By Adrian Moore and Sal Nuzzo
September 4, 2018
You may be wondering what is going on with the gig economy. Earlier this year, the California Supreme Court ruled that many gig workers should have the pay and benefits of employees, a decision some would like to see extended to other states. And not long ago, Florida papers were full of news about a study showing the gig work force is still a tiny percentage of all workers.
But don’t send flowers to the funeral of the gig economy yet. The forces creating alternatives to traditional work are inexorable.
A brand new study from the Reason Foundation — “The Changing Workplace and The New Self-Employed Economy” — details what we do and don’t know about the gig economy. Three powerful forces are driving it, and have been since the 1970s.
Businesses have to compete not just locally, but often online and globally, and that is causing them to change. Many have revised their need for full-time standard workers and instead favor a low-cost work force with flexibility in hours, size and skill sets. Workers have changed what they want, too. Today’s workers average 11.7 jobs between the ages of 18 and 48 and likely find staying in one life-long job in order to get benefits more of a cage than a refuge. Finally, as digital platforms make possible all manner of exchange that used to be nearly impossible, the economy is changing. All three come together to create a lot of pressure for different work arrangements than most of us are used to.
There is a change in attitude from “jobs” to “work.” The needs of the Industrial Age packaged work into standardized, full-time, inflexible, decades-long jobs that best served the economy of the time. The Digital Age is unpacking jobs to reflect the characteristics of the work needed, most commonly as a series of contracts. The U.S. economy is evolving to center on work through independent work arrangements.
This alternative work comprises what’s called the “gig economy,” the “sharing economy” and the “fissured workplace.” The scope of these terms often overlaps, creating confusion, but what’s important is what the workplaces have in common — they are not subject to the regulations of traditional workplaces. As a result, the gig economy ranges from less-secure but more-flexible, task-oriented short-term work with high worker autonomy to long-term contracting with more security and less autonomy. Examples include driving for Uber or Lyft, selling crafts on Etsy, or doing freelance work through TaskRabbit.
In Florida’s economy, these jobs are vital. Gig work is ideally suited to providing transportation, entertainment, recreation and other services to the vast numbers of tourists and business visitors to the state. The number of visitors ebbs and flows constantly so the flexibility of gig work helps achieve the right number of workers at the right time.
Last month’s much ballyhooed study showing few workers in the gig economy only counted people whose only job was gig work. The reality is most gig workers are supplementing traditional work or using it part time. Today 32.3 percent of the U.S. work force is in an alternative work arrangement — and that number is growing.
The most comprehensive research of late, from McKinsey Global Institute, finds that the majority of gig workers are supplementing primary incomes (54 percent) and/or are working independently by choice (72 percent). These independent workers also report higher satisfaction levels than traditional workers across the board. This is consistent globally, finding 43 percent of survey respondents preferring self-employment and expressing that autonomy and flexibility are second only to income, which suggests a change in worker priorities.
For the gig economy to continue to flourish, policymakers should embrace the independent nature of gig work. Trying to force gig economy companies, which are not employers, to mimic the traditional workplace model harms workers and consumers — as has already happened in some cities that have driven out ride-sharing services like Uber or companies like WeWork by demanding traditional benefits. Gig work is self-employment. The gig economy emerged from market-driven autonomy and flexibility for both companies and workers, and it thrives despite a few challenges. The market will likely address these challenges — as long as we let it.
Dr. Adrian Moore is vice president of Reason Foundation. Sal Nuzzo is vice president of Policy for The James Madison Institute.