The Gig Economy Offers Necessary Alternatives, But It Isn’t Perfect
Long-term commitments are going out of style. This is both a good and bad thing.
Thanks to the digitalization of society, there is a sort of rebellion against traditional work standards happening, where the 40-hour, sit-in-an-office-chair schedule is being foregone for mobile, commitment-less work.
Gigs, if you will, forming what is now known as the gig economy.
Unlike most rebellions, though, the rise of the gig economy is a win for everyone willing to participate. Companies have fewer employees and only pay these individual contractors once a job is completed. The individual contractors have the freedom to work wherever and whenever.
These jobs require zero future commitment once a job is completed. Requests for time off aren’t necessary. Gig workers are free to travel and can work in that new city to cover expenses if need be. Anyone that considers themselves to be a nomad is probably already in the gig economy or should be soon.
Current estimates show that about 36% of Americans participate in the gig economy, which is nearly 60 million people. By 2023, the percentage of Americans expected to work in the gig economy at some point in their lifetime is expected to be around 52%.
There are tradeoffs to being a gig worker, of course. Gig workers make 58% less than full-time employees on average — mainly due to the amount working part-time (with some being high school/college students or older people looking for extra cash). Fewer than half have access to company benefits.
While the gig workers we are most accustomed to seeing on a daily basis are rideshare or food delivery drivers, there was only an estimation of about two million Uber and Lyft drivers in 2020 and one million DoorDash drivers. That would mean those three companies make up just about 5% of the gig economy.
Gig work like rideshare or food delivery offers a great alternative work to unskilled workers that don’t want to work for a low hourly wage. In reality, though, the gig economy is made up of mostly skilled workers. According to And Co, 61% of freelance workers are skilled in two to three areas. More than one-third make $75,000 a year or more.
Thanks to companies such as UpWork and Fiverr, freelancers and employers can connect rather easily to buy and sell gigs. On UpWork alone, there are over 12 million registered freelancers.
While there are many finding great success through these freelance avenues, there are certainly issues to consider for the workers on the lower end of the income scale and even small businesses.
That being said, these major gig companies are arguably normalising job insecurity. Their high profiles and extensive marketing tactics are boosting the phenomenon of insecure work by appealing to those who’re struggling with the increased rates of underemployment and casualisation. So much so that certain gig jobs, such as food delivery workers, have become essential to the function of many restaurants, as well as our daily feeding rituals.
The “power struggle” between workers and employers goes back to the early days of industrialization, and the benefits that employers gain from hiring gig workers are often discussed. For example, a company like Uber gets away with not having to offer health insurance to drivers as they are not employees.
There is no doubt that lower-income workers struggle more than anyone due to their lack of access to higher education, meaning gaining skills is that much harder. If those workers don’t have access to health insurance through their parents or a significant other, their only way to get it is going the traditional 40-hour, office-bound work route.
Judicial measures have been taken to try to give these gig workers more protections in California, though Uber and Lyft now find themselves exempt, meaning they can still consider their drivers as independent contractors. Rate cuts and expenses for drivers have pushed their earning potential to a much lower level than it used to be while the companies see revenues rise.
The gig economy is great for skilled workers, and as mentioned previously, the majority of freelance workers are skilled in more than one area. The flexibility offered and higher rates they can charge could make up for the downside of not having benefits.
Anyone that lacks access to gaining skills and feels limited to a gig such as Uber should be looked out for, however. The number of people that are uninsured in America has risen dramatically due to pandemic-related layoffs and job losses. Considering many people turned to gig work due to those same pandemic-related layoffs and job losses, it’s fair to assume there is a fair amount of crossover.
Moving forward, the gig economy deserves appreciation for giving people a different path to making a living (or supplementing income) and allowing small businesses to grow. It should also be improved upon to give workers benefits and the proper respect for allowing companies such as Uber to become so successful and widespread.
Once the gig economy grows to represent the majority of Americans and becomes a more significant part of our overall economy, the scales need to tilt more in the workers’ favor when it comes to compensation.