Written by Robbie Adler
These days, the term “gig economy” seems to have become ubiquitous, even though it is only in recent years that many people could tell you what it means. This service-providing, contract-based sector of the economy, driven by platforms such as Uber, TaskRabbit, and Airbnb, has been around for quite some time, but the rise of online communication and smartphone apps has made accessibility for both workers and customers more convenient than ever. The model has been wildly successful, with customers filling the market for convenient services, and workers consistently reporting high rates of job satisfaction. Recently, however, protests and lawsuits seem to have undermined the ground on which it stands, casting doubt on the long-term efficacy of these companies. While continued growth for these platforms is entirely possible, the message is clear for companies and workers alike: remember that it is only gigs.
The gig economy, also called the sharing economy, refers to the sector that comprises on-demand jobs where workers provide a service, either in a self-employed manner or working under contract with a platform. Such platforms generally fall either into the category of labor-providing services, such as the ride-sharing companies Uber and Lyft, or capital-providing platforms such as Airbnb, where contractors can rent out their homes. Much of the draw for customers is the low cost of these services compared to more traditional service providing companies, such as taxi cabs. The slash in price can be attributed to workers’ status as contractors instead of employees. As contractors, companies are not required to provide benefits such as health insurance. They also do not need to cover compensation for work-related expenses such as gas money for drivers or upkeep costs for a house.
Not surprisingly, the majority of gig workers do not use these jobs as a primary source of income, but rather as a supplement. As well, most workers in this growing sector are young, falling in the 25-35 age range. This is a demographic which tends to have less secure full-time or part-time jobs with volatile incomes. For these people, the gig economy has proven to be a highly effective and convenient method to supplement their month-to-month earnings. Flexibility in scheduling, as well as minimal required commitment to contracts that can be added or dropped quickly, makes these jobs an ideal secondary source of earnings.
I see few downsides to the expansion of the gig-based online platforms. However, it is important that companies do not get carried away with their commitment to cheap service. In particular, for platforms that view their workers as disposable, voiceless labor could experience a backlash that results in workers going elsewhere. This month, Uber drivers have staged protests in New York and San Francisco, contending an overambitious cut in fares and the corresponding cut in wages. While this grievance seems justified, contract workers must also be careful not to expect too much out of their companies. Uber currently faces a scheduled court date in June, which will determine if it must treat its workers as employees rather than contractors. This would require them to compensate drivers for expenses such as gas and car maintenance. While this would encourage drivers to use a gig job as more of a primary source of income, it would also drive fares up, reducing the draw for customers.
Cheap, convenient services are, and always will be, a highly practical boost to the economy and a useful way for people to make some extra cash on the weekends. Given the exponential rate of growth in recent years, they seem poised only to keep expanding. However, continued success rests on both employers and contractors to keep a clear vision of what they are, and resist the urge to become too much like their employee-based counterparts.