It seems to be a failed social experiment to me, there is definitely a negative feedback loop there. Bad HITS, low wages, withheld payments, bad workers, sweatshops. Hard to imagine it will get any better.

I wonder if you reversed the process and had projects bid on workers if it could counter the race to the bottom effect. Include a system where work could be divided into common types and include worker metrics and feedback that captured any specialization. Perhaps allow some workers to fill a managerial role, where they acquire large blocks and have a trusted group they farm out work to. Presumably wages would go up but bad work would go down, perhaps offsetting it somewhat.