Is The Gig Economy Changing The Way We View Work?

The ‘gig economy’ is just a hipster way of describing people who contract their labour rather than being full time employees. But is it changing the workplace?

We are constantly told that the ‘gig economy’ is about to destroy the workplace as we know it. We apparently have entered a brave new future where workers are no longer tethered to a business and lack the protections of employment laws written in a bygone and largely irrelevant era.  But the evidence tells a very different story.

The ‘gig economy’ is just a hipster way of describing people who contract their labour rather than being full time employees.  In that sense, gig workers have always been part of our economy.  Most tradespeople, for example, run their own businesses and contract their labour to multiple employers, often simultaneously. 

Recently however, contracting or ‘gig working’ has bled more and more into jobs previously occupied by full-time employees.  Taxi drivers are the most obvious modern example.  Formerly a driver worked for a company who owned and serviced the car.  The driver worked for a wage or for a percentage of the fares collected.  With the advent of Uber, the car is owned and serviced by the gig worker and they get to keep a much bigger (in theory) proportion of the fares earned. And it doesn’t stop there.  Gig workers are doing a similar thing when they turn their home into a hotel and themselves into hoteliers using AirBnB.

But for all the headline-grabbing hoo-ha about Uber, AirBnB and Lyft etc., gig workers using electronic platforms still only account for about 1 percent of the workforce. If we include contractors, temps and on-call workers of any description in the definition, about 10 per cent of the US workforce is part of the ‘gig economy’.  And that percentage has not moved at all since 2005.  The overwhelming majority (90 per cent) of workers had full-time jobs in 2005 and they still do.

The introduction of electronic platforms like Uber, Lyft and AirBnB may not have changed the overall numbers but it has changed one very important aspect of contracted labour, the age of the person doing the work.  Between 2005 and 2017 the percentage of ‘gig workers’ aged 35-44 dropped from a quarter to a fifth.  Meanwhile the percentage aged 55-64 increased by 25% and the numbers aged over 65 almost doubled.  Today’s ‘gig workers’ are increasingly older workers who in earlier times might have been receiving a government pension or living out their golden years on their savings. The reality couldn’t be further from the youth culture branding of the digital platforms.

Gig platforms may be growing but they are largely not replacing more standard work patterns. The JP Morgan Chase Institute (JPMCI) tracks payments to the bank accounts of workers in the ‘gig economy’ (via the platforms that arrange the work).  Their data shows that, for most of those workers, gigs are sporadic and are usually a second job done in a household where another member has a fulltime job.

And far from suffering lesser conditions, data from the US Labour survey shows that the group of gig workers growing fastest (those over 50) had the highest weekly earnings and greatest level of health insurance and retirement coverage of any age group.  All of those measure increased significantly between 2005 and 2017. 

The same survey did however identify a different and more concerning trend for younger workers when compared to its 1995 results.  There is an undeniable decline in work conditions for workers in general.  There is less job security, fewer opportunities for promotion and the increasing probability that their job will be outsourced to a company paying lower wages and offering less benefits.  This is increasingly being driven by the deliberate creation of ‘contracting’ roles which in reality are being performed by people who on any reasonable measure are full-time employees.  The contractor status gives the employer much more flexibility but destroys job security for the employee.

There is a lot of spin associated with the story of the gig economy and it is probably driven by tech companies which have a lot to gain by us believing they are much more important than they are.  The reality is that gig work is not increasing.  All that is changing is the method of arranging it and the age of the people doing it. 

But all the noise about the gig economy hides a more important story.  Full-time job security is declining and with it, people’s overall earning capacity and sense of worth and well-being.  We need to care less about the marketing spin emanating from the ‘gig economy’ and more about the very real declines in job security. 

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