Stochastic Wage Suppression on Gig Platforms and How to Organize Against It

Digital labor markets are increasingly used to procure diverse forms of human input, from data annotation to food delivery. A central concern in such markets is the ability of platforms to suppress wages by exploiting the abundance of low-cost labor. To better understand labor outcomes, we introduce a novel posted-price procurement model with coverage objectives. In our model a platform seeks to acquire a set of M tasks while minimizing wait time, as well as total spending. Workers are sampled from a population and complete a task if the posted price is higher than their estimated cost of labor. First, we show that with a simple pricing strategy the platform can cover all categories in time O(M), while paying only a O(log(M)/M) fraction of the total cost of labor by exploiting high worker uncertainty about their costs. Then, we study the impact of collective action to prevent the exploitation of workers. We show how a small, strategically chosen coalition of workers that commits to a price floor forces the platform's total spending from logarithmic to linear in M, substantially reducing the power of the platform to suppress wages. In contrast, a randomly sampled coalition of equal size remains largely ineffective. We complement our theory with synthetic experiments that demonstrate the benefit of targeted recruitment for collective action across different market regimes. More broadly, our results provide a theoretical foundation for understanding how to organize collective bargaining for promoting welfare in digital labor markets.