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Why Hasn't The Gig Economy Killed Traditional Work? (npr.org)
An anonymous reader quotes NPR:
In recent months, a slew of studies has debunked predictions that we're witnessing the dawn of a new "gig economy." The U.S. Bureau of Labor Statistics (BLS) found that there was actually a decline in the categories of jobs associated with the gig economy between 2005 and 2017. Larry Katz and the late Alan Krueger then revised their influential study that had originally found gig work was exploding. Instead, they found it had only grown modestly. Other economists ended up finding the same -- and now writers are declaring the gig economy is "a big nothingburger."
Arun Sundararajan, a professor at the NYU Stern School of Business and the author of The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism, remains a true believer in the gig revolution.... When asked about the onslaught of data contradicting his thesis, Sundararajan said the Bureau of Labor Statistics continues "to underestimate the size of the gig economy and in particular of the platform-based gig economy." The best BLS estimate of the number of gig workers employed through digital platforms -- whether full-time, part-time or occasionally -- is one percent of the total U.S. workforce, or about 1.6 million workers, as of mid-2017. Sundararajan argues that the survey questions the BLS used to gather this data were clunky and don't quite capture what's going on.... He believes work done through gig platforms can be more efficient than work done in a traditional company -- and that will spell the company's doom...
The dawn of a new gig economy has seemed plausible because the Internet has been dramatically reducing transaction costs. Search engines have made it incredibly cheap to find goods and services, compare prices, and get bargains. Social media and peer reviews have made it easier to determine if people are trustworthy. E-commerce has made it easier process payments. You can click a button on a mobile phone and instantaneously have GPS guide drivers right to you. But as big as these efficiency gains have been, a new economy based on crowds of people doing gigs through digital platforms -- as exciting or scary as that might sound -- still doesn't compare to one based on the efficiencies and stability of the good old-fashioned company.
Arun Sundararajan, a professor at the NYU Stern School of Business and the author of The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism, remains a true believer in the gig revolution.... When asked about the onslaught of data contradicting his thesis, Sundararajan said the Bureau of Labor Statistics continues "to underestimate the size of the gig economy and in particular of the platform-based gig economy." The best BLS estimate of the number of gig workers employed through digital platforms -- whether full-time, part-time or occasionally -- is one percent of the total U.S. workforce, or about 1.6 million workers, as of mid-2017. Sundararajan argues that the survey questions the BLS used to gather this data were clunky and don't quite capture what's going on.... He believes work done through gig platforms can be more efficient than work done in a traditional company -- and that will spell the company's doom...
The dawn of a new gig economy has seemed plausible because the Internet has been dramatically reducing transaction costs. Search engines have made it incredibly cheap to find goods and services, compare prices, and get bargains. Social media and peer reviews have made it easier to determine if people are trustworthy. E-commerce has made it easier process payments. You can click a button on a mobile phone and instantaneously have GPS guide drivers right to you. But as big as these efficiency gains have been, a new economy based on crowds of people doing gigs through digital platforms -- as exciting or scary as that might sound -- still doesn't compare to one based on the efficiencies and stability of the good old-fashioned company.
Because banks, lenders, landlords, etc don't look at gig work as 'steady employment'? People don't want to set up their own company, buy their own tools, pay for their own training, healthcare, taxes, etc? Not to mention the job offers are terrible, gigs worth doing are hard to find..
When I just 'opted out' and went to enjoy my basement life.
Nobody hires full time anymore. Nobody promises raises for good performance anymore. Standing out as a productive employee is a double edged sword that in some places helps you rise fast and in others ensures employees or managers will gun for you to keep you from moving up.
Based on everyone I know (family included) running businesses, nobody is following the law 100%, lots of people get paid in cash and leave it off their taxes.
The whole system is broken from top to bottom, and the only way to tell the honest from the dishonest is if they are in debt, but only spending meagerly. Everyone else seems to be living with dirty laundry stinking up some part of their life.
Because the workers needed to make the Gig Economy (TM) haven't embraced it? And why would that be? Maybe it's because:
1. Gig workloads are inconsistent. One day or night you're busy, the next you might be sparsely working
2. Too many people started competing for those gigs, which leads to....
3. The Gig payscale is awful and many people give it up after a while because they realize they'd make more at a boring steady job where they can reliably predict what their next paycheck will look like.
4. Hours are supposed to be flexible on whatever the worker wants to do, but in reality there are boom times and down times. If you're not working those, you're not paying your rent.
As an example of the above, we don't have Uber where I live but when I travel I use it a lot. It's great for the customer. But I also make a point of talking to the drivers about their experience with it as I'm quite curious about what they have to say. More than half the drivers I talk to say the profit for them keeps declining because of increasing operations costs and Uber's income share on the rides keeps shifting. Most of the full-time drivers say if they had known how the numbers would work out they would probably not have ditched their old day job to do Uber full time. Maybe one in 10 I talk to actually seem to enjoy it.
The gig economy is bullshit. It's just another fancy label for "you're going to be at will contractors and we're gonna pay you peanuts"
... is more efficient.
We suffer more in our imagination than in reality. - Seneca
Workloads ebb and flow in almost every organization - if all workers are gigged (so to speak) then all the knowledge and experience walks out the door at the first ebb. Paying regular salary and benefits smooths out the ups and downs of labor requirements.
Where I live and frok my perspective, I don't see any desperation or lack of full-time jobs. We probably live in different places, though. Anyway, you mentioned something that reminded me of something interesting.
> low-skill stuff like yard work, house cleaning, dog walking and so on.
Funny thing about that is the going rate for someone to cut your grass or clean your house is about $30/hour here in Dallas. (Roughly equivalent to $50/hour on the coast), yet the vast majority of people lacking marketable skills would rather make $12 / hour at a "regular job".
I've talked to a lot of people because I like to help young people get started and convicts get re-started and the number of people who choose $12/hour working for someone else rather than $30-$40/hour working for themselves is surprising to me.
It seems there are at least two reasons. A somewhat logical reason is that they want consistency. Doing gigs you don't know if you'll make $400 this week or $550. People like consistency so much they prefer to know they'll make $400 working at the mall.
A purely emotional reason is that people are so nervous about having their own business - despite the fact they know many twelve year old kids mow lawns. They might personally know a 12 year old who mows 10 lawns every week for $300, yet they work 30 hours for the same money because their nervous about whether they can do the same thing that kids all over America do.
The requirement for >30 hrs requiring insurance is only for companies with >50 employees. Do you have any idea how much revenue a company with 50+ employees has? They cam afford it.
You pay $30 an hour, but for every hour of work there's another hour or more of searching for the work, making arrangements with you, and of course driving who knows how far to you and back. And then sometimes there's a middleman taking a cut too.
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tl;dr - people will not work for pocket change.
Some people are hesitant to set up their own business because it's not quite as simple as it was when you're 12 and mowing lawns. Some jobs require insurance, which you pay for annually whether you work or not. Others require you to be incorporated. The quarterly filings aren't a big deal, but might scare some people off, but even after twenty years of doing so, prefer an accountant to do the annual filings and schedules. Soon as you do that, you run into $500-$1000/year expense and have equipment that needs to be expensed and depreciated. It's really not the same as mowing lawns.
If you save the extra money during good weeks, spending only what you make ON AVERAGE, you can quickly have three months of expenses saved and then you're not so scared about bad weeks.
This simple, but not easy.