Let’s Talk About The Gig Economy

Neal Ungerleider
Mar 24, 2017 · 6 min read

Let’s talk about the “gig economy” a little bit. That’s been a buzzterm lately — Great to host TED talks about! Great to discuss at SXSW! Great to get a funding round for! — but the actual economy part? Well, it’s a little different.

Jia Tolentino at the New Yorker just wrote a great piece called The Gig Economy Celebrates Working Yourself To Death that, ostensibly, is about Lyft celebrating a driver working while in labor (uhh…) and a subway ad campaign by online freelancer marketplace Fiverr celebrating sleep deprivation and skipping lunch in favor of freelance work.

Reading about this was FASCINATING. See, I run a personal finance site for freelancers and independent contractors called Almost Millions that’s all about the money and business issues participants in the 1099 economy deal with. In addition, I’ve been working some permutation of full-time, part-time, or freelance work for the past decade.

My particular work stack? I write for Fast Company magazine and freelance as a content strategist and ghostwriter, while running Almost Millions as a side project. I might earn substantially more than the typical Lyft driver or Fiverr freelancer, but I deal with many of the same financial issues.

So do many self-employed architects, graphic designers, engineers, and other professionals — the 1099 economy is a continuum where Airbnb hosts, self-employed software developers, Caviar delivery drivers, and yoga teachers all have more commonalities than differences.

The Commonalities Of 1099 Land

That’s why it’s so amazingly wonderful to see people discussing this at the New Yorker. But back to the gig economy! You’ve heard about this, and if you’re in the demographic that I’m imagining is reading this, you’ve probably been a passenger in an UberX or ordered delivery from Instacart. Here’s what you need to know about the gig economy:

1. The gig economy isn’t really about gigs:

Fiverr is a freelance marketplace where anyone in the world can offer small jobs (for instance, designing a logo or recording a short video) to clients. Gigs start at $5, though you’d probably have to pay over $25 for any service you want done professionally. Uber and Lyft are platforms which allow anyone to sign up and chauffeur random passengers around a city for money. TaskRabbit lets you do chores and tasks for random clients and get paid in exchange. All of these sites take commissions from the workers who sign up for their platform… and they’re paid as 1099ers (that is, they don’t receive any benefits from their “employer” and don’t have any taxes taken out from their paychecks.)

There are a wide range of particpants in the gig economy. Where I live in Los Angeles, a lot of the people I encounter work in the entertainment industry and drive for Uber/host Airbnb to supplement seasonal work. Others are serial entrepreneurs who embrace the hustle mentality — I once met a Lyft driver who uses his car as a lead generator for a business offering Disneyland shuttles to foreign tourists, and an Uber driver who doubled as a real estate agent. He credited his Uber job with helping him find out about properties he’d otherwise be oblivious to.

But many more gig economy folks are people who want full-time jobs and can’t find them. The Bureau of Labor Statistics’ metrics on underemployment are full of sadness and there are rent checks to pay.

2. Some people want to be entrepreneurs, others have to:

Building on this past point, there are two main groups of gig economy participants — Entrepreneurs who use it to subsidize their other businesses, and involuntary entrepreneurs piecing together an income.

There are plenty of Airbnb hosts with full-time jobs who are using the service to build a nest egg or pay for the kid’s school tuition. There are plenty of Fiverr freelancers in countries like India, the Ukraine, and Malaysia who earn good incomes providing quick-turnaround online services for wealthier North American, European, and East Asian customers.

There are also retirees driving for Uber so they’re not on the streets, single parents who don’t earn enough money at their part-time retail jobs, and strivers trying to find full-time jobs in shitty local economies.

What I’ve discovered editing Almost Millions and speaking with readers is that the first group are savvy about business and finances. They’re the ones developing business plans, figuring out optimal hours to drive with Uber or Lyft to get bonuses, and the ones hiring accountants to make sure they get every tax exemption they’re entitled to.

The involuntary entrepreneurs, however, are thrown into the deep end of the pool. They might not realize that they have to pay $2500 out of pocket on the $10,000 they earned driver for Uber the year before. They don’t understand the tax deductions that could let them take a lot more money home. They aren’t busy figuring out lead generation, a sales funnel, product diversification, retail arbitrage, or anything else the blog/Reddit entrepreneur world is discussing. These 1099ers are just busy trying to make ends meet, and have life throwing too much at them to improve their situation.

3. This shit is structural:

I want to be 1000% upfront about this: Companies like Fiverr and Lyft aren’t exploiting their workers. They are, however, exploiting a huge systematic gap in the global economy.

If Uber didn’t exist, Lyft, Juno, or another startup TBD would operate with a similar business model. If TaskRabbit didn’t exist, there’d be other companies offering TaskRabbit-like services. Fiverr succeeds largely because they offer an easier user interface and a better experience than Upwork, a site with a similar business model.

The internet has globalized things, and a musician in Brooklyn or an artist in Oakland looking to make a few extra dollars on a platform like Fiverr competes with similarly talented individuals in Mumbai or Minsk who have much lower living expenses. Limo drivers in Los Angeles who have driven for years through a relatively well-paying dispatch agency see the corporate clients who were their bread and butter for years using Uber instead.

And for the masses of workers in America, the past 20 years have been a financial death by a thousand cuts. The Affordable Care Act works relatively well in states like New York and California with a wide variety of insurers, but is unaffordable in many southern and midwestern states. When I worked retail jobs as a young adult (My first three jobs were at Wendy’s, Officemax, and the K-Mart loading dock — pretty typical growing up in Staten Island), I was paid by check or direct deposit — if I bugged my bosses. These days, pay at many retailers is via debit cards.

Getting your pay automatically loaded onto a debit card is great for the company, which pays much less in accounts payable and human resources expenses, but sucks for employees who need to pay a $2.95 or $3.95 ATM fee every time they need to withdraw money. That shit adds up.

Oh, and how many employers only offer part-time work these days instead of full-time work. That sucks when you have kids, college debt, credit card loans, or all three.

The gig economy exists because there are a TON of big, impersonal market forces that make part-time, on-demand work with no benefits appealing. The gig economy exists because there are investors who think companies like TaskRabbit, Airbnb, and Fiverr can make lots of money.

Depending on your political beliefs, you might have different opinions on why this is happening. That’s fine — I’m not here to be a partisan. Results are what are 100% sexy and appealing, not ideology.

The gig economy isn’t going away. So how do we help people make a living in the gig economy?

You’re reading this now. What do you think?

Neal Ungerleider

Written by

Writer who does consulting-y things. Journalism work seen: Fast Company, Los Angeles Times, Dow Jones, etc. Child of the Outer Boroughs.

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