Is the Gig Economy Good for Workers?

Unless you’re a part of the increasingly exclusive one percent, if you live in the San Francisco-Bay Area you most likely could use a little extra cash. There’s no surprise, then, that the city by the bay has given birth to a slew of startups that connect people with ‘gigs,’ on-demand, flexible, freelance employment, that are redefining what it means to work.

For some, living in one of the most expensive cities in the United States means occasionally taking on gigs – whether it’s running an errand, renting one’s car, or giving a lift to a total stranger and getting paid for it – while for others gigging is a way of life and welcome way to generate income.

This new ‘gig economy,’ comprised of companies such as Uber, Lyft, Airbnb, TaskRabbit and Handy, isn’t unique to the Bay Area; the gig economy is alive and well and counts on workers across the country who desire flexible part-time hours, are in between jobs, or have full-time jobs and are looking for ways to make extra cash on the side.

With all the upside that gigs seem to offer, it’s easy to overlook the impact this is having on local economies and worker well-being.

Long-Term Growth

Between 2010 and 2014, the gig economy accounted for 30 percent of new jobs and created new income sources for 2.1 million people in the United States, according to an American Action Forum report published this year.

Even more, according to business and financial management solutions provider Intuit, 7.6 million people will be part of the gig, or “on-demand economy,” by 2020 – and that slice of the labor market will grow by 18.5 percent per year over the next five years.

In other words, the gig economy is poised to grow and isn’t going anywhere.

Indeed, the rise of the gig economy is part of a broader trend in the U.S. within the “contingent” workforce (i.e. independent contractors), which has grown “from 17 percent of the U.S. workforce 25 years ago, to 36 percent today, and is expected to reach 43 percent by 2020,” according to the Intuit report.

Is this gig growth good for American workers? The jury is still out.

The Gig Economy’s Grey Area

While gig jobs offer flexible work schedules and work-life balance (not to mention, not having to report to a boss), gig workers lose out on important benefits offered by traditional full-time employers, such as guaranteed minimum wages, overtime compensation, and unemployment insurance.

“It’s a trade off between flexibility and stability in income,” Maya Tobias, co-founder of Bay Area-based local job board site Localwise, told 3p. “Our support system for workers seems to be eroding. It’s great if you’re a student making extra cash, but if you’re trying to support a family on one of these jobs, and you’re not getting health insurance and you don’t have certainty that you’re going to get paid next week, that’s a big problem.”

Localwise connects local businesses with local talent for one-time gigs, part-time and full-time opportunities and is rooted in strengthening connections between local businesses and local communities – something that well-known gig employers (think Uber) aren’t so well-known for.

Gig economy employers have also come under scrutiny for their lack of concrete policies that ensure worker security. Organizations such as the National Employment Law Project (NELP), which advocates for rights on the job, social insurance protections and equitable access to technology for “on-demand economy” participants, and New York Communities for Change, a social and economic justice coalition that drives awareness of “uber shady” gig employer business practices, are giving a voice to gig employees who are often the last heard in this national conversation.

Making It Count

Many of these gig workers (5.3 million) are full-time independent millennial workers (aged 21-35), according to management service provider MBO Partners. That same organization puts the number of independent works at 30 million. The growth of freelance, contract, consulting and gig workers in recent years has caused policy makers to re-evaluate how workers and wages are counted in state and national employment figures.

“The 'gig economy' has really become a convenient cover for the 21st Century robber barons,” one frequent Lyft driver and Airbnb renter, who chose to remain anonymous, told 3p. “They can keep a good public facade by eschewing the wonderous merits of the "sharing economy," but in reality the 'worker bees' they rely on are working around the clock just to scrape by, without any legal protections or benefits by the company or state.

They also keep a relatively good morale…by dividing their workforce into a two-tier system. The top tier – those who keep the platform running – receive the staggeringly high tech income and plush benefits that befit a successful startup. The lower tier, though – those who drive the platform – earn a fraction of the income at (often) double the hours, far below the standard of living required to make it in the same city."

Next month, the U.S. Labor Department will host a summit on the future of work with the aim of figuring out how they can better tally up “on-demand” gig workers. This may signal a shift towards more protective policies for gig employees (and independent workers overall), who currently exist as ghosts in national economy head counts – ghosts who are fueling an ever-growing and ever-complex industry.

Image credit: Dan Gold and Humphrey Muleba via Unsplash