Is this the Gig Economy we were promised? And what’s next for the Gig Economy?

One of the greatest conundrums of 90s culture was trying to figure out how Cosmo Kramer made a living on Seinfeld. His ability to cook up schemes here and there was laughable and totally unrealistic. Thirty years later, this style of work has become a standard amongst more than 36% of the US population. The Gig Economy glamorizes doing odd jobs for others. As a result, we’ve created an entire working class of Kramers.

But is this the Gig Economy we hoped for? And what does the future hold for this style of work?

Be Your Own Boss!

Self-preservation is our first order of programming. Survive at all costs. But one caveat is that we’d prefer self-preservation on our terms. For instance, I know I need water. But if it can be carbonated and flavored w/ a hint of cran-raspberry, then hand me a La Croix.

Same goes for work. We know we need to make money, but if we can do it on our terms and our time then we’ll take that route.

This is the dream that Gig Economy platforms geniusly market to people. And for skilled workers, that dream comes true with these platforms:

The skilled Gig Economy is actually a positive step for work. The platforms give power to designers, writers, and other creatives to choose their clients and hours as they come in. And the platform handles the administration of web presence, billing, and some marketing.

Then there’s the unskilled Gig Economy:

This doesn’t even scratch the surface of all the platforms out there promising flexibility of work hours and freedom. But are we actually better off?

Are We Really Free?

The Gig Economy was predicted by Nobel Prize Winner, Ronald Coase in his Transaction Cost Theory back in 1937 which stated that:

Firms only employ people directly when the cost of finding, supervising, and paying outside contractors is higher than for internal employees.

This first held true with the outsourcing of customer service to international call centers. And it’s going through another iteration of outsourcing to individuals at home with access to TaskRabbit, Wonolo, Blue Crew, etc… A company like Macy’s foresees the increase in customer service calls around the holidays and uses Wonolo to get a bunch of seasonal hires – without any long-term commitment.

In this sense, the Gig Economy has polished the image of temp work which has many problems of its own. Furthermore, almost all of the unskilled (and some of the skilled) gigs lack true worker freedom because they are marketplaces determined by consumer demand.

If the most lucrative times to work are determined by the customers, then do you really have a choice when to work?

Realistically, TaskRabbit, Uber, and exchanged an employer-dictated work schedule for a customer-dictated work schedule.

“But I can still choose to work whenever I want.”

True. But you’re sacrificing your earning potential by not scheduling around customer demand. Therefore, I think the “freedom” is a bit misleading.

The Earnings & Benefits

There’s massive speculation and argument over how much ride-sharing drivers earn. MIT said $3.37 an hour. Uber said $45 (at first) and then settled on about $16 an hour. It’s hard to get a straight answer out of anyone because there is no de facto wage for any work in the Gig Economy.

That’s the risk of the Gig Economy.

It takes its name from the entertainers who have long toured the country with no plan, hoping to get gigs. (I don’t actually know if that’s true but it aligns perfectly.) Realistically:

  • A full-time Uber driver can make $40,000 a year.
  • The average worker on MTurk can expect to bring in no more than $2/hour, with only the top 4% of people bringing in more than $7.25/hour.
  • Most other services lack sufficient data and most info about wages is meant for marketing purposes. For those generic estimates, head here. Otherwise, if there’s a specific app you’d like to know about, email me and I can do some research.

Mostly what I’ve found via first-person reviews is that full-time gig work often means working multiple gig platforms. Food delivery here. TaskRabbit there. And surveys in your free time. We’re talking about half a dozen gigs just to make an honest wage. On top of that, there’s no pension, no guaranteed wage, no benefits.

The only ones benefiting are the companies who now forgo full-time hiring for seasonal work. They don’t spend time training skills but instead just hire freelancers that already have the said skill.

Instapage saved $2.3 million with this method of hiring freelancers on Upwork for customer service and other talent roles.

Right Direction?

It’s definitely better to be a skilled gig worker than it is an unskilled gig worker. Still both have many upsides to their former counterparts. Overall, I like how Diane Mulcahy sums it up:

The economic plight of an on-demand worker for companies like TaskRabbit or Postmates is not materially different from that of a low-wage hourly worker in a fast-food restaurant or retail store. Both workers have low wages, no benefits, and limited rights and protections.

The difference is that workers who wouldn’t dream of applying for a job in a fast-food restaurant are willing to bid for work on TaskRabbit or Postmates partly because they can do so when and to the extent that they choose.

Bad jobs won’t disappear in the gig economy; they are the persistent bane of our economy and our society. But the gig economy gives low-skill workers a way to move from bad jobs to better work. It’s not a sufficient change, but it’s moving in the right direction.

Diane Mulcahy, Harvard Business Review

I think gig work shows promise. But there’s still a lot that needs to improve.

Next for the Gig Economy

The Gig Economy is still growing upward, but also outward. For instance, I just came across a platform called Neighbor, which is working itself into the $40 billion American’s spend on storage every year.

Essentially, Neighbor allows anyone to lease extra space around their house to people in the area that could use some storage space. This might include an empty shelf in your garage, a fence where a bike can be chained, a parking space, etc.

Neighbor has a tremendous opportunity for growth.

It’s also indicative that the Gig Economy is parsing everything in our lives and creating it into an opportunity to make money or get help. Shoot, there is even a service where people will come to your house and collect your organic waste. It’s not long before that gets commoditized and you’ll get paid for giving someone your banana peels.

Where we need to go next is in consolidating these platforms.

Personally, I think that within the next 3-5 years, we will really benefit from having a Gig Economy Aggregator to help people manage all of one’s gigs. 

Basically, the interface would connect all of the gig platforms and act as a scheduler for users. The user sets their own hours of operation, skills and capabilities, and ideal earnings. The Gig Aggregator then creates a schedule that gets the user as close to their specs as possible.

This would alleviate the stress that full-time gig workers have with handling multiple gig accounts at once.

I realize this is a total “Pie in the Sky” type of an idea that would require buy-in from companies and their competitors. But the alternative is that gig platforms allow for unions to form, workers to get benefits, and potentially adopt wage standards. Something that they are fighting tooth and nail.

Think of a thought experiment where there are robots just like you, or 100 clones like you. That would presumably be bad for your wages, but that is nowhere about to happen. Instead, what we are having are human beings being treated like robots and being paid little.

Peter Thiel

Improvements must be made. Too many workers rely on the Gig Economy and too many loopholes exist for corporations to save money.