Recently Uber and Lyft drivers around the world went on strike. For some, this move may have seemed unprecedented. We may have heard now and again that working conditions aren’t ideal, or that the gig economy is causing problems. But how many of us really understand the gig economy? A recent study found that 89% of Americans weren’t familiar with the term gig economy at all and, seeing as this is a term we might occasionally hear thrown around on the news without proper context, it can be hard to understand what it is or if it’s any good. After all, these drivers have a job, right?
Well, since I started delving into topics like the ethics of Amazon I started running into similar recurring problems, namely the automation of work and shifting perspectives of what it means to be a worker. For a while I’d been planning to delve more into the gig economy, which is ultimately what this a lot of these problems link to. The strikes finally gave me the push to sit down, do the research and get this out there. I hope it’s helpful.
What is the gig economy?
The name gig economy basically refers to the idea of earning your income from multiple short term tasks, rather than the standard of one fixed 9-5 job. As a concept it has been around for a long time; each piece of work is seen as one ‘gig’, a name that is said to come from the music industry, meaning that it can encompass a variety of small business owners and freelancers who are paid to complete projects for larger organisations. Typically gig workers have held jobs like musician, photographer, writer, designer, driver or tradesperson, meaning that the gig economy existed long before the technology we know today.
That being said, the gig economy is now heavily associated with middlemen digital platforms or apps such as Uber, Deliveroo, or Amazon delivery, all of which use technology to dole out the individual gigs to people who are defined as self-employed. The gig economy has also been referred to as the ‘sharing economy’, mainly in regards to platforms like Airbnb, or the ‘collaborative economy’, as well as the ‘platform economy’, due to the use of app-based platforms to divide out the work.
Companies in the gig economy are often in industries that have relied on self-employed workers for a long time, with technology allowing them to operate on larger scales (for example taxi services vs Uber). Gigs can vary in terms of pay, from someone who earns a little extra as a delivery driver to independent management consultants who can charge high fees for their knowledge. a Pew study last year found that 72% of American adults had used one of eleven gig based services and that a third of people under forty-five had used four or more, so it’s big business.
The gig economy is also said to be similar to, but not the same as, zero hour contracts. Both of these setups offer no guarantee of pay, minimum set hours, or job security. However, gig economy jobs pay per ‘gig’, for example each individual Uber fare, while zero hour contracts are paid hourly, without a set minimum. Unlike gig workers, workers with zero hour contracts are technically seen as employees, meaning they’re entitled to holiday pay, however neither are entitled to sick pay.
How many people work in the gig economy?
It’s hard to get a full grasp on the amount of people working in the gig economy, especially as many people in stable employment can take on gig economy jobs on the side (for example people who do Uber on top of a regular job). Numbers I can find include a parliamentary report that says 15% of UK workers (around 5 million) are self-employed, however this also covers traditional freelance roles and contractors that may not be considered part of the gig economy. The Chartered Institute for Professional Development estimates that approximately 1.3 million British people are employed in the gig economy, while TUC says that 3.2 million are in precarious work.
Looking further afield, in 2017 the gig economy in the US was estimated to be about 34% of the workforce and expected to be 43% by the year 2020, while Harvard Business Review reported that 150 million workers in North American and Western Europe are independent contractors.
Why has it grown so much?
The financial crash in 2008 had a massive impact on the rise of the gig economy. With huge numbers facing unemployment, many people picked up any temporary, flexible work they could find. Some had a full-time job but needed to increase their income, others reached an income by taking on multiple gigs at once. This led many to pick up work where they could choose their own hours, and apps such as Uber and Lyft took off.
That being said, it’s worth noting that technology itself isn’t necessarily to blame for the shift in our economy:
Louis Hyman, a professor at the School of Industrial and Labor Relations at Cornell University had this to say: “The history of labor shows that technology does not usually drive social change. On the contrary, social change is typically driven by decisions we make about how to organize our world. Only later does technology swoop in, accelerating and consolidating those changes.” This supports the thought that our world (and by implication our markets) is already re-organizing towards gigs and personalized services, and technology is merely finding ways to fit within the economic jigsaw puzzle.
Another reason for turning to gig work is age. According to a 2018 study, Gen X-ers work the most hours per week of any generation and are also most likely to exclusively rely on gig work for income. On the other side, baby boomers tend to use gig economy work to earn a little extra money that they may not be receiving in retirement, and millennials use side gigs to pay off debt. The study also found that millennials in the gig economy earn $27,500 for 26 hours per week on average, while baby boomers earn $43,600 for 25 hours per week.
What are the benefits of the gig economy?
The main argument for the gig economy is its flexibility: workers can choose how often they work and when is convenient for them, while employers only pay when work is available, avoiding staff costs when there’s no demand.
There’s also an argument that gig jobs can be helpful on a temporary basis when we need a little extra income, or for jobs within areas like the creative industry:
The other day, I asked my Uber driver if driving was his full-time job or a side gig. He said he’s a freelance graphic designer and works on projects for clients roughly three hours a day. The rest of his working hours, he drives Uber to keep himself occupied.
When you’re a young creative just starting out, and your resume is more or less a blank slate, gig work can help you get a foot in the door.
The gig economy allows creatives to pay the bills while also giving them time to pursue their passions. Visual artists like my Uber driver can supplement freelance design work by driving for rideshare services. Aspiring novelists can freelance as copywriters to make their rent payments.
Honestly, as a creative, I’m tempted to call bullshit on this argument a little bit. While the gig economy may help you supplement your income when you’re first starting out any job can do this, and other jobs (such as working in a cafe) can actually provide better benefits too. Plus, this risks feeding into an already pervasive narrative that creatives don’t deserve adequate compensation for their work. Sure, the graphic designer in the example above may just not have had many clients, but if he’s driving for Uber because his clients won’t pay him enough (or are offering him ‘exposure’ as payment), then that is not a good argument for the gig economy.
What are the problems?
Well, there are a few.
A large one is that gig based work moves risk away from organisations and company structures and instead passes it on to the individual. The gig economy is less stable, as work fluctuates, but the gig worker takes the hit, not the corporation. You can’t guarantee your next paycheck or the amount. When you don’t work, you don’t get paid, meaning that you need rigorous planning or to work extremely long hours to take time off and to earn enough to get by, otherwise you’re left vulnerable.
Traditional jobs come with benefits like pension plans and, more often if you’re USA based, health insurance. However, freelancers need to create their own plans for retirement and healthcare. They also have no protection against unfair dismissal, no right to redundancy payments, and no right to receive the national minimum wage, paid holiday or sickness pay.
Alongside this, some reports suggest that many in the gig economy aren’t even making minimum wage. A 2017 study suggested some gig economy workers earn less than £2.50 an hour, which is only permissable because they are viewed as independent contractors and not employees. (This is a similar issue to the UK government claiming success because more people are in work when the reality is that most people are underemployed and not earning enough).
There is also often no option for progression and movement up the ranks, like a normal corporate structure, in gig economy models. Essentially, it’s an easy way to keep low-income workers in the same position forever. There’s an argument that employers should invest in mentorship and training, including establishing protocol for gig workers to help them move up the ladder, but this would require these companies to acknowledge that their workers are actually their workers, which has yet to happen.
Sadly, those who most need to work can find themselves trapped in a cycle of struggle. Ravenelle interviewed men and women signed up to do tasks on Task Rabbit—prior to its acquisition by IKEA—and who drove for Uber, for example. They were not employees and so had no health insurance, workers’ compensation protections, employer contributions to Social Security and payroll taxes, paid time off, family leave protections, discrimination protections, or unemployment insurance benefits.
Sometimes, this gig work also requires an initial outlay of capital. (My own neighbor just traded in her old vehicle for a new car, taking on thousands of dollars in debt so that she can make extra money driving for Lyft.) At the very least, a potential worker needs a smartphone and wi-fi service. Ravanelle’s book boasts an image inside of a young man in a park panhandling for $30 to activate his phone service so that he can start picking up work.
There’s definitely a dehumanising element to the gig economy too. Instead of human bosses people work for apps, making it harder to communicate with management if an issue occurs or if you’re not happy. Especially as these apps insist you don’t actually work for them, you work for yourself. It also means that when risks or uncomfortable circumstances arise, workers are basically on their own.
The workers Ravenelle spoke to were hit on at work while in a stranger’s house; injured after taking strenuous moving jobs; found themselves delivering questionable packages containing illegal substances; and drove passengers involved in shady activities, fearing that a protest or refusal would end in violence. In all of these awkward situations, these “independent contractors” were forced to choose between a slew of bad options. They could turn down work when they needed the money and risk finding themselves scrambling more. They could take questionable tasks and hope that it all worked out, which it sometimes did. But that meant exposing themselves to the risk that they would end up hurt and financially responsible for their on-the-job injuries, which would also mean needing unpaid time off.
Additionally, according to a recent study this type of environment also breeds a culture where productivity becomes a huge matter of importance, with self-worth and identity often becoming tied to how productive we are. While fulfilment in the gig economy can come from being your own boss, this is also tied to strong existential anxiety, overwork and isolation.
how to know you’ve internalized capitalism:
– you determine your worth based on your productivity
– you feel guilty for resting
– your primary concern is to make yourself profitable
– you neglect your health
– you think “hard work” is what brings happiness
— أ fâtıma 🍒 (@_r0sewater) March 11, 2019
How can we make it better?
While it doesn’t look like the gig economy is going anywhere soon, there are a few options on the table for how we can make it better.
Wages and benefits:
In the USA there are options for “Multiple Employer” retirement plans, where a single 401(k) plan is sponsored by multiple employers, which can include states or a group of gig economy companies. Honest Dollar, while Uber offers a retirement savings option to drivers in some cities through Betterment. Both apps are voluntary investing platforms, and many other gig platforms don’t even offer this.a state-sponsored retirement plan that would apply to freelance workers. Currently Lyft offers a pension service called
When it comes to actual wages, legislation is most likely to make a difference. The Labour Department under Trump’s rule has suggested that it will allow gig companies to continue to classify their workers as contractors rather than employees, but smaller scale legislation has seen change. In New York Uber is legally required to pay its drivers an hourly minimum wage of $17 after expenses. And in California state politicians have introduced legislation to reclassify gig economy workers as employees too. Considering that Uber, Lyft, and other transportation network companies (TNCs) have convinced lawmakers in over 40 states to overrule and preempt local efforts to regulate gig based ride-hailing services, it shows that legislation is effective enough for them to take notice.
In the UK in 2016 Uber drivers in the UK won the right to be classed as workers, meaning the app would have to provide holiday pay, paid rest breaks, and the national minimum wage. Uber launched an appeal against this but lost in December 2018, although they are now appealing again. Deliveroo drivers also recently lost a high court battle to gain union recognition.
Alongside these legal proceedings, in 2017 The Taylor Review called for a new category of worker known as a ‘dependent contractor’. This would give those in the gig economy some employment benefits and ensure a decent wage, though it wouldn’t give them full-time employee status or protections. The government response to this was to promise stricter enforcement of holiday and sick pay for those in the gig economy, however unions suggested that this leaves 1.8 million workers without vital rights. We’re also still waiting for legislation that sees any of this pass into concrete law, beyond the consultation of the review itself.