I was browsing the oDesk Community recently and I came across this thread on low wages.  Threads on low wages are nothing new, and normally I’d hesitate to bring another to your attention.  However this one got me thinking about the issue in a slightly different fashion, so I thought it would be worth exploring in a post.

One of the contributors posted a well-thought argument, complete with supporting figures that showed how low rates on freelance sites tend to drive out high rates.  The basic point was that if buyers see the same kind of job being done for $0.50/hr they are not going to pay $15.00 or even $5.00/hr.  It doesn’t make economic sense.

That’s a great description of how a commodity market works.

oDesk is not a commodity market.

All of our regular contributors work on oDesk.  None of us work for $0.50/hr and all of us get invitations from buyers.  If this was a pure commodity market that wouldn’t happen.  It isn’t, so it does.

Before I go any further, I’d better explain what I mean by a commodity market.  To me a commodity market is one where all products are essentially the same and they primarily compete on price.  Oil is a commodity, as is wheat and a number of other products.  The thing to remember is that when you are dealing with commodities no one source will give you a better product than any other.  A barrel of oil is a barrel of oil.  It will convert into the same number of gallons of gas whether it comes from the North Sea, Saudi Arabia, Venezuela, or Kuwait.

The closest thing to a commodity on oDesk are the various article mills that post jobs where they offer to pay $2.00 or less per article for a dozen or more 500 word articles a day.  They may say they want excellent writers and perfect writing, but what they really want is merely competent writing and a serviceable product.  That’s a commodity:  any moderately skilled writer can produce those sorts of articles without much trouble.

Those are the kind of fixed price jobs that have driven down prices on a number of sites.

There is a way out of that trap though:  Don’t market your work as a commodity.

I get jobs because people want me.  So do Nelson and Bill.  While any one of the three of us could do a very good job for you on just about any writing project no two of us will do exactly the same job on any project.  We aren’t the same person, and we aren’t marketing ourselves as the same person.  We all market ourselves differently and we all work differently.

We aren’t selling commodities.

One common reaction to low rates is to suggest a minimum wage on oDesk.   It comes up regularly in the community and just as regularly gets squashed back down.  Personally I don’t support a minimum wage on oDesk for a number of reasons.

My first reason is simple.  A minimum wage acts to commoditize work and I don’t want to work in a commodity market.  The very idea of a minimum wage is that all work is the same and so it should be valued the same.  When it comes to writing and creating, that’s simply not true.  While I hate very low rates I have seen work and profiles on various sites where the work really wasn’t worth more than $0.50/hr.   Putting a minimum wage makes the argument my work is worth the same as poor work and I won’t accept that.

My second reason has to do with the nature of the online marketplace and how it differs from the offline world most people are used to.

Here’s an example:

Let’s say I have a fast food restaurant at the corner of 1st and Pine in Dogston and they introduce a minimum wage.   Meanwhile, there’s no minimum wage in Catsville over in the next county, but that doesn’t matter, I’m in Dogston so I’ll have to pay it.  My store has a fixed location and so do my workers, and that means I have no choice but to pay the minimum and they have no choice but to accept it.

It’s either that or take my business elsewhere, but there are costs involved in closing one business down, moving to another county and starting up there.  I probably can’t make the difference back in the labor savings so I have to accept the minimum wage.

It doesn’t work that way online.

If oDesk institutes a minimum wage, all the buyers who post jobs below that rate will go to other sites, and the providers who can only get those jobs will follow them.  After all, how much does it take to type otherjobsite(dot)com into a browser and go through the account setup process?

In the long run it will make no difference to most of these buyers and providers.

Now some people may argue that oDesk is better off without those buyers, but this is the real world where things are often buried in shades of gray.  Some of those buyers may be paying very low rates for article mill work and much higher rates for web design or other content work.   Some of the low rate providers may develop reputations that will move them up into the higher rate brackets.

The reason some of those buyers may pay different rates to different providers is simple:  They pay more when they value work higher.   So even if they are paying commodity rates for one job they may not pay it for another.

So remember, if you want to make more money on oDesk, you don’t need a minimum wage, you need to escape the commodity trap.

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