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The Gig Economy: Economic “Liberation” or “Damnation”?



The up-and-down year of Fiverr, a preeminent gig economy company is probably the best analog for the gig economy’s perplexing role in the modern workforce. Fiverr started 2019 on a high note with a very high-profile IPO, becoming the latest gig-economy company to make the plunge into the public trading sector. Things have been rocky since then, however, with the company posting millions of losses since then and struggling to recapture the excitement of the initial launch. In a way, Fiverr best represents how the gig economy has ultimately shaken up the workforce: not terrible, but sort of disappointing. Underwhelming. The economic equivalent to the color beige. For all the talk of the “revolution” of the gig economy, most economists are still waiting for it. So, what is happening? Why the wait? Or is the gig economy here, and we just didn’t realize it?


Liberation…

The dream of a gig economy is still very much alive and still very appealing to many workers and employers alike. Uber and Fiverr have obviously made headlines (for good and bad reasons) over the years, but it’s hard to argue they haven’t ultimately been successful. And with ever-increasing technological capacities, more traditional workplaces moving from physical offices to virtual ones, and a desire among millennials and Gen Z workers for greater autonomy and flexibility, there is no reason to think that “gigs” are going anywhere.


For the workers, it is becoming easier to vet employers and opportunities and avoid scams, while the costs of doing business as a solo practitioner are continuously going down. It has never been easier to turn oneself into a corporate entity. If a person has in-demand skills, the opportunity to break the chains of corporate offices and work from a hammock on the beach once a week is very hard to pass up.


Employers can make out like bandits too. Many corporate needs are for skills on individual projects, and just as it is easier than ever for workers to vet companies, it is easier than ever for companies to vet workers. Need a website built, logo made, or need temp staff for a 6-week gig? It is hard to argue for hiring a full-time employee for a part-time job.


…Or Damnation?

While the dream of the gig economy is a white-collar specialist working part-time, it's hard to say that is the best example of the “real” gig-economy workers: part-time, low skill workers. While Uber and Lyft position themselves as a way to work a little bit of the time and earn some extra side cash. But for many workers, Uber and Lyft represent more than full-time employment with often lower than minimum wage returns and no benefits.


The modern economy and many governments are still grappling with the best way to handle those whose primary income comes from low-paying “gigs”. It often comes down to the ever-present employee/contractor divide that defines the modern system. In the United States, companies have had some success arguing in court that they should not be responsible for many of the protections and benefits that full-time workers generally enjoy; in Europe, there have been successful movements to raise minimum protections for gig workers.


There are also many concerns from economists about the long-term effects of the gig economy on the lowest class of workers, and the overall reliability of unemployment numbers as more workers are forced into “involuntary part-time” work. The fact is that if the gig revolution comes, it likely won’t be for the middle class and white-collar professionals, but for replaceable, low-skill labor that has yet to be automated. Instead of part-time hours and greater autonomy, this would create a system where workers need to balance multiple “gigs” simultaneously without any financial or psychological security. How society, as a whole, responds could fundamentally change the nature of work.


The Future

Regardless of its impact on our society, the gig economy is already here and it’s not going anywhere. With office spaces becoming increasingly virtual, the most likely scenario is that the gig economy will supplement traditional offices, for better or worse, rather than completely replace traditional employment. For some workers and employers, the value of a stable and predictable workforce will be too tempting. For others, the flexibility and autonomy of gig work will be valued more than the stability of a “normal 9-5”. As much as people have different tastes in music, food, and hobbies, they will have different preferences in how they work. Luckily, the market will be able to enable and facilitate both styles of employment.


Further Reading:


https://www.npr.org/sections/money/2019/03/26/706683593/why-hasnt-the-gig-economy-killed-traditional-work

http://fortune.com/2019/06/13/fiverr-ipo-gig-economy/

https://thehill.com/policy/transportation/441481-trump-ruling-boosts-gig-economy-firms

https://www.reuters.com/article/us-eu-labour-gigeconomy/eu-lawmakers-okay-minimum-rights-for-gig-economy-workers-idUSKCN1RS1DU

https://www.cnn.com/2019/05/16/tech/fiverr-files-to-go-public/index.html

https://www.cbsnews.com/news/side-hustle-jobs-american-workers-turn-to-gig-economy-to-earn-cash-boost-savings/

https://theintercept.com/2019/02/04/google-ai-project-maven-figure-eight/

https://www.businessinsider.com/unemployment-vs-involuntary-part-time-work-underemployment-2019-1

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