By Jim O’Neill
Independent, Disruptive and Getting Paid
The Gig Economy is a disruption in the American workforce. The days of working 9–5, five days a week at the same company for 20 years is near the end of its normalcy in the American landscape. The dislocation of worker caused by the Great Recession of 2007–2009 might be why workers sought alternatives to the office life. The research to the cause of the independent contractor cannot be fully determined until the effects of the recession continue to fade. (Krueger, 2016) The replacement of the office starts with consultants, freelancers and independent contractors. All eager to build a portfolio of successful short-term job experiences as a replacement for full-time employment in an office. Gig employers emphasize solely on performance instead of office attendance. The Gig employee can find solutions when and wherever, the office does not control their innovation. Those hiring Gig employees value the quality of work over the process which it was created.
Furthermore, there are no studies implying the typical office work week raises any measurement of productivity, performance and job satisfaction. The data on working in an office suggests most workers aren’t engaged, waste large portions of the workday not working, thus costing their companies money despite ever present supervisors. A typical office employee costs upward of $12,000 per employee per year just to plant themselves eight hours a day, five days a week. If you include salary to that cost, the return a company makes on its investment is decreasing every year. (Mulcahy, 2017)
No one aspires, after college, to be an office plant stuck in a cubicle, slowly wilting just to pay the bills. Yes, most graduates find a job in a field they wish to be a part of which is supposed to make work feel less stagnant. The new Gig Economy is replacing the way a new graduate looks at their career. Will my job be here in three years? Do I even want to be here in three years? Aren’t I considered a failure if I want to work for one company longer than three years? The newly minted workers hope these questions answer themselves as they gather experience in their respective fields.
Subsequently, the Gig employer cannot afford to pay full-time workers for all the work needing attention. They need a good return on their investments. Hiring workers on a temporary status to supplement busy times has been used for a long time. Also, employers know people commonly take more than one job and switch companies until they find a comfortable spot. The difference is the scale: comfortable spots are temporary and people have the need to be mobile. The new comfort zone is the freedom to work when and where you want as an independent worker.
The independent worker is made up four demographically diverse categories. The “free agents, who actively choose independent work and derive their primary income from it; casual earners, who use independent work for supplemental income and do so by choice; reluctants, who make their primary living from independent work but would prefer traditional jobs; and the financially strapped, who do supplemental independent work out of necessity.” (James Manyika S. L., 2016)
The casual earners are the more traditional worker as people have been taking side jobs for a long time. Most of the casual earners use the supplemental income to afford a lifestyle they want. Both the casual earner and free agent are reported by the McKinsey Global Institute (MGI) report, Independent work: Choice, necessity, and the gig economy (James Manyika S. L., 2016) to have more job satisfaction as they choose their jobs. As the reluctants and financially strapped work out of necessity conveyed a less than positive attitude towards the gigs they chose. Conversely, the free agent showed to have the highest level of satisfaction across several factors based on their gig experience. This suggest that numerous workers in the Gig Economy value nonmonetary aspects of being an independent worker.
The Bureau of Labor Statistics (BLS), a division of the United States Department of Labor, has more in depth information on the Gig workforce that the McKinsey Global Institute. The BLS data driven report is comparable with the survey based results of the MGI with exceptions. The BLS took a more clinical approach as they have a large amount of data to access to identify an independent worker. The BLS data “Gig workers could be in contingent or alternative employment arrangements, or both, as measured by BLS. Contingent workers are those who don’t have an implicit or explicit contract for long-term employment. Alternative employment arrangements include independent contractors (also called freelancers or independent consultants), on-call workers, and workers provided by temporary help agencies or contract firms.” (Hogan, 2016) The data used is over 10 years’ old which does not reflect the current workforce. Although, there are plenty of websites that reference the data, still. The BLS plans on collecting new data again in May of 2017.
The Bureau has recognized some occupations are more likely to fall into the gig workforce. They achieve this by placing occupations into groups based on those workers who are hired to perform on-demand jobs. These are the occupations which are recognized by BLS as increasingly relevant in the gig economy.
Arts and design. Many occupations in this group, including musicians, graphic designers, and craft and fine artists, offer specific one-time services or customized products, which makes them good candidates for gig work.
Computer and information technology. Web developers, software developers, and computer programmers are among the occupations in this group in which workers might be hired to complete a single job, such as to create a small-business website or a new type of software.
Media and communications. The services of technical writers, interpreters and translators, photographers, and others in this group are often project-based and easy to deliver electronically, fueling a market for gig workers.
Transportation and material moving. Ridesharing apps have helped to create opportunities for workers who provide transportation to passengers as needed, and on-demand shopping services have led to gig jobs for delivery drivers.
As one can tell the above jobs can be characterized as on-demand, independent and not beholden to the typical 9–5 office job. There are pros and cons to these and other gig jobs which isn’t an exclusive occurrence as most occupations have them. The pros are flexibility, variety and passion. An independent worker craves the flexibility of working on their terms where the gig is set to your schedule, results over process. A gig worker enjoys the array of jobs they can choose from. These jobs may not be the ones you wanted, although the opportunity to expand or sharpen your skills makes the jobs attractive to the independent worker, one must pay the bills. Passion, if you do not have it then the gig is not for you. As the CEO of Fiverr, Micha Kaufman, wrote in WIRED, “there is a growing recognition that people who balance work and play, and who work at what they are passionate about, are often more focused and productive, delivering greater value to their clients.” (Micha Kaufman, 2013)
Working yourself to Death
Consequently, there are some cons, the most prevailing is benefits such as health care and paid leave, no work-no pay. Even though you are paid for work performed, the pay may not be as sustainable as hoped. The New Yorker wrote about the downside of the gig economy, The Gig Economy Celebrates Working Yourself to Death. (Tolentino, 2017) The article mentions a story from the Lyft, the ride-sharing app, company blog, since removed. The blog post celebrates a driver identified as Mary from Chicago. Apparently, Mary was very pregnant and began contracting. Since she was a week from delivering, she figured the contractions were still of the false variety and kept driving. For safety sake, Mary started driving towards the hospital when she received a “ping!” indicating she had a ride request. Mary, independent worker extraordinaire, took the request which didn’t take her off course towards the hospital. Upon arriving at the hospital, Mary gave birth.
Lyft’s blog post included a picture of the baby wearing a company onesie. Accordingly, Mary was hyped for having the “entrepreneurial spirit”. (Tolentino, 2017) The true gig employee, readily available to make a dollar, even when you’re dilating. The New Yorker was quick to point out that Lyft does not provide health insurance or even maternity leave. Although, Lyft does offer to hook up independent contractors with an insurance broker as well as providing information on the Affordable Care Act.
Why would an independent worker go-getter need to apply for ACA? The simple answer is most independent contractors attached to Uber and Lyft net around $11 per ride. One could argue, Mary kept working because she was a week away from her due date. Or Mary realized she need to work as much as possible since her “employer” did not provide the necessary health care coverage. What does need to be studied is Lyft reason for promoting a story of an exploited worker.
All throughout the internet anyone can find cases of independent contractor being normalized by the Gig Economy which lionizes those who make a little more than minimum wage while giving maximum effort. Fiverr has an ad campaign glorifying those who “eat a coffee for lunch” while offering services which start at $5. All the while, the company raises millions of dollars from venture capitalists. One cannot deny their ad campaign does motivate the average 20-something looking for a way to get ahead while not selling out to be a rebel with a cause. Although, looking at one of Fiverr’s videos. I am unsure if I want to ignore Mr. Death casually smoking a cigarette behind my back or take a business call/text during sex. If those are legitimate possibilities than one would have to wonder if saying, “what do you want to drink with that?” isn’t that bad of an option.
How does someone who is looking for a change, enter the Gig workforce? Several digital platforms have entered the marketplace to facilitate the connection between workers and employers. The more developed independent contractor will go online to use sites like LinkedIn and Glassdoor to access potential jobs. The point being there are plenty of platforms out there for the potential gig worker. All you have to do is sign up, create a profile which is professional and thorough. A word of caution, if you have a job, take a few side gigs until you are sure this type of work is for you. A successful gig employees will build a great base over a time, be adaptable, judicious with their money. By managing your funds correctly, allows for the gig workers the ability to choose the job the like instead of taking whatever comes, not everyone wants to “almost” give birth on the job or eat coffee for breakfast.
The ultimate decision comes from the individual. Did the Great Recession help accelerate the Gig Economy? Perhaps, the new administration occupying the White House might have a significant effect on the rise or decline of the independent contractor. The independent workforce has begun to appear on the policy makers, companies and academia’s radar. All political commentary aside, the independent workforce will continue to rise as preliminary studies suggests. The advancement of the digital will promote the market for the individual. An independent contractor needs to be protected. All occupations have a upsides and downsides, the Gig Economy has plenty of both, although “freedom’s just another word for nothing else to lose.” (Janis, 1969).
Since 2015 there have been four reports often referenced when researching this project.
o Lawrence F. Katz and Alan B. Krueger; National Bureau of Economic Research
o Elka Torpey and Andrew Hogan; Bureau of Labor Statistics
o James Manyika, Susan Lund, Jacques Bughin, Kelsey Robinson, Jan Mischke, and Deepa Mahajan; McKinsey Global Institute
These reports have a plethora of valuable data which I have referenced to shape the report. I will place a few graphs and tables of interest. The Gig Economy can work. I believe it to be the future of the workforce. As Americans, we need to work together to find a way to support this new workforce, new rules for a growing classification of workers.
10–15% of working-age adults in the US and EU earn their primary living from independent work.
The figures vary somewhat across countries, from 11 percent in the United States to 18 percent in Spain. In general, the highest shares of independent workers are found in countries such as Greece, Italy, Poland, and Spain where incomes are lower and economic growth has been persistently weak. In these countries, some 15 to 20 percent of the workforce is self-employed or in temporary employment. In some European countries, including Greece, Spain, Portugal, the Netherlands, and Poland, more than three-quarters of temporary workers are involuntary. (James Manyika S. L., 2016)
Table 4 reports the percentage of workers in various categories that are employed in
alternative work arrangements in their main jobs.12 For example, 6.4 percent of those aged 16 to 24 were employed in an alternative work arrangement in 2015, while 14.3 percent of those aged 25–54 and 23.9 percent of those aged 55–74 were employed in an alternative work arrangement. The 1995 and 2005 CWS also show a positive age gradient in the incidence of alternative work. Interestingly, the rise in the incidence of alternative work occurred has been sharpest for older workers (those 55 to 75 years old) and strong for prime age workers (those 25 to 54 years old) as well. But there was no change in the percentage of workers aged 16–24 who were employed in alternative work arrangement from 2005 to 2015, despite the over 50 percent growth in incidence across all workers. Thus, the age gradient in alternative work has become steeper.
From the increasing use of contingent freelance workers to the growing role of robotics and smart machines, the corporate workforce is changing — radically and rapidly. These changes are no longer simply a distraction; they are now actively disrupting labor markets and the economy. (Deloitte, 2016)
Workers in all educational categories experienced a rise in the likelihood of working in an alternative work arrangement. Alternative work arrangements were most prevalent in the construction and professional business services industries in 2005. Although workers in these industries continue to have a high likelihood of being employed in alternative work arrangements, the growth of alternative work arrangements has been much greater in previously lagging sectors including transportation and warehousing, information and communications, education and health care, and public administration. Figure 2 illustrates trends from 1995 to 2015 in the share of workers in alternative work arrangements by industry. (Krueger, 2016)
Given the shortcomings of government data, a number of organizations and researchers have made their own efforts to measure the independent workforce in the United States. Each source uses its own definition, however, yielding a wide range of estimates of its size. At the low end of this range is an estimate from MBO Partners, which counts 40 million US “independents.”26 At the high end is the Freelancers Union, whose research finds 54 million US freelancers.27 Some studies have specifically attempted to identify the online share of the independent workforce in the United States; these estimates range from less than one million workers to ten million. (James Manyika S. L., 2016)
MGI’s survey finds that 15 percent of independent earners use digital platforms todayDespite the media coverage they have garnered, only a fraction of independent work takes place on digital platforms such as Uber, Lyft, TaskRabbit, Upwork, Freelancer.com, Thumbtack, and the like. Katz and Krueger’s research pegged this number at 0.3 percent of working-age adults in the United States in any given week.37 Another study employed our broader definition of independent work (that is, it included supplemental earners and those who sell goods or rent assets) and put the share at roughly 4 percent of the US working-age population.