continue to grow: Nearly a quarter of a billion people came online for the first time last year, and about 4 billion people, more than half of the world’s population, now have internet access. In 2016, the World Bank estimated that the global market for online freelancing was $4.4 billion.

But while freelance websites may have raised wages and broadened the number of potential employers for some people, they’ve forced every new worker who signs up into entering a global marketplace with endless competition, low wages, and little stability. Decades ago, the only companies that outsourced work overseas were multinational corporations with the resources to set up manufacturing shops elsewhere. Now, independent businesses and individuals are using the power of the internet to find the cheapest services in the world too, and it’s not just manufacturing workers who are seeing the downsides to globalization. All over the country, people like graphic designers and voice-over artists and writers and marketers have to keep lowering their rates to compete.

“There really is a race-to-the-bottom effect going on here, because there’s so much of an oversupply of workers,” Mark Graham, a professor of internet geography at the Oxford Internet Institute, told me. Graham and his colleagues have been conducting an extensive study of the digital economy, interviewing hundreds of digital workers and analyzing data about tens of thousands of projects. They found that most buyers are located in high-income countries like the United States, and most sellers are in countries such as India, Nigeria, and the Philippines. While digital-labor markets are intended to allow sellers to auction off their work to whoever will pay the highest price for it, Graham and his Oxford colleagues Isis Hjorth and Vili Lehdonvirta found that they also help buyers find the cheapest sellers.

“Rates are way too low, but it’s how it works,” Jelena, a 17-year-old in Serbia who lists services on Fiverr.com, told me. (The Atlantic is not publishing her last name because Fiverr prohibits users from sharing email addresses and personal details, as she did with me.) “Whoever offers the lowest price, gets the job.” Jelena will translate 1,000 words from Serbian to English, or make a PowerPoint presentation, or even “write a beautiful love letter” for just $5 a pop. Fiverr takes about 20 percent of that, and then she gets charged a PayPal fee, so she ends up with about $3 for each service, she told me.

I encountered Jelena when I logged onto Fiverr, and, curious about the quality of the stuff I could buy for just $5, hired her and a few other freelancers to do some tasks. For just $7—$5 plus a $2 service fee charged by Fiverr—Jelena wrote a 200-word love letter for me. It was great: I told her that my fictional paramour and I had been dating for 161 days, and she added up those digits, which equal the number eight, and made a reference to how flipping an “8” on its side would lead to the infinity sign. “I wanna flip that 8 to the left and spend it with you,” she wrote.

Fiverr was founded in 2010 to take some of the “friction” out of the process of finding and working with a freelancer, making it as easy to buy labor as it is to buy a T-shirt online. In a statement, spokesperson Sam Katzen described it as “a global community that enables anyone to be a doer.” Freelancers have been allowed to charge more than $5 since 2015, and they are increasingly raising their rates: Just 5 percent of services cost $5, according to Katzen. Last year, Fiverr introduced a tier called Fiverr Pro that allows the company to feature high-quality workers who have been vetted by Fiverr through an application process and can thus charge more, Katzen said. While I found many logo designers listing their services for $5 on Fiverr, the Fiverr Pro designers charged much more, from $375 and up.

Digital-freelance sites each work a little differently. On Fiverr, buyers and sellers correspond through the platform anonymously and are not supposed to exchange email addresses or phone numbers, a rule designed to ensure that people won’t connect off the platform and thus hire one another without Fiverr getting a cut. Anyone can create a profile and begin selling their services right away, but they don’t have to upload a photo of themselves, or enter their education qualifications, or use their real name. Because people are restricted from exchanging too much information about themselves, it can be hard to know who you’re hiring. One of the workers I hired to write a Christian-themed blog post for $5 had a profile that listed her name as “Deborah Hutton.” It said that she was a “journalist by training,” and it featured a picture of a young white woman in glasses looking at a laptop, smiling. But when I did a reverse Google image search of the photo, I found it was actually an Adobe stock photo, titled “Happy woman using laptop at café.” And the name Deborah Hutton is the same as that of an English journalist for Vogue who died in 2005. When I asked “Deborah” if that was really her name, she did not write back. Fiverr listed her location as Nigeria. (Sites like Upwork, by contrast, require workers to submit an application that includes a real photo, their qualifications, and schooling.)

The internet makes all workers equal; there’s no way for a buyer to know who really is sitting behind the computer doing the work. This is a boon for many. Graham talked to people who did not have legal immigration status in the countries where they lived, but were still able to earn a living online, and older workers who had lost their jobs, but had disguised their age and were finding work.

But that also means similarly talented people can charge equal rates, regardless of their actual qualifications, even if they live in countries that have vastly different costs of living—and that Americans and other skilled workers in the developed world have a particularly hard time competing. That’s partly why the Harvard economist Richard B. Freeman warned more than a decade ago that the growth of the global workforce, with its proliferation of educated workers everywhere, “presents the U.S. economy with the greatest challenge since the Great Depression.”

Monika Taylor lives in the United States and offers psychic readings for $5 on Fiverr to supplement her full-time job. She had mostly been selling her readings on Facebook and Pinterest for about $65 to $85, she told me, but when she stumbled across Fiverr, she figured it was a good way to broaden the number of people she could reach. Though she balked when she saw that others were charging just $5 for psychic readings, she decided to list her services anyway, figuring she could raise rates once she had enough clients. She got a few clients over the last few years, but when she raised her rates recently, to $15 from $5, people stopped buying her readings, she said. Now, she has gone back to mostly selling on other platforms. “If I had to make a living on Fiverr,” she told me, “I would be living under a bridge.”

Sellers know that if they complain or ask for more money, there are millions of workers out there who will replace them. They also don’t want to ally with other workers and advocate for better working conditions because they see those people as competitors, not colleagues, Graham found. “They don’t want to make a fuss, they just want to get a five-star rating,” Graham told me. Many workers are willing to lower their rates beyond what they considered fair, the academics wrote in a paper summing up their research.

Of course, many people are having a positive experience in the online digital economy. Graham and his colleagues interviewed Arvin, a university professor in Manila, who, at the time he signed up for a digital platform, was frustrated by his low wages and long commute at the university. Once he started selling his services doing search-engine optimization, he was able to leave his university job and soon made three times what he had made before—about $600 a month—working just 25–30 hours a week. Another worker, Kim-Ly, who lives in Vietnam, found a data-entry job online that paid $8 an hour—about four times what she had made before as an accountant at a bank—that allowed her to travel abroad and buy luxury goods.

I also corresponded with Jahanzeb Malik, a 24-year-old Pakistani man who told me he made about $5,000 over two years on Fiverr creating PowerPoint presentations for startups pitching to investors. He did Fiverr while he was in school, and liked having the extra money, he said. He was good at PowerPoints, and he was good at social media, and by answering questions about Fiverr on sites like Quora, he became “a guru-like figure” in the community of Fiverr sellers, he told me. That allowed him to launch his own website, NerdsHD.com, where he blogs about the digital economy and sells what he had sold on Fiverr before, but for more money. His work on Fiverr gave him the client list and name recognition to start his own business, he told me.

For other workers, though, gigs are too unstable to make a living. The firm that employed Kim-Ly, for instance, reduced her pay to $6 and then closed the project. When she found a new job, it was for just $4 an hour, and she told the researchers she didn’t feel comfortable bargaining for better pay. Another study of a different digital-work platform in Europe found that the vast majority of people who listed a service were never hired for any gigs.

Jelena, the woman from Serbia, told me she’s made her peace with the idea that she has to offer the lowest possible rates “in order to get any jobs at all.” A woman I hired to write a short story, a 23-year-old who didn’t want her name used, lives in Canada, where she is trying to become a writer. She’s sold writing on Fiverr since 2015, and told me that while it was hard to get work at first because there were so many sellers to compete with, she now has lots of good reviews, and consistent jobs. The 500-word story she completed for me was funny, succinct, and well-written, but she still charged just $5 for it. After more than three years, she still sees Fiverr as a way to earn some side cash, rather than as a full-time job.

Genevieve Hannon used to be a voice actor in New York City, where she was a member of SAG-AFTRA, which meant that she sometimes made $500 for a quick session doing TV voice-over promos. She made about $85,000 to $100,000 a year, she told me. She eventually left the East Coast to become a veterinary tech in Utah, but when she decided to supplement her income by doing voice-over work online, she had to dramatically lower her rates to find work on Fiverr. At first, she charged just $5 for 100 words of script, which made her feel guilty because she knew she was drastically undercutting union rates. When she started getting good reviews, she slowly raised her rates, and eventually made $17,000 one year. But she felt guilty doing work for multinational companies that had previously hired union actors for much more money, she told me. She was stuck: If she rejoined the union, she wouldn’t get much work, because so many buyers had gone to digital-work sites. But Fiverr didn’t earn her as much money. She eventually got kicked off Fiverr for listing her website in a correspondence with a client, she told me, and in the end, she was glad to leave the site. “It was a real relief to feel like I’m not doing something harmful for the overall good,” she said. Still, now that she’s banned from Fiverr, she’s had to resort to other digital-work sites to sell her services, which she says don’t have the reach of Fiverr.

Graham has a few suggestions for how these sites can pay better. He suggested forming a global group that could ensure international labor standards are being met, for example. He recently wrote a proposal for a FairWork Foundation, which would give certifications to companies that pay the minimum wage and treat workers fairly. Workers could also form digital picket lines to disrupt employers who don’t pay fairly or treat workers well, or they could gather on Reddit or Facebook to share information about better-paid gigs. (Workers on Amazon’s Mechanical Turk have Turkopticon, for example, a browser plugin that allows users to rate employers.) Some workers in other gig industries have established platform co-ops that allow them to better control rates and working conditions.

These changes might not have much of an impact on U.S. and Canadian workers who are competing with people overseas. But paying workers in the developing world better will have a positive effect on everyone else, Graham said. A U.S. law requiring that any employer who uses these platforms follow the labor laws in the countries where they’re operating could help. “I guess my only hope within this reality is that we can ... raise working conditions for those that currently have bad ones, rather than lowering working conditions for everyone,” he told me.

America has, for a long time, decided that the upsides of outsourcing outweigh the downsides. When U.S. companies first started sending manufacturing jobs overseas, millions of American customers got lower prices for the goods they were buying, which made them a little less concerned about the tens of thousands of people whose manufacturing jobs had disappeared, but we never did find a way to help the losers of globalization become winners.

It’s possible that Americans will still decide that this latest wave of outsourcing is, on the whole, beneficial, too. But the usual mantra told to people who have lost their jobs to outsourcing—get more education, get more training—doesn’t make sense in an economy where educated people across the world are competing: On Fiverr, I found someone in Pakistan offering to do architectural designs for just $5.

For the many talented people who now have a global platform to sell their services, Fiverr and other sites represent a huge opportunity. The people who prosper are “the cream of the crop,” Graham told me. One recent paper has predicted that a “Matthew effect” could begin to dominate the global gig economy, in which the most successful workers do better and better. Everyone else, though, is going to do worse.