Inflation’s at a 30-year high, which is…bad. There are some benefits: mortgages and other forms of debt are worth less in relative terms than was previously the case; interest rates may soon rise, which would make savings appreciate faster; there’s a bit of a use-it-or-lose-it phenomenon encouraging consumer spending (theoretically); but overall, it’s not good for gas to cost more. It’s not good for groceries to cost more. And those wage gains workers have been enjoying? They’re more than outweighed by that money they’re making being worth less than it was. Conventional wisdom says that some inflation is good—that’s why two percent is the Federal Reserve’s constant target—but a 30-year high in inflation is not good, and spikes in inflation are not good.
That isn’t to say high inflation should be avoided at all costs. If you were to choose one metric as the sole barometer of policy’s success, inflation would not be the top choice. But it’s important. And what’s happening is bad. You might argue it’s a necessary evil, or a negative effect of positive happenings elsewhere, but if anyone’s purporting to support high inflation right now, in and of itself, they probably have a rather specific financial or political interest driving that stance (or someone who influences their thinking has a particular interest driving that stance).
As many of you know, The Barking Crow is partially financed through the gig economy. Specifically, we do a good bit of rideshare and food delivery.
We didn’t start driving rideshare until 2019. We didn’t start delivering food until the pandemic was underway. We don’t really know how volatile wages were in whatever passes for normal times in industries as young as those. That said, our rideshare/food delivery hourly wages are up. They’re up more than 50% from 2019. I didn’t have the highest-paying corporate job in the world back in 2017 and the first half of 2018, but I make more per hour than I did in that job in weeks when I worked exactly 40 hours.
Some of this may be that we’ve gotten a bit better at the “game”—we’ve learned how to maximize our earnings. Some of it may be Austin-specific. But we aren’t driving that differently from two years ago, and it’s hard to believe Austin is entirely distinct as a market (though a massive influx of young tech workers in a city with virtually no public transit and a limited downtown is about the best thing you can ask for as a rideshare/food delivery driver).
Even if this is an industry-wide phenomenon, it isn’t entirely driven by inflation. There are plenty of factors impacting supply and demand—I’d guess demand for food delivery remains higher than pre-pandemic levels, in turn cutting into rideshare supply; the worker shortage has given drivers better choices than before in terms of where and when and how much to work. But at the same time, the wage gains are of a similar proportion to the increase in gas prices (speaking personally, the final margin is still much larger than it was), and they’re accompanied by what I believe have been increased costs for rideshare on the consumer side. There’s inflation going in. There’s inflation coming out. And it makes me wonder:
One of the hallmark benefits of the gig economy is the flexibility it gives workers. With no contracts and a constantly changing wage, workers can and do jump quickly from one job to another. Sometimes, it’s as simple and easy as switching apps on one’s phone. And so the thing I wonder is whether there’s at least an element here in which gig workers are shielded from some of the negative effects of high inflation, or brought along for the ride. Rather than being in a role in which raises and cost of living adjustments happen at set intervals and significant barriers exist in the way of changing jobs, the wage is constantly changing in response to market demand and market supply, and changing jobs is, relatively speaking, extraordinarily easy. A gig economy is an elastic economy. Elasticity, in a time of rapid change, can be pretty darn helpful.
This isn’t to say that high inflation is good for Uber drivers. At best, it’s probably neutral on average. Gig workers still have to pay for food, and for rent, and for all the other expenses. Wages might be adjusting to inflation, but they’re not gaining, in the purchasing power sense, because of inflation (my best guess is that natural inelasticity probably just means they’re losing less ground in that slice of the equation than wages are losing elsewhere). But there might be some lessons in here: On the academic side, it’s a strong example of Adam Smith’s invisible hand doing good work for workers. On the practical side in fields of policy, it’s an endorsement of a free market’s ability to react to certain external shocks. On the practical side in the private sector, it might be an example of how to handle cost of living adjustments to wages, supporting a model, perhaps for certain businesses, that goes quarter-over-quarter or month-over-month rather than year-over-year.
In the meantime, if you’re looking for part-time work in Austin…stay off my turf. These guys are giving me something like seven extra dollars a ride this week.
