Week of November 18, 2018 — This Week in the Gig Economy
In this publication of This Week in the Gig Economy, we’re covering topics ranging from the large trends in the Global Labour Market, and the latest developments with large gig economy companies. Without further ado:
Gig Economy Development
Last-Mile delivery apps on the rise
As consumers increasingly turn to e-commerce for all their shopping needs, speedy fulfillment isn’t just a “nice to have” — it’s the expectation of every online shopping experience. As a result, businesses have begun racing to develop new technologies and business models to delight customers — all while trying to cut costs. If you wish to learn more in detail about last mile delivery and its challenges, please check out this article by Business Insider.
Fact #1. Did you know? Last mile delivery services serve the $2.4 trillion e-commerce market worldwide and the market is expected to grow to $3.4 trillion by 2020.
According to a report by Freight Waves, the demand for last-mile delivery services has increased by 50 percent in the last 18 months around the world. As we go through the Black-Friday and Cyber Monday, we can clearly see why this is the case. According to a new report by Adobe Analytics, the recent figure shows the online Black Friday sales have hit $6.2B, jumping 23.6 percent from a year ago. This is the first Black Friday in history where more than $2 billion in purchases were conducted over smartphones. Cyber Monday sales online are also expected to set a new record of $7.8 billion, up nearly 18 percent from last year. (Now that’s crazy!)
BC one step closer to using ride-hailing apps
The reason that British Colombians don’t get to use ride-hailing apps such as Uber and Lyft, is that the province doesn’t have any insurance products that work for them. But finally, the legislation tabled November 19 in the provincial legislature pushes ICBC (Insurance Corporation of British Columbia) to have insurance products ready for ride-hailing services by fall 2019. It’s still unclear when we will get to see Ubers and Lyfts on the road but overall, its a one step towards it.
Wonolo raises extra 30M in funding
Silicon Valley is in a race to develop tech that will hook up with the 60 million American gig economy workers. Wonolo, is a platform that connects on-demand workers with businesses that need staff quickly. They specialize in labor-based roles in areas like retail, manufacturing, and shipping. The firm has now raised an extra $32 million in funding (Series C — what is that?) to meet the blue-collar demand. It will be interesting to see who will win this race now that Uber has also stepped in to the ring with Uber Works.
Trends in the Gig Economy and the Labour Market
The size of gig economy workers is bigger than estimated
A lot of gig economy workers in the US may have been classified as jobless in surveys conducted previously. A recent report by The Labour Department shows that there are a lot more gig workers in U.S economy than we previously thought.
The hardest demographic in America’s labour market may be the gig workers: How many hours do they put in, where, and just how many are out there? Bloomberg New’s Katia Dmitrieva speaks more about it.
To give you a better idea, there are in between 657,000 and 4.6 million more people earning income but not counted as employed, according to an analysis of data spanning from 2012 to 2016. If their gigs are counted as jobs, this could increase the total employment rate by between 0.4 percent to 3 percent.
The low unemployment rate — Can it fall too low? And isn’t a good thing?
Fact #2. Did you know? Last time the unemployment rate was this low (3.7%) in the United States was in October 1969. Richard Nixon was president.
Economic forecasters are expecting it to drop even further to 3.4 percent over the next year. Which raises a question: Can the unemployment rate fall too low? To many of us, this is a jarring question. If there are more people working, fewer people struggling to find jobs that’s better, right? So who is worried about low unemployment rates? Well, there are some folks at the Federal Reserve worry about it.
David Wessel, The Director at The Hutchins Center on Fiscal and Monetary Policy explains why this is the case. According to his recent article on the economy update, he says that this is not because the folks at the Federal Reserve are “hard-hearted, nasty people”. The Fed’s primary goal is to achieve stable prices, which they define by keeping inflation at 2 percent. Based on our economic history, the Fed and other economist believe that when unemployment falls below some threshold, wages and prices go up.
Things are a bit different now, even though lately, the inflation has been creeping towards that 2 percent target, wage growth has been very slow. In part, this is because the strong job market has got workers off the sidelines. Another main reason is that globalization, outsourcing, technology, the gig economy and gradual decline of unions have weakened the bargaining power of workers. This means employers don’t have to raise wages like they once did.
Therefore, the economist at the Fed, the Congressional Budget Office and elsewhere have moved down their estimates of how low the unemployment rate can go before it generates unwelcome inflation.
Half of the millennials have side-jobs now to make ends meet
According to a recent survey, a sizable minority of American workers are looking for an extra gig to make ends meet. And younger workers are especially trying to supplement their meager earnings.
“One in four Americans have a side hustle. This includes about half of millennials,” according to a survey by Bankrate.com
Employers should start understanding that the workers they hire will have to get another job during the work week. They must think how the growing gig economy will affect their businesses.
Since we are on this topic, for anyone who is interested in learning more about the gig economy this excellent book by the journalist Sarah Kessler will help provide a good understanding. It has also been labeled as one of the best books in 2018 by Financial Times.
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