The federal minimum wage has effectively been stagnating since the 1960s, and even the recent spate of state minimum wage hikes have lagged far behind the rising cost of living. But if workplace regulations seem to evolve at a glacial pace, there’s a quickly rising threat of exploitation from the digital economy’s cutting edge: in the rapidly evolving digital workforce, labor standards are stuck in a primitive state, with no minimum wage and virtually no standards.

The world of crowdsourced labor—short-term jobs, projects and grunt work that allow every netizen to become a mini-boss or mini-temp—is a new frontier. The online platforms of companies like Mechanical Turk provide virtual hiring halls in which people request and advertise miscellaneous help, ranging from sorting someone’s e-mail inbox to participating in an online behavioral study. But questions have bubbled up about how our existing labor laws—many created in the Depression era—can be grafted onto a labor structure that is inherently borderless and perilously “flexible.”

The lack of structure and standards produce innumerable opportunities for exploitation, particularly when tasks do not involve face-to-face human contact (like processing spreadsheet data for an entrepreneur in Berlin): should e-mail sorting be paid per hour or by megabyte? What happens if your worker runs away or your task-requester refuses to pay?

A major class-action lawsuit recently sought to clarify the expanding gray area of “cloud labor.” Workers sued Crowdflower, one of the largest crowdsourced labor sites, accusing it of violating the Fair Labor Standards Act (FLSA) by claiming they were not paid minimum wage or in some cases not paid at all. The suit is now in the process of reaching a settlement that is expected to restore thousands of dollars of back pay to the claimants, but questions remain about how the industry will be regulated going forward.

Former cloud laborer Christopher Otey accused Crowdflower of violating the law for linking him to jobs that paid less than minimum wage, and also charged that Crowdflower’s entire business model is structured to ensure that task requesters can pay micro-taskers less than the legal minimum, perhaps the equivalent of just $2 or $3 per hour.

Crowdflower denies that it plays such a controlling role in the labor exchange. Crowdflower spokesperson Julie Crabill told in 2013:

Crowdflower’s view is that the FLSA does not apply to contributors that choose to accept the various tasks offered to the crowd. We look at crowd contributors as independent contractors, not employees. They’re free to work whenever, wherever, however they wish, for whoever they wish for as long or as short a time as they wish.

But Crowdflower isn’t just a go-between; for the kinds of workers addressed in the complaint, it manages labor transactions by overseeing a workforce of about 20,000 through a complex proprietary database, testing and ranking workers’ aptitude and thus determining their job access. (The total estimated number of taskers ranges into the hundreds of thousands or even millions.)

It’s a tried-and-true tactic for companies to skirt regulations and wage and hour laws by claiming they’re not direct employers. However, “1099’ed” workers deemed “independent contractors” are often not truly entering into a volutary agreement between equal parties; they do the same work as ordinary employees, just without the benefits or labor protections. Worker misclassification violations are seen as an epidemic throughout the offline economy.

Michelle Miller, co-founder of, sees the rising digital labor market as “structurally analogous to the tangible sector of supply chain subcontracting”—for example, Amazon’s temp warehouse workers whose jobs and working conditions are outsourced to staffing companies:

The mechanics are different but the structure is the same—subcontracted piece work looked like rolling cigars and stitching textiles in your tenement in the early 20th century. But it’s still basically the same thing if you’re coding something.

For crowdsourced workers, flexibility is a double-edged sword that they’re often willing to gamble on. Kristy (a k a Spamgirl), who moderates a worker forum for Mechanical Turkers, says via e-mail: ”The beauty of crowd work is that it’s flexible, our wages are set by how hard we work and who we work for, and we aren’t beholden to any company.”

Meanwhile, the microwork industry chafes at regulation as a constraint on growth. There’s the familiar-sounding pro-business argument that raising wage standards would make US-based cloud workers “uncompetitive” in a global job market alongside workers in Mumbai or Manila.

But for all its supposedly seamless efficiency, crowdsourced labor markets substitute flexibility for stability and creates ethical vacuums. A 2012 academic paper by technology scholars at Stanford, Carnegie Mellon and other institutions warned of a Tayloristic tendency to dehumanize laborers, whose pay structure is comparable to “piecework compensation in manufacturing.” Besides, the work can be morally dubious—for example, “to mine gold in games, and even, potentially, to locate dissidents.” There’s also a burgeoning digital labor market in Asia for monitors of disturbing digital images—would cloud workers in this esoteric sector qualify for workers’ comp for potential mental trauma?

As Moshe Marvit pointed out in The Nation, cloud labor can spawn a new breed of sweatshop. The casualization of labor, in which there’s no longer such a thing as a steady job, much less a career, feeds neoliberal capitalist growth by allowing corporations to skirt regulations that ensure fair pay, guard against discrimination and provide workers with benefits and income supports if the company decides to shift to, say, a cheaper labor market abroad.

In fact, the migration overseas—outsourcing on top of crowdsourcing—is already underway, and could soon be seized by “emerging economies” like Malaysia, which has a national industrial program to build a “global hub for digital work.”

So far, efforts to organize crowdsourced workers have been limited by the atomized structure of the workforce. But as the global economy evolves, micro-workers will eventually realize that their human rights and social needs aren’t so flexible, nor is the principle of fairness at work, even if the workplace has become a virtual space.

We may not get a minimum wage or unions for microwork any time soon, but workers can, for example, create online fora for raising consciousness and informing each other about their rights. Or systems for monitoring or rating companies to ensure accountability and transparency on job conditions. It will be a gargantuan challenge to scale that up globally. Then again, if cloud labor really lives up to its promise of unlimited intellectual potential through a “marketplace of ideas,” the next generation of labor rights could also emanate from the wisdom of crowds.