The Fallacy of A Gig Economy

Think of a time when you had something taken away from you. Whether it be a cherished object, a spouse or even your job, we tend to have a cold overwhelming feeling overcome us. We as humans have a natural inclination to need a sense of stability especially when it comes to the objects we have in our possession through our hard work and dedicated time. Unfortunately, the possessions we so cherish and which are symbols of our investments soon evaporated when the housing economy collapsed in 2008.

As a result of the financial crisis, the public turned on one another, the lower and middle classes revolted towards the elites for the mishandling of funds for their own selfish agenda while the top 1% turned a blind eye and just pointed towards the poor, immigrants and the education system for the downfall of the economy. Through it all, there was no sense of unity for any of this.

Think of a forest that has been hit with a major fire. It would normally take days or even months to handle the disaster and eventually put it out. A wide majority of thinkers would believe that this decimated forest would never recover from all this damage. But eventually, a small flower arises from the ashes and there’s life all over again. This flower sparks life back into the forest making it better than it was before, that’s just how nature usually works.

“We’ve seen over time that countries that have the best economic growth are those that have good governance, and good governance comes from freedom of communication. It comes from ending corruption. It comes from a populace that can go online and say, ‘This politician is corrupt, this administrator, or this public official is corrupt.” — Ramez Naam

Almost ten years have past since the economic collapse setting our country back to the drawing board but with strong government regulation from the Obama Administration particularly towards wall street, our economy seems to take strives once again towards economic prosperity. But there is a platform that has boosted the economy that seems to have a collapsing effect if governance does not uphold the moral standards for the greater good of all Americans.

This practice is called the “Gig Economy”

The Gig Economy goes hand in hand with the Shared Economy. Both being produced in the late 2000’s as an answer for the economic collapse. The shared economy in particular because it’s popularity in this day in age. The specific and mostly underestimated key term, “Shared” became a selling point for most business because:

“The word “sharing” was a misnomer, a savvy-but-disingenuous spin on an industry they felt was more about the monetary opportunism than altruism”

The Shared Economy has opened the floodgates for businesses to take advantage of the mishaps that the economic collapse left on the majority and mold it in a way that would be financially beneficial for the individual. Giving them the freedom to dictate their own path towards economic stability or prosperity.

An obvious example would be Airbnb, their business platform and marketing is simple, letting the individual to use their home as an asset to build their wealth,giving the individual the freedom of choice, allowing them to get a chunk of money that will allow them more freedom than what they used to have. This approach is meant for people to take advantage of the assets that they currently have and flip it for their own financial gain.

The rise of rentals compared to buying a home would be another example of being a part of the Shared Economy, sharing clothing among other stranger would be an example, letting individuals renting your store front or studio would be another example as well. Any object that could be used for personal wealth can be attractive to almost anyone, but what about those that do not want to contribute their own material possessions but would like to use other assets they’ve acquired to make money? That’s where the gig economy takes place.

The natural thought of the gig economy would be placed the expansion of Uber into our everyday lives. We use Uber as verb nowadays because of it’s frequent use is so many people’s lives. But the drivers that work for this ride hailing service are not employees, they’re independent contractors.

Hiring independent contractors is a perfect business strategy when it comes to saving the most money and still getting the same quality of work or even better from the people you hire. The same goes for a company like Fiverr where people offer their services for as low as five dollars, or the web service “Handy” where random people can come and clean your home for a certain amount of money. All services come with a clause, the person is not an employee, so their services can be requested and terminated at any time.

Small companies are not the only that is taking the approach of hiring “gig” worker. Corporations and government jobs are taking the same approach. This eliminates the need to give workers certain benefits like health insurance and a pension, it also eliminates workers to join unions that benefit the employee.

The gig economy would be argued that it is economically beneficial for all people across the board. For web service companies this benefits the worker that does not want to be constricted by the 9–5 job that they are used to. For companies, this eliminates the needs to provide workers certain required amenities. Ultimately, this is suppose to make peoples lives better.

“For it matters not, how much we own, the cars . . . the house . . . the cash. What matters is how we live and love and how we spend our dash.”
Diane Mulcahy

This leads to a very complex question…

Has the Gig & Shared Economic platform helped the US Economy?

No matter where we turn, we are constantly bombarded with promotions stating an almost nostalgic way of making income through your own personal assets as stated before. Companies have positioned themselves to allow people to earn money from basically everything that you can imagine. But has that actually helped the macro-economy and position Americans towards well paying and stable jobs?

Bloomberg — The Rise of the 1099 Economy

Any and every job position can now be replaced with an independent contractor through an agency or from direct resource. For corporations; this is an upside for them, it prevents the responsibilities of providing healthcare and other mandatory amenities for the specific employee.

What has been often hard to ignore is the hardships that people have gone through in the past few years, the stability of maintain a job for more than a year for most millennials have evaporated. Former employees that has invested their lives have now been replaced for someone else taking a lower salary for the same amount of work being conducted.

That is where tech companies come into play providing an entrepreneurial feel for the work but in essence it’s the same labor package that has been presented in a different bow. For companies like Uber & Fivrr their main demographic for outreach are people in three categories:

INDIVIDUALS BETWEEN THE AGES OF 18–35

HOUSEHOLDS WITH INCOME BETWEEN 50K AND 75K

THOSE WITH KIDS IN THE HOUSE UNDER 18

A certain financial gap of middle class and lower class with a reliance on more than one means of income to have a stable and balanced life for themselves and their family. Ultimately it is up to the individual to ask the question,

“To what extent will I go in order to obtain the lifestyle that I want to have?”

This is where things get dicey for the individual and where companies like Fiverr, Uber, Lyft, Airbnb thrive off of. The need to present an almost dream like success story that helps the individual achieve their goals in exchange for a certain amount of hours given in the meantime. Lets take Uber for example for they are the poster child for presenting how much an Uber driver can make in a week.

Uber advertisements presents drivers making around $6,000 a month by driving full time. Though a presentation of this amount of money can be very enticing, this is indeed a fallacy of economic individual prosperity. A company of this magnitude can not account for all drivers making this amount of money, nor can they account how many hours that needs to be invested to have this sort of outcome.

This practice is nothing new, it is essentially taking the low income workers that have to deal with the griefs of working eight plus hours a day with uncertain outcomes for how the company will treat that worker. In their heart, they feel expendable constantly in fear that their replacement is right around the corner. Then comes a particular company ready to save their from the grief and uncertainty by offering them a financial concept they can achieve on their own time. This no different from any other get rich quick schemes that has been plaguing people’s lives for decades.

The gig economy is empowerment. This new business paradigm empowers individuals to better shape their own destiny and leverage their existing assets to their benefit. — John McAfee

There will be a cycle to which can be beneficial for our economy but to what extent? Once the demand expands will there be enough supplies in order to accommodate everyone? The answer is simple, no.

Which leads back to my question: Has this platform been good to our overall economy? Yes it has. But at a certain cost to the individual that has to dealing with obstacles on a daily basis essentially without the backing of the partnering companies they work with.

When provided the concept of a Shared Economy, one must take into effect that for every action there a reaction. Many factors will eventually come into place that will further inflate the bubble of the shared economy then ultimately bursting leaving a wide majority of the labor force out of work. This is turn will lead to a further divide between the wealthy and the poor.

A reliance on the Gig/Shared Economy will kill job security

Companies like Fiverr are presenting a platform where finding work can seem like a breeze. Companies can obtain work for cheap and for a limited time. There’s no need to hire a worker, giving them a contract for a certain amount of years and end up paying for certain entitlements that one is suppose to have.

With Fiverr, Uber, Lyft and many more companies that have an array of individuals in line for that next “gig” everyone is an independent contractor or “doer” in fiverr’s case. Where will this place a college student who has trekked through years of school, placing themselves in student debt ultimately to find out that their dream job has been placed by someone who will take less for the same amount of work.

It’s not just small companies, corporations and even the government has turned to rising temp. agencies for their share of workers to get out of paying liabilities. With uncertainties in the workforce, many workers in this day are more underemployed than they were 25 years ago.

No one really has any job security anymore, including myself. — Simon Cowell

Next time when listening to a politician placing the blame on foreign workers that are stealing jobs for Americans, take that with a grain of salt and look into corporations that are replacing the normal worker that is looking for job stability with the independent contractor that comes in one day and leaves after the job is done.

Automation will be a service of the future… Thanks to the Shared Economy.

While the shared economy/gig economy has been beneficial for people who are trying to earn an extra dollar, consumers and contractors are ultimately leading companies like Uber, Amazon, Airbnb and many other companies to invest heavily on automation in the near future.

Self-driving cars, packaging drones, even project management bots will be easily accessible for people are in need for services that are quick and cost effective. This turn of the tide will displace thousands of workers who are heavily reliant on certain companies as their sole means of income. Once self-driving vehicles are on the road, thousands of workers will be stuck without a pot to piss in.

The Shared Economy will destroy the middle class.

The secret ingredient that will further divide the wealth gap between the rich and the poor will be Shared Economy. Airbnb that has a reliance on people renting out their rooms or possibly homes to other tenants for a short period of time has started to invest in property themselves to rent. Other landlords has started to get on the same boat as well, by kicking out their current tenants and posting the apartments or rooms on Airbnb. Property values in big cities like San Francisco, Los Angeles, and New York City has rise exponentially thus leaving more people homeless or moving further away from certain destinations that they are used to.

With the labor force being up ended by the advancement of Artificial Intelligence and real estate values increasing due to many people turning to short term rental outlets, there will be a substantial amount of people without a job and without a home.

Conclusion

What needs to be done is stronger governmental regulations on companies that solely rely on the individual and their assets. People are putting themselves on the line to earn an extra dollar and should not be left on in the cold once everything moves forwards towards speed and convenience.

Companies like Uber should invest in the individuals by providing educational scholarships for people wanting to move ahead and become better people and obtain better careers. Airbnb should invest back into the community and build better infrastucuture. Provide affordable housing for individuals who are in the lower income bracket. Airbnb should work with local governments in order to crack down on landlords who are kicking out their current tenants and placing the whole apartment on Airbnb for more profit. And a company like Fiverr should have their independent contractors have some form of insurance to lean on. If these people are using Fiverr’s platform for their sole means of income then there needs to be certain changes to benefit all parties, not just a small few.

Finally, we as consumers need to be better educated on the practices that these companies conduct on their workers. With knowledge better knowledge we have the power to further endorse this or take a stand against such egregious acts. The future of this economy relies upon better education of the system and a guidance towards further prosperity hand in hand with corporations and the government.