The SOCAP24 Agenda is now released! Check it out + get your ticket before July 16 to save $700

The Rise and Challenges of the Gig Economy

March 9, 2020

The gig economy is not a product of the Fourth Industrial Revolution. But the rapid advancements in technology of late have allowed this labor market to exponentially grow over the past years.

Our increasingly interconnected world has helped open new doors of employment. Some of the biggest beneficiaries are the people who normally have less access to conventional jobs and are less capable of accepting traditional work arrangements.

According to Fortunly, about 57 million Americans now engage in gigs. This number is predicted to further balloon as 52 percent of the US workforce is expected to become gig workers at some point by 2023.

Autonomy and flexibility have made the gig economy undoubtedly attractive. Many professionals are even going full-time to have a better work-life balance. For the most part, being able to get paid based on output rather than input is a luxury not found in most jobs.

Sadly, the potential of the gig economy to be a force for social good remains largely untapped to this day. While the pillars of conscious business models, which companies in this space should adopt, have been out in the open for a long time now, many of the same companies are still responsible for causing and aggravating the pressing ills plaguing gig workers.

Worker Misclassification

In general, gig workers don’t receive the basic labor rights afforded to their counterparts in the traditional economy. The lack of minimum wage, overtime payment, employment insurance coverages, paid time off, employer contributions to retirement savings, extended health and maternity benefits, and others has led to profound economic insecurity on the part of these hardworking professionals.

The status quo has caused many gig workers to suffer financially, psychologically, and physically. Since they have few safety nets, the value of their unstable incomes from their unconventional jobs can erode significantly.

Despite such injustices, the corporations guilty of abusing gig workers have been getting away with exploitative practices legally. The owners of the digital marketplaces are technically not employers, so these professionals are usually classified as “independent contractors.” In April 2019, the US Department of Labor declared that gig workers are not employees.

As a result, corporations like Lyft are typically exempt from the legal responsibilities of a textbook employer. This “immunity” in turn has helped save them money — to the detriment of the lifeblood of their businesses.

The misclassification of those who labor for gig-economy companies has been the subject of many lawsuits. Although certain gig workers have scored notable legal victories, particularly in California, not all have been as fortunate.

To be fair, some characters from the side of the establishment are open to reclassify independent contractors under certain conditions. And there are gig workers who fear a reality where digital marketplaces are heavily regulated.

Any apprehension toward new pro-worker gig-economy legislation could be attributed to uncertainty. The experience of the Golden State after its new law kicks in next year will prove whether the “employee” classification of gig workers could work without killing the business of digital platforms in the long run.

“Employer” Control

Worker freedom is a common excuse used by many gig economy companies for not labeling the professionals that live off their platforms as “employees.” However, many of these corporations have been implementing one-sided policies that remove the “free” from freelancers and the “independent” from independent contractors.

Uber and Handy are shining examples.

The ride-hailing giant doesn’t restrict the drivers on its platform from switching to its competitors. But it has also not been allowing its “independent contractors” to do many things real self-employed drivers should be able to do. Setting fares, negotiating the size of commissions, and selecting which routes to take without any fear of getting penalized are some of the matters Uber drivers have to worry about.

The on-demand house cleaning and handyman startup likes to impose a bunch of restrictions on the “freelancers” in its network, too. Handy has been prohibiting workers from wearing non-brand clothing, using certain cleaning supplies, charging different service prices, and taking personal calls on the job.

Perhaps the only freedom these gig workers can exercise is working longer hours.

The Bottom Line

Meaningful solutions, like fairer state laws, to some of the biggest conundrums of many gig workers are finally underway. The said injustices won’t disappear overnight, but at least we’re heading in the right direction.

Stakeholder Capitalism
Join the SOCAP Newsletter!