When was the last time you took an Uber? A Lyft? Had your groceries delivered through Instacart? Each of these transactions belongs to the so-called “gig economy,” an overarching term for the pool of exchanges that happen between those who work individually to provide services and the consumers who utilize them. Sure, it’s nice to have your favorite meal come to your doorstep or avoid the hassle of public transportation. However, this escalating trend in the labor force is quickly refashioning work and the way we conceptualize it.
2018 estimates place the number of Americans working in the gig economy at roughly 57 million, or just about 36% of the country’s population. Gig workers tend to fall into one of two boxes. They are either “independent,” meaning that they have complete liberty from any corporate entity, or “contingent,” which describes those who work for a specific organization.
How did the gig economy unfold?
This development is part of the larger platform economy, or the network of business ventures (oftentimes in the tech sector) that use primarily digital structures in commerce as opposed to physical stores with physical products. At the heart of this system is the economic phenomenon of network effects, indicating that the worth of a product or service rises as the number of people using these products or services rises. (Think about Snapchat, for example — if you were the only person to have the app, it might not be worth your time.)
When thinking of the gig economy, what comes to mind first might be the app that fosters user participation. Uber, for example, holds the first place spot in the App Store’s travel category. Lyft is right behind it in position #2. The whole system is closely tied to technology, oftentimes relying upon electronic payment, online ordering, and digital mapping. While this brings to the table a convenience that has attracted millions of users, it also shutters those without access to internet connection or the means to purchase devices.
In addition to the major industry giants, several companies have entered the market hoping to fulfill a wider range of needs. Fiverr, for example, brands itself as “an expertly curated marketplace” that connects freelancers to opportunities for work. Many of these options are remote, like translation, illustration, logo design, and data entry, making it a popular conduit for the pandemic era. On a similar wave, TaskRabbit functions like a virtual job board on the local level, offering gigs that range from spring cleaning to waiting in line. Even the medical world has begun to dip its toe in the pool of the gig economy, with apps like Medely and Nomad leading the way.
In most cases, gig workers use their own equipment in order to get the job done. DoorDash delivery people, for example, rely on their own cars and gas to complete orders. For this reason, many gig workers must balance the mounting costs of depreciation against the potential for quick cash and freedom in scheduling.
What does this mean for the gig workers themselves?
Gig work oftentimes means that the traditional nine-to-five setup is out of the picture. Long gone is the idea of pushing through the morning grind until lunch hour, all just to go home and repeat the same process the next day. However, there exists a major trade off, as employees of this category must grapple with less job security. Whereas a secretary or an accountant is likely to be protected from exploitation, pay cuts, or job loss under a long-term contract, gig workers often lack this long-term guarantee.
While some workers have praised the increased liberties that come alongside growing distance from company leadership, this freedom comes at a further cost. Healthcare is perhaps the most notable example. Disclosures of lacking health insurance are roughly twice as common among independent contractors. Research from SAP SuccessFactors and the Society for Human Resources Management found that several gig workers have access to healthcare from beyond their employer, such as a family member or federal program, yet paid vacation, sick time and retirement benefits remain prime sources of concern.
To address some of these worries, Uber experimented with a more structured retirement option back in 2016. In three American cities plus New Jersey, drivers could utilize online investment guidance through Betterment and start an IRA or Roth IRA all through the Uber app. These accounts would come at no cost and with no lower account threshold, although the fees were slated to kick in after one year.
Despite these efforts, however, tensions within Uber as well as Lyft came to a head this May. California’s Attorney General and the city attorneys of three of the state’s urban hotspots filed a lawsuit against Uber and Lyft, arguing that gig workers within these corporations must be entitled to the employee label and consequently reap the benefits of this title. The list of advantages to this distinction is not a short one, including overtime, repayment for driving costs, and minimum wage. In August, California Attorney General’s claims were upheld, with Judge Schulman ruling that drivers for Uber and Lyft should indeed shed the label of “independent contractor” and gain the “employee” title. While this ruling appears to be a victory for gig workers, some worry that the projections might be the death knell for autonomy.
What might the future look like?
To put it bluntly, the gig economy is changing everything. It’s altering the way people approach earning income and the way consumers think about the open marketplace. As unease and frustration surrounding the conditions and terms of gig work continue to mount, the landscape of the entire system is subject to change. Advocacy groups like Gig Workers Rising and the Mobile Workers Alliance are already working to push through change that will protect the fruits of labor.
The gig economy is making possible what the world of the mid-twentieth century could not have foreseen. It allows individuals to turn applications on their mobile devices into full-fledged sources of income. As innovations in tech skyrocket and consume even more of our attention, there is truly no endpoint in sight for the gig economy.
Do you think the gig economy will slow down anytime soon? Let us know in the poll below.
Cover Photo by Dan Gold via Unsplash
What does the future have in store for the gig economy?
It will fizzle out — there are too many unknowns
It will continue to expand
All of our work will be in the gig economy eventually