Week of October 21, 2018 — This Week in the Gig Economy

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In this publication of This Week in the Gig Economy, we’re covering topics ranging from the latest developments of Uber, the tough recruitment environment, and innovative players shaping the Gig Economy. Without further ado:

Uber in the News

The company is currently piloting Uber Work in Chicago, as it further diversifies it’s core business away from ride-hailing. Uber is currently dabbling in Temporary Staffing with Uber Work, as well as Bike and Scooter for hire services. However, the firm is still under pressure from it’s drivers, and governments around the world due to it’s classification of drivers as independent contractors. The firm has been sued by hundred of drivers, claiming that Uber’s mis-classification allows it to avoid paying employee benefits, overtime and insurance.

Uber drivers feel cheated by being classified as contractors, as they are left paying for things like gas, maintenance and insurance. However, the company may be using a clever tactic of granting equity to its drivers in order to align incentives between drivers and Uber. The firm is requesting permission from the SEC to grant shares to their contractors, as is AirBnb.

Another tactic that the firm may be using in order to solve the “mis-classification problem”, is to fundamentally change the image of the company. According to Erin Dunne, Uber may be hopping into all of their side businesses in order to change their image as a transportation service, to a platform which simply connects people. If Uber can prove that they are simply in the business of connecting people, they can avoid transportation regulations and maybe even independent contractor classification issues.

Gig Economy Trends

Louis Hyman, the author of a new book titled “Temp: How American Work, American Business, and the American Dream Became Temporaryexplains the origins of the Gig Economy in this article. He explains that the Gig Economy was born through temporary staffing agencies, and management consulting. The current expansion of the Gig Economy, with companies such as TaskRabbit and Postmates is only an extension of the existing traditional temporary/gig economy.

In research conducted by Gallup, it was discovered that 51% of employees say they would change jobs for flextime, and 35% say they would change jobs for a flexible working location. It shows that the traditional 9–5 is also being disrupted by the Gig Economy. People are increasingly seeking flexible employment arrangements. Research from the UK government found that 4.4% of the UK population worked in the gig economy in the last 12 months. This is roughly 2.8 million people. Over half of those involved in the gig economy (56%) were aged 18 to 34 compared to 27% of the whole sample (2,184 individuals). As we begin to see Baby Boomers retire in droves, the economy and workplace of the future is increasingly going to be gig-based.

However, government planning will be essential, as we transition into a gig-based economy. There are stories of people that are struggling to deal with the precarious nature of work. Traditional jobs are being increasingly precarious, as short term or temporary contracts are favored by companies. There has been a rise in the structural job insecurity, as people have become more uncertain about their hours, and income in a job. Companies are increasingly using new employment contracts with “Zero Hours”, or “Temporary” natures.

To add to the above paragraph, according to latest figures from the STUC at least 10 per cent of the Scottish workforce is in insecure employment — that’s 259,000 people out of a total of 2.6 million. Some 63,000 are on zero hours contracts, there are 38,000 in temporary work, and 158,000 in low-paid self-employment.

Low Unemployment Rates = Tough Recruitment Environment

It’s a love-hate relationship between temp agencies and the low unemployment rate environment. Long Island had an unemployment rate of 3.3% in September, the lowest in a decade. The last time the jobless rate was 3.3 percent was in 2007, before the Great Recession hit. The rate is now less than half the 8.2 percent peak, reached in 2010 and in 2012, following the recession that ended in June 2009.

On one hand, agencies are full to the brim with job orders from clients. However, they are finding it difficult to find enough people to fill these jobs. According to temp agencies, the challenge being faced in the market is that the number of available workers has shrunk drastically. While the unemployment rate has surely reduced the amount of available workers in the market, the real challenge that agencies face is being able to attract a sufficient amount of workers in a noisy environment (because there are definitely enough workers to sustain economic demand). It’s a job seekers paradise, as they have the ability to hop jobs when they please. Employers should seek innovative recruitment solutions in order to gain an advantage in this tough environment.

Ride-Sharing Ecosystem Expansion

There are two interesting companies which are aiming to expand the ride-sharing or ride-hailing ecosystem.

HyreCar is a unique company which matches owners of idle vehicles with drivers who wish to take advantage of the “gig economy” aspects of the ride-sharing industry. HyreCar recently announced a partnership with Shift Technology in order to further add to its services. The new partnership will allow HyreCar to dramatically improve the efficiency of the insurance claims process, allowing HyreCar to make timely payouts to vehicle owners.

Across the ocean, Chris King’s startup “Splend” is going head to head with General Motors’ Maven. Splend is one of the world’s largest car rental, leasing providers to Uber, and on-demand rideshare groups. The firm recently received a $7.2M investment, and $220M debt financing package from one of the world’s largest fleet management companies. Asides from leasing vehicles, and the individual data it tracks on its 2500 (and growing) drivers, Splend provides information on key events in various locations that allow drivers to be at the right place and the right time. It helps them earn during “surge”, or higher, pricing.

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