Myth: Online Labor Marketplaces Only Lower Worker Wages

Excellent examples of situations where online labor markets increased wages. Also read my post that explains the economics at work in these examples.

Hunter Walk

“By creating competition for task/project-based employment, online labor marketplaces lower average wages for workers. These platforms do increase demand so people can make same/more in total, but only if they work more hours (ie hourly wage down, utilization up).”

Since Homebrew invests in marketplaces, I tend to encounter the above sentiment fairly frequently despite the fact that, in many cases, it’s just plain wrong. Yes it’s true that incumbents utilize regulatory frameworks to create artificial scarcity, which inflates prices, shrinks demand and hurts consumers (eg cosmetologists in Utah being forced to spend $16k and two years of school in order to braid hair). And it’s also true that reducing opacity in connecting supply and demand (as well as geographic boundaries) can lead to price discovery, so if you were getting away with overcharging, marketplaces are a shining light on your dark corner.

But here’s the thing – if you have a…

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