The gig economy is not for everyone

The pandemic has brought a renewed focus on working remotely – which in turn has pushed the gig economy to the forefront once again. Makes sense, right? After all, if you’ve been laid off but you still have to pay the bills, any work can sound good. But sometimes I think we in the hiring industry tend to oversell the gig economy. It’s not the answer for everyone.

For the purpose of this post, I will define gig work as essentially ‘work without commitments’. In other words, the employer is hiring the worker to do a task – but there is no ongoing commitment to the worker beyond that particular task. Thus, you may ‘hire’ a driver to take you from your house to a bar – but you’re not putting them on your payroll. Or you may hire an accountant to review your books – but again, there is no employer/employee role. The second part of gig work as it is currently manifested is some sort of online ‘marketplace’, where the employer can locate and hire the worker. (Note that many folks – including myself – don’t necessarily agree with the necessity of an online marketplace. But I’m going with the popular definition, so I’ll simply agree to disagree!).

Thus, a Lyft driver is a gig worker. She does work ‘without an ongoing commitment’ and finds that work via a marketplace. A JobBoardDoctor isn’t – because although he does work for employers ‘without an ongoing commitment’, he does not have access to an online marketplace for job board consultants. He’s just an old-fashioned consultant. (Now do you see why the marketplace part of this definition is questionable? If the Doctor obtained his work on a platform such as Upwork, he might very well be considered a gig worker. Definitions, smefinitions!)

So why isn’t the gig economy for everyone? Or even (I would argue) most people?

Well…

• Healthcare: If you’re unfortunate enough to live in a nation that does not cover your basic healthcare, you will need to provide some sort of healthcare insurance for yourself. Fact: healthcare is expensive. Even well-compensated gig workers, such as those in tech or healthcare, will find that covering their healthcare costs ‘out of pocket’ to be challenging. So if you want to be a gig worker, live somewhere with universal healthcare – or just make a lot of money!
• Retirement: For those who envision a carefree retirement, gig work may not be the answer – unless they are disciplined. Without the wonder of payroll deduction, setting aside a portion of earnings for a retirement fund can be challenging. Not impossible, but…just ask your Doordash person how their retirement savings are going.
• Regularity: If you like predictable income, gig work may not be your first choice. ‘Nuff said.
• Primary income: The biggest defenders of the gig economy avoid talking about the preceding points by claiming that gig work is ‘just extra income’ for those who are already working a ‘regular job’. But estimates indicate that from 50% to 75% of gig workers rely on gigs as their primary source of income.
• Less income: One documented effect of the marketplaces is that they tend to drive down the cost of work for employers. In other words, over time, gig workers receive less income for the same work.

So who benefits from the gig economy?

• Employers: Whether it’s you getting a ride to the bar, or Google moving 30% of its workforce to contractor status, as an employer you get more for less. Consider that the benefits mentioned above typically contribute 25-40% of the total compensation cost for a ‘real’ employee – then chop that off when a gig worker is used instead. Real savings…for the employer.
• Marketplaces: What, did you think marketplaces did it for free? They get a slice of the action, of course.
• Some gig workers: If you have an in-demand skill, few competitors, and are willing to hustle, you can probably do better than a traditional employee. Probably. But don’t forget to factor in those extra costs! (Also, have a supply of tranquilizers available for those times when work is scarce!).

You may be wondering by now – why did I  write this post? You probably know most, if not all, of the above. You’re in the industry, after all! Well…I just think it’s useful every now and then to step back and take a hard look at the imbalance in power between employer and employee. The scales have always been weighted in favor of the employer. The push to ‘gigify’ work is simply making the imbalance worse. Is that fair? No. But more importantly, is it good for society overall if workers get paid less and less? I would suggest that it isn’t.

And that, my friends, is where I’ll end on the gig economy. Something to think about.

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