I have a request for you. The next time you take an Uber or a Lyft, be sure to start a conversation with your driver. Ask them if ridesharing is their only job or if they’re doing something else on the side. I usually do, and about half the time I learn that they’re either between jobs or working another gig part time. This is what is known as the gig economy, a new post-recession arrangement where independent contractors make short-term arrangements with companies, and make ends meet by doing multiple such engagements. It might seem interesting and modern, but I believe it has a darker side that may provide tidings of disruptions to come.
I think the post-recession part might be fundamental to the presence of the gig economy. After the American economy started recovering, companies realized it’s better to hire people for individual projects rather than full time. Enabled by the network effect of the Internet and smartphones, Uber and Lyft didn’t so much start the gig economy as they stepped into an existing vacuum at the right time. Anecdotally, you are likely to find many more people who are “independent contractors” or “freelancers” because they are working for two or more companies simultaneously to meet the monthly bill. Numerically, more than a third of the American workforce is now freelancing. Companies like Fiverr provide what they call a “Marketplace for Creative & Professional Services” where writers, graphics designers, advertisers, and coders provide their services.
The much touted advantages include flexibility and independence, as you are your own boss and don’t have to answer to any crotchety old manager. Sure, a creative professional with many interests can simultaneously pursue his or her interests in multiple fields, but there is a dark side that must be examined.
One possible shadow side may be that the “gig economy” is simply the dissolution of the middle class being sold as a modern idea. The collapse of the American middle class is nothing new and has been a major flashpoint for political discourse since the recession. Now, while the definitions of the middle class vary, the presence of a steady job is a constant feature across various descriptions. But it is these steady jobs that have been lost. So instead of one or two steady high wage jobs, people are having to take many low wage “freelance” gigs. In effect, the gig economy might be a symptom of ers twhile middle class people working odd jobs, albeit with a certain savoir faire appropriate for wealthier people.
The net effect is that there are hundreds of thousands of people working without many work benefits because they are not technically employees, only independent contractors. Simultaneously, companies like Handy — a gig marketplace for users to hire, pay, and rate home cleaners — operate with lower labor costs than the competition because they don’t have to pay benefits. A number of salivating screeds have been written by publications like Salon and Fast Company speaking convincingly about unsustainable business models and litigation.
Some of these moves might indeed be valuable. For instance, according to Fast Company, Handy has been sued for “compensation for missed lunch breaks, minimum wage compensation, reimbursement for business expenses, and overtime, in addition to other penalties.”
There is also a glimmer that these workers might be reclassified as “employees” rather than “independent contractors.” Seth Harris and Alan Krueger recently published a paper for the Brookings Institution where they suggested reclassifying workers in the current gig economy as employees.
But I suspect this might be a symptom of a larger malaise. Technology, often touted as a great liberator of the masses, can just as easily be an exploitative tool. Only time will tell, but the gig economy might very well end up moving up the economic chain as automation takes more and more regular jobs. The labor laws are just starting to catch up with the gig economy, but this might just be a stop gap disruption of the larger coming disruptions.
Reach columnist Arunabh Satpathy at email@example.com. Twitter: @sarunabh