“Gone is the era of the lifetime career, let alone the life-long job and the economic security that came with it…”
This is an excerpt from a recent article by John Gapper in the Financial Times.
On the surface, it sounds like it’s talking about the rapid changes business is confronting in the area of skills, technology and social communications. But what the article is really about is the “gig economy.” Not particularly a new term, but still not a totally familiar one either. The gig economy refers to the rapidly growing segment of the economy built on contractors, vendors and temporary workers. It’s a “wild west” atmosphere where companies like UBER, Homejoy (cleaning company) and Lyft have grown rapidly. These are brands that employ no one. These businesses are built in that space between people who want work done and people willing to do that work. Here they develop a brand and maintain business standards, i.e. customer promises in order to grow revenue. Unencumbered by cars, cleaning equipment, supplies, etc., the gig economy company’s real asset is a marketplace that they have developed and evolved. A so-called shared economy.
But what does that mean for people working?
On one hand, it means that workers may have more flexibility, more of that feeling of self-employment. In some cases it offers the freedom of free-lance…set your own hours…create better work life balance.
But this new economy is also challenging. It can be interpreted as a way to avoid labor laws and one of many threats to middle class earning power. Many in this new economy find themselves doing work for considerably less pay and with no economic security. No predictability. No sick days or overtime; no workers compensation insurance or recognition of their personal investments of equipment and supplies. No minimum wage or safety measures. Lots of trade-offs for the freedom and security.
Thanks to these new on-demand startups, a retiree, a stay-at-home mom with a few odd hours to spare or a recently unemployed worker who needs to make ends meet while looking for a job, can work when they want. There is a place for these jobs. But I am suspicious of this new economic force becoming a backbone of our economy.
Several lawsuits have been launched as these new workers begin to question their status with these new companies. The companies have rules, set standards, exert controls…all in the name of customer service and brand protection. But how far can that extend before the level of control creates an employer/employee relationship? Some of these new workers believe it has crossed the line.
And it may be that the rapid advancement of the gig economy means that regulations just haven’t caught up. We may need to re-think how we define the relationship if we want these new business models to thrive.
Business and the economy continually change. And we need, and benefit from, the ideas put into practice by entrepreneurs. Technology…the world of apps…all new and changing fast. But for those of us striving to lift the economic position of people through work, there is concern. Threats to middle class earning power are many and the gap is widening.
Let’s be sure that we understand all of the ramifications of these new employment options.