The Hustle Economy

The Hustle Economy

Today, inequality—especially racial inequality—is not only produced through the job market but through people’s ability to hustle.

Is an Uber driver an entrepreneur, a worker, or a vendor? The answer appears to be whatever Uber needs her to be. (John Michael Snowden)

The futurism of technology discourse is ahistorical and ideological. Tech utopianism disembeds the future from the political economies that produce its social relations, and it obscures the machinations of racial capitalism. When I was recently asked to consider how digital technologies shape “economic opportunity” and the “future of work,” I started by examining what we mean by economic opportunity, and what counts as work.

In lay terms, economic opportunity in the future of work looks like hustling. Hustling traditionally refers to income-generating activities that occur in the informal economy. It has also become synonymous with a type of job-adjacent work that looks like it is embedded in the formal economy but is governed by different state protections, which makes the work risky and those doing it vulnerable.

“Platform entrepreneurs” who trade their labor using a digital platform (like TaskRabbit or Takl) that extracts a portion of that labor in exchange for facilitating payments and promotion between provider and customer are hustling. So are independent contractors who enter arrangements with companies (like Uber, Lyft, or Amazon with its delivery drivers) that provide access to proprietary scheduling-based work in exchange for workers who will accept the risk of not being an employee. Hustling also refers to influencers, who develop personal brands on social media platforms and exchange their share of market capture in the attention economy for discounted products, free goods, and direct-to-consumer sales. While all of these types of hustling can happen in conjunction with waged employment and other forms of entrepreneurship, they all show how the assumption of risk has shifted from states and employers to workers. Today, inequality—especially racial inequality—is not only produced through the job market but through people’s ability to hustle.

The Economic Opportunity Act of 1964, which introduced the term into public provisioning, was part of the massive investment in social welfare that happened in the middle of the twentieth century. The legislation, which included funding for a jobs program, adult education, and small business loans, was eventually replaced by the Community Services Block Grant in 1981. The trajectory from economic opportunity to block grants is an allegory for how the dominant economic logic in the United States shifted from an emphasis on civil rights to “investment.” By the 1980s, “economic opportunity” meant promoting entrepreneurship and securing formal credentials among poor people and minorities. By the 2000s, this approach was taken for granted.

Since March, tens of millions of people have filed for unemployment. Meanwhile many participants in the hustle economy have had to adapt quickly to the new context created by the coronavirus. The future is predicted to be less job-centric. It is predicted to be more competitive. It is predicted to shift more risk onto individuals and communities. Digital technologies—combined with the effects of the COVID-19 pandemic—are speeding these processes up and making them more efficient. To understand these changes, we need to look to the borders between the formal and informal economy where entrepreneurship sits.

 

Racial Capitalism and the Future of Work

The concept of racial capitalism posits that racialization is a primary project for all capitalist activities, from accumulation to extraction. This holds for the future of work as much as the past. Racial capitalism identifies the hustle not just as a response to inequalities in the formal economy but as a kind of racial theater. Black people—and Black women especially—are shut out of traditional employment, but our culture applauds the hustler who responds to exclusion by striking out on her own. As brands and digital platforms celebrate grit and urge us to “respect the hustle,” the realities of who succeeds and who stays struggling are lost.

Some argue that in contrast to the formal economy’s rush for accumulation, the informal economy is driven by the unmet needs of the exploited classes. Still, the informal economy, which serves as a pressure valve for the formal economy, has its own set of underlying social relations. The theater of the hustle obscures some of these relations and emphasizes others. Mostly, it distracts us from the diffuse nature of extraction today. Hustling encompasses legal, semi-legal, illegal, and small-scale enterprises, but it also includes precarious workers in professions that have shifted to the hustle economy even when their titles do not reflect it. This is a global and varied phenomenon. But the larger story is about the expansion of the informal economy by shifting the relations of production that underpin the formal economy.

Entrepreneurship is not often theorized as work. Even when a worker provides a service, the absence of a firm renders entrepreneurial activity as something other than a “job.” But, as Zulema Valdez points out in her study of Latinx entrepreneurs, ethnic and Black entrepreneurs in particular use ventures to augment bad jobs, substitute for job losses, or to otherwise mitigate exclusion from occupational pathways. Some of these entrepreneurs may work for themselves, but many are adding entrepreneurship as a type of second or third shift on top of a formal job arrangement. The administrative state does little to track or identify this sort of activity, in stark contrast to the vast apparatus that oversees public and private job sectors. Entrepreneurial firms that employ fewer than fifteen employees, for example, are exempt from reporting data to the Equal Employment Opportunity Commission.

Take the case of a job task platform like TaskRabbit. It promotes itself as a way for underemployed women to make extra income in their spare time. But women are less likely to have unallocated time than are men. They are also less likely to be compensated for work they provide in almost any economic arrangement, and when they are compensated, it is at rates lower than those for men. And a nonwhite, immigrant, working-class woman is more vulnerable to the message of economic inclusion than a white, upper-middle-class woman. Other platforms try to blur the distinction between workers and owners. What, for example, is an Uber driver? Is she an entrepreneur, a vendor, or an employee? The answer appears to be she is whatever the platform requires her to be to maximize profit at any given point in an exchange.

The word “entrepreneurial” has served as a shield against inquiry into the work arrangements that are organized beneath that banner, especially when aided and abetted by platforms and data black boxes. But the tools that leverage the idea of inclusion work differently for different people, limiting what opportunities are available and channeling people into specific forms of entrepreneurship. The future of work will make many more U.S. workers into entrepreneurs. But what type of entrepreneurs will they be? And what digital technologies will they use?

 

Hustling in the Shadows of Economic Opportunity

While the “digital economy” is often pictured as start-ups in the Silicon Valley tech industry, today all entrepreneurship is digital. From hair salons to small farms, resale clothing shops to house cleaners, the use of social media platforms is increasingly central to entrepreneurs’ livelihoods. Social media is not only a source of information and peer support, but also a place where business itself is conducted. It is important, therefore, to understand the role digital technologies play in perpetuating and upending inequalities in entrepreneurial access and success.

Entrepreneurs reach customers through social media platforms like Instagram and Facebook as well as business-specific platforms like Yelp and Thumbtack. They collect payments, manage financials, and even receive loans through fintech platforms like Square and Kabbage. And entrepreneurs in the digital economy often work out of physical spaces that operate like platforms, such as WeWork and Phenix Salon Suites. These platforms are designed to serve an economy where livelihoods are increasingly defined by a patchwork of entrepreneurial activities. Those whose professional life sits at the nexus of these digital tools are “platform entrepreneurs.”

The access these platforms provide is a kind of “predatory inclusion.” Personal finance is a good analog. When traditional banking services excluded large swaths of consumers, payday loans and prepaid cards emerged to fill the gap left behind. In the world of business-to-business products, a range of alternative business services serve the same function: lending packages, fintech products, business software, business credit schemes, and merchant services accounts. There is a whole array of “subprime” business services, which justify high relative costs by offering themselves to entrepreneurs shut out of traditional services. The platform economy is a stopgap to overcome exclusion, and a tool used to target people for predatory inclusion. Subprime entrepreneurs gain access to the platform economy and the social, political, and economic capital they need on uneven and often exploitative terms.

As educational institutions and policy makers continue to encourage entrepreneurship as a viable path to economic security for more workers left behind in the job-based economy, it is critical that we understand how different kinds of entrepreneurs experience that pathway. With that in mind, I am engaged in an ongoing research project, which aims to map the ecosystem of entrepreneurial activity and technologies used by platform entrepreneurs in gendered professional services. With my colleague Lana Swartz at the University of Virginia, I am looking at how platform entrepreneurship is shaped differently by race, class, and gender in mid-sized cities with negligible high-status technology industries. We shift the lens of studies of entrepreneurship in the United States from Silicon Valley and Wall Street to the shadows of economic opportunity structures: the chain mall beauty salon sub-rental, the Instagram direct messages of beauty industry micro-celebrities, and the network of capital that targets entrepreneurs with severely constrained choices.

This research complements my “Hustle Better” project on how Black women entrepreneurs access micro-capital through fintech platforms that target subprime entrepreneurs. In collaboration with the Filene Research Institute, I am interviewing women who hustle in areas with rich histories of Black entrepreneurship and a sizable Black consumer class. Given conditions that would be considered favorable for ethnic entrepreneurship, this research explores how Black women make sense of the fintech platforms where they conduct some or all of their business activity. A host of feminist scholarship has demonstrated that economic relations are also emotional, affective experiences. Racial capitalism must feel good at least part of the time or it would be unsustainable, and predatory fintech platforms inculcate feelings of belonging, success, and mobility despite the material reality of their exploitative terms. More importantly, I am exploring the potential of cooperative and not-for-profit fintech to create non-predatory platforms for vulnerable entrepreneurs.

 

Around International Women’s Day, commemorated just one week after the close of Black History Month, I was inundated with memes congratulating me for being a woman. Brands and media issued lists and essays and social marketing to celebrate Black women. A story about Black women entrepreneurs got a lot of traction. It was pithy and had the scientific patina of a numerical data point. The story celebrated that “Black women are starting businesses at the fastest clip of any racial group.” The claim does not make much sense, since Black women aren’t a racial group but are a subset of a racial group. The report, produced by American Express, says that “The number of firms owned by African-American women has grown by 164% since 2007.” The story is popular because it celebrates Black uplift through economic opportunity. The reality is less rosy.

Black women platform entrepreneurs have more education than their white male and female counterparts. Despite having more formal education, they face more job insecurity than similarly educated peers. This insecurity is compounded if those Black women are also sexual minorities. These intersecting inequalities shape Black women’s exposure to entrepreneurship schemes that are marketed as low risk. For example, platforms like PayPal, Kabbage, and Square all offer business loans targeted at micro-businesses and platform entrepreneurs. Advertised as micro lines of credit for entrepreneurs with little collateral or business credit, it is easy to see the coercive appeal of these products for Black women who face systemic discrimination in credit markets. This can look like a form of economic inclusion. But on closer examination, these products are less like business loans and more like short-term cash advances, which are common in economically marginalized communities. They promise various efficiencies made possible by digital technologies. PayPal can garnish an entrepreneur’s income to repay the loan “simple and easy.” Kabbage uses an algorithm that makes it possible to “apply in minutes and qualify in no time.” The platforms accomplish this by exploiting the vast amounts of historical data available on potential borrowers.

The efficiencies of frictionless repayment and low opportunity costs to apply have very different value depending on the social location of the consumer. They also mask the predatory terms of inclusion. Interest rates from Kabbage can exceed 50 percent when the short term of repayment schedule is considered. Moreover, because these products are not typical loans, they do not report to credit bureaus or build business credit. PayPal, Kabbage, and Square differ from other kinds of business loans offered in this space, such as LendingClub and Amazon Lending, that have more favorable terms but are targeted to higher status, whiter, and wealthier entrepreneurs. The high price of inclusion in capital accumulation schemes like self-employment and entrepreneurship for Black women recommends racial capitalism as a robust analytical framework.

As the economy shifts to more and more non-job labor, digital technologies will continue to reshape work by finding new ways to facilitate efficient, racialized extraction. We will see more platforms that produce new types of occupational closure through the creation of micro-degrees and certificates, and more companies that rebrand economic insecurity as economic opportunity. The processes may look inclusive, but the terms will be predatory.


Tressie McMillan Cottom, an associate professor and senior research faculty at the Center for Information, Technology and Public Life at UNC-Chapel Hill, is the author of Thick: And Other Essays, a finalist for the National Book Award. She is a member of Dissent’s editorial board.


Lima