The digital age has been responsible for some of the biggest changes to the way we live. This isn’t just true for shopping and the ways we spend our leisure time; it is also having a significant effect on the way many of us earn a living.
With the modern on-demand economy, apps can instantly connect people and businesses with products or services they need. While much of the attention goes to ride-hailing services like Uber, the on-demand services and app economy stretches much further. You now have apps for things like on-demand plumbers and on-demand healthcare services. Businesses can also use a variety of platforms that offer on-demand workers for a range of different types of tasks.
The people who work to provide these services (like your Uber driver) are working in the gig economy. According to some reports, more than one-third of workers in the US participate in the gig economy. That is a significant portion of the labor market and the numbers are expected to increase in the coming years.
What is the Gig Economy?
The idea of gig work is not new. People have been taking one-time jobs for a long time. Technically, the teenager who babysits for a neighbor and the person who works as a handyman on the weekends are both gig workers. They are agreeing to do temporary work that they will be paid for at the end.
While both of those types of work are gigs, they are not what people talk about when they reference the gig economy. In this regard, people are generally talking about people who use online platforms to connect with people or businesses that need temporary workers.
The gig economy is made up of three basic components. You have the consumers who need to hire a worker to perform a service, the gig workers who provide the service and the platforms that connect the two parties. The consumer uses the platform to find a worker to perform a task and when the task is completed, the worker is usually paid through the platform.
Why Workers Choose the Gig Economy
Working in the gig economy varies significantly from traditional work arrangements. With a traditional work arrangement, the worker has a steady employer who they work for regularly. This employer provides them with a schedule and they are guaranteed a wage or salary.
In the gig economy, workers do not have a steady employer. Instead, they are self-employed. Gig workers use one or more platforms to connect with jobs. When the job is completed, they are paid and they move on to working for a different client or customer who needs their work.
With millions of people working in the gig economy, you should expect that different people have different reasons for choosing this type of work. Furthermore, many gig workers have steady employment, but they choose to take gig work during the time they have away from their regular job.
The flexibility of gig work is one of the common reasons many cite for working in the on-demand economy. With many of these platforms, you can sign-in and find work instantly, but there is no requirement for how often or when you have to work. This allows the worker to make his or her own schedule, and it makes this type of work ideal for people who have a full-time job but use the gig economy to earn extra income.
Challenges of the Gig Economy
While many do prefer the gig economy to a traditional work arrangement, it does come with challenges for the workers and for society. Most of the laws and government programs that manage things like workers’ rights and protections were formed with an understanding that people would likely work for the same employer most of their lives and that they would depend on that employer in various ways.
When you have a steady job, your employer provides healthcare benefits and they may even offer a retirement plan. In the gig economy, these benefits do not exist. If the worker is going to have health insurance or a retirement plan, they are going to need to manage these issues on their own. In many cases, this could result in gig workers being more dependent on social services that are provided by the government.
As another issue, you have workers’ rights and protections. While hiring gig workers can be a good way to meet a need, some businesses may get rid of their full-time employees to hire workers they can classify as independent contractors. This means that the business has less of an obligation to the worker and it also reduces their liability for the actions of people who may be working for them.
Adapting to the Gig Economy
With the gig economy changing the way so many people work, society is going to need to look for solutions to some of the issues that come with this new work arrangement. Measures will need to be taken to protect the rights of people who work in the gig economy and to make sure they have the support that is common in traditional work arrangements.
California’s Assembly Bill 5 provides one example of a government taking steps to make sure gig workers are protected. Under this legislation, there are new standards for classifying a worker as an independent contractor. This will require businesses to prove their workers meet the guidelines to be classified as independent contractors and if they cannot meet this burden, they will have to meet their obligations as an employer.
This is just one example of a government stepping in to protect gig workers. That said, it doesn’t solve every issue and it will take time before we know if it even solves the problem it was intended to address. However, it is an important step because it shows that these issues are on the radar of lawmakers and people are starting to see that we will need to make adjustments to account for the changing nature of work.