Currently, the vast potential of the cloud, mobile phones, and organizations is exploding the gig or sharing economy. The gig economy allows for independent resources and part-time services to be contracted out to numerous clients. Clients can hire skilled and capable resources at a lower cost and time investment.
The importance of the gig economy is that it is estimated to reach over $300 billion in around five years.
Similarly, it is estimated that around 160 million independent contractors participate in the gig economy.
WHO WINS? This is a complex issue. It is clear that clients are the big winner. In general, employers’ access great services at lower cost and minimal commitment for aspects like training, investment, and benefits. You can now hail an Uber car in New York City around rush hour at 20 to 30 percent lower cost than for a traditional cab, which you frequently can’t find anyway.
In my own case, I have hired about 50 contractors in the last few years with significant cost savings for mostly great skills. For example, one of my freelance job ads typically produces 50 to 100 qualified responses. There are also tools like Fiverr for use in completing mundane errands or simple tasks.
The gig economy can benefit workers desiring part-time employment. Students, part-time workers, retired people, and mothers are all examples of gig workers supplementing their income via the gig economy. I once helped a therapist switch from a permanent position with numerous requirements to a less-taxing position by switching from insurance payments to private practice with higher rates. She worked less hours at much higher rates and had free time to help her family.
However, I also argue that many contractors are simply exploited. They think they are independent even though they are are often on call 24 hours a day. Uber doesn’t usually need many people in the middle of the night or at 2:00 p.m in the afternoon. They need drivers in the morning and at rush hours. I’ve known PH.D. students who were driving for a paltry $10 per hour.
Similarly, contractors are frequently required to work special hours to meet deadlines or other requirements. Gig employees receive no benefits and are uncertain of steady employment unless they are really good and experienced. There are about 2,000 hours in a work year. Earning $15 per hour and working 50 percent of the time is about average. That totals to about $15,000 —a lot less than a full-time traditional job would pay.
The good news for gig workers is that the Freelancers Union recently launched in New York City and the city is leading the way towards ensuring that gig workers don’t get stiffed. New York City recently passed the Freelance Isn’t Free Act, ensuring that freelancers working without a contract, earning $800 or more per project, receive prompt payment for completed work.
A Final Word
As the old saying goes, the only certainty is change itself. We are seeing dramatic growth and change in the sharing or gig economy. Examine what parts you are currently using and consider how you might benefit as both a buyer and seller of products and services.
Now, that the unemployment rate is low, will more gig workers switch to full-time positions with benefits? Will companies prefer to hire reliable, full-time workers as they experience a surge in the demand for their products and services?
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