The Truth About the Gig Economy

When discussing our current economic and job situation, you’ve probably heard the term “gig economy” thrown around—what exactly is it? The “gig economy” involves independent workers holding usually temporary positions contracted with other individuals or larger organizations. Also known as freelancers, these workers work on their own terms, either reaching out to or being recruited by firms for their services, or working directly for larger companies like Lyft. As a rising senior, I have begun to consider what kind of job I may want to have after I graduate, and I know that some are already looking into using their skills within the flexibility of freelance work. While the gig economy might seem to have a lot of attractive features, such as personal freedom and the ability to work non-traditional jobs, there are some downfalls to this structure, such as lack of job security. Is the gig economy worth it? Is it a fad that has risen from economic anxiety, lack of employment opportunities and collective millennial lack of focus, or is it a legitimate way to make a living for skilled employees?

Pro: Independence and being “your own boss”

One of the main aspects that drive people to take part in the gig economy is the fact that one is independent of the demands of a regular 9-to-5. Freelancers have more control over the hours and days they want to work, who they want to work with, what kind of jobs they want to complete, etc. because they are not reporting to a higher power. Under capitalism, workers are alienated, removed from directly receiving or benefiting from the output they produce and exploited by firms. In theory, the gig economy provides workers with the opportunity to directly receive the benefits of their own work because they are making money for themselves and not to increase company revenue. While workers have deadlines and obligations to their employers, they have more freedom in deciding who to work for and when. One also has the opportunity to explore a variety of occupations based on interests and hobbies.

Pro: Expanding the market

The gig economy has long been hailed as a place where entrepreneurship and creativity flourishes, and it is often advertised as being the road to turning one’s hobby into a career. In the gig economy, the possibilities are virtually endless, the options are virtually unlimited and the opportunities are virtually boundless. There is a promise that one can be anything: social media manager, photographer, driver, or even a completely new job-title. Specialization thrives as workers develop their skills in a particular area and have the opportunity to explore new fields and ideas. Some argue that the gig economy values collaboration rather than competition, with workers emphasizing passion and creativity in their fields. Entire start-ups and large businesses have emerged from working “side-hustles,” such as Shopify, allowing the interests and ideas of individual workers are able to develop.

The benefits for firms and employers are that freelance workers are low cost, specialized, can be hired in different timezones for work that’s around the clock, and have the ability to increase returns to scale. The widespread use of the internet has allowed for the gig economy to grow, with the ability to choose workers from a variety of fields online with a few clicks—think “Tinder” for professionals. Websites like fiverr have been developed to bring the ability to post job listings and hire workers directly into the workers’ and employers’ hands. Workers can advertise their services and are given scores based on previous “gigs,” some earning a “Pro” title which can allow them to mark up the prices of their services highly.

Pro: Preparing for new reality  

The number of people who are self-employed is growing, and a gig-centered economy may soon become the norm, giving those already in the gig economy an advantage. While the myth of the solo-preneur is that they live and work in the moment, around 54% of gig workers save for the future and 60% pay for their own life insurance, redefining “stability.” Automation and the gig economy could also benefit from each other: automation could create a new category of “set-up and leave” jobs that could be filled by gig workers with necessary tech skills.

Con: It’s not always glamorous

Personally, when I think “freelancer,” my mind jumps right away to photographers, writers and other artists working on their own terms. However, the gig economy is much larger than this and includes workers contracted by large companies like Uber and even those making money off of capital platforms like eBay. While some gig economy participant have found success, others see it as a way to work a side job like driving in order to supplement their current employment. Having the gig economy as an excuse to not pay workers fairly because they have the option of taking on a side-pursuit could be potentially damaging for workers already facing slashed wages, hours, benefits and protections.

Con: Lack of protections and job security

Not having a consistent employer means that one could go for long periods of time without any work. If their position is simply not in demand, workers could face inconsistent employment, and automation could also impact workers by making certain positions obsolete. The gig economy runs on volatility and possible unreliability, and hiring a freelancer can be a gamble for quality for firms. Entering the gig economy as a worker is also a gamble as workers are tasked with finding jobs that compensate properly and promise stable employment.

Ultimately, the gig economy places many responsibilities that once belonged to the firms on the workers, from training to buying insurance, which helps increase firms' profits. Self-employed workers are not entitled to firm-specific employee benefits and protections against harassment and sexual assault, which could be especially dangerous for women and minorities. Companies like Uber have been criticized for cutting down the price of rides and for the incidents of harassment of their drivers. Although freelance companies typically do not provide benefits like health insurance, companies like Uber and Postmates have begun to contract outside companies like Stride Health to give employers advice on getting healthcare rather than providing employee-sponsored protections. While the number of unions have been declining since the 20th century, unions have often been essential for workers in typical firms in collective bargaining for higher wages, benefits and security. As a “gig” worker, one lacks the collective action efforts of a union and is basically on their own.

Ambiguity and lack of accountability are also large issues, from freelancers posting vague ads about themselves, to finding ways to keep track of performance, to making sure both firms and workers deliver their promises. As companies reach out to employees across the world, reliability and accountability on both ends become stickier. Outsourcing may mean that freelancers from around the world would compete for the same positions, and firms may end up hiring those who charge the least for their services. Regulating contracts internationally with workers and firms will be necessary as the gig economy has gone global.

Con: What free time? (Possible exploitation)

They say that if you do what you love you’ll never work a day in your life—but what if what you love becomes nonstop work?

A lot of people who take part in the gig economy are also formally employed and have taken on a second (or even third) job in order to make ends meet; think “side hustle.” Ironically, a lot of those involved in the gig economy have less freedom with their time than traditional workers, despite the promised liberation of traditional schedules. Firms like Uber encourage maximum involvement by treating the interface like a game: drivers are rewarded for taking on more trips and are incentivized for various achievements, like “entertaining” drives. This encourages drivers to put in extra labor for a job that provides them with no direct benefits and little pay. Larger companies that employ freelancers are finding ways to continuously lease the most work out of their employees, even if it means that they end up falling prey to the “24-hour workday.” Fiverr has been criticized for its ad campaigns targeting “doers,” which often romanticize sacrificing basic personal time in exchange for “the grind.”  

Arlie Hochschild The Time Bind discusses how firms over the past few decades have been reforming their policies and benefits to make sure that firms are getting “the most” out of their workers—emulating 19th century Taylorism which meticulously managed workers in order to increase efficiency. One of the largest shifts Hochschild observed was the amount of work that people do outside of their positions and which spills into their personal life has greatly increased. With freelance workers, there are no set times of when their work should “stop,” and they are at the mercy of the expectation that their work basically never ends and should always be on call.

Adjusting to our current economy

There is no doubt that the gig economy is disrupting the current relationship between workers and employees. While many companies do not have the best interest of their workers in mind when focusing on maximizing profits, hiring freelancers adds another level of separation between the firm and the employee. Essentially, the firm is no longer responsible for the worker if the worker they hire is a freelancer, as opposed to workers they directly contract who are entitled to benefits and other protections that are guaranteed with jobs.

However, on the bright side, the philosophy of the gig economy might have the potential to allow us to rethink the worker/employer relationship as a whole. Workers at traditional firms tend to attach a lot of their identity to the firms that employ them: for example, Walmart has developed such a strong employee loyalty that workers viewed the store as a “haven” and their fellow employees as a community (Reich and Bearmen). The lines between personal and professional life are becoming more blurred, and while I see nothing wrong in firms forming a sense of community among workers, firms have been able to exploit workers based on this within a precarious economic state by making them work longer hours for less benefits. While the risk of exploitation is rampant in the gig economy, the idea that workers are individuals that are receiving the benefits of their own labor may be the key to completely rethinking the employer/worker relationship. Perhaps imagining the gig economy outside of a capitalist system could be the first step in a world where workers are taken care of, experience no alienation, are not exploited for their work and are able to be fulfilled in the jobs they take part in. Despite the many stigmas surrounding the gig economy, many within it are passionate, talented and hard-working individuals who excel at being their own bosses, and we must make sure that we are protecting their livelihoods.

For those already taking part in the hustle and bustle, Business News Daily States three tips for choosing a “good gig”: aim to be treated like an employer, find a company that offers full-time conversion and rewards expertise with full-time positions, and sometimes it is better to work for smaller companies which can deliver a more personal connection rather than working for large companies like Uber. No matter what, the gig economy is here to stay, and it is likely that you will be participating in it either as a worker or as a contractor. Freelancers are developing skills that will greatly benefit them as members of the new workforce, from learning how to close deals to marketing themselves and developing a “brand” to securing long-term projects. The gig economy represents a new paradigm, and instead of trying to get “millennials” to find “steady, real jobs,” maybe we need to accept this new reality and make sure that those taking part in the gig economy are well-paid, protected and not exploited by big businesses. The gig economy could be our era’s “Great Transformation,” and as the market shifts we need to make sure that social protections will follow. Perhaps as the gig economy grows and becomes more solidified, we will have a vision where the paradigm does not reflect the harmful forces present in traditional neoliberal contexts, and where workers are truly pursuing their passions and in control of their own destinies.

Sources include The HillForbes, Bloomberg, The Next Web, Business News Daily and NPR.