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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..
"Gig economy" is for the desperate. Desperate workers who will take a shitty job, and desperate employers who need [task] done with minimal overhead and no commitment on their part. There is some overlap between "desperate" and "loser", but they are not always going to be the same.
Employment based around desperation isn't good thing in the long term, for either party. I think what we saw was a spike in desperation at the same time these services became technically and socially feasible. How big it is will vary year to year with the bubbles and fickleness inherent in the free market. Hypeman economists like Sundararajan will have their heads going in circles trying to make sense of it.
I think it's helpful in understanding to avoid buzzwords like "gig economy" altogether. These kind of buzzwords are loaded up with an entire narrative that makes it mentally easy for you to forget context and history, being swept up in the hype. The facts become harder to actually integrate into your worldview. Keep history and context in mind, and it's clear the "gig economy" is more evolution than revolution. You're fixed on this image of a bedraggled hipster, that is the detritus of Sundararajan's investment hype. The reality is more... real. Normal people wanting the same things they always have.
most individuals can not lead that kind of life!
;)
I have been a self employed contract programmer for 30+ years. It takes a different thought process to in essence run a small business which is what contractors/self employed/gig workers are doing.
I do not have personal/work lives. As an individual who is self employed I have a life.
Most individuals do not have the ability/drive/desire to run a business/be self employed. They do not have that special ability to create opportunities, cope with problems and solve them themselves.
Just my 2 cents
"Arun Sundararajan, a professor at the NYU Stern School of Business... remains a true believer in the gig revolution...."
I bet Arun has tenure at NYU.
I wonder if his position at NYU became like that of an uber driver (an independent contractor), he'd still be "true believer in the gig revolution"??
If those count?
The trades are full of small and medium contracting firms, not to mention no shortage of self-employed as well. Far from being a new thing of course.
At the grocery store company (in the central USA) where I work, a number of the ~twenty-somethings are doing "gigs", but not for any happy reason.
...And many of them try to push that work off the app when they can; to avoid the app fees and so they can skim on taxes as well...
All of them live on their own--so they need a full-time income--but none of them can find a starting job that is full-time.
And getting one part time job is easy, but most part-time jobs refuse to give fixed hours anymore, so it's nearly impossible to get two part-time jobs at different places.
So they are working one 'normal' part-time job (at the store, for 20-25 hours a week) and doing odd jobs on various phone/web app companies online. The online work is low-skill stuff like yard work, house cleaning, dog walking and so on.
So the truth with most of these people is that they're doing online gig work not because it's better than a part-time job, but because they can't find any full-time job, and because they can't find two part-time jobs that will schedule around each other.
I am not an economist, but I don't know that this is exactly a good sign.
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"
As a company it is attractive to hire resource as and when you need it. You can scale easily, it avoids longer term commitments especially in markets like the EU where labour protections are strong etc. However, if doing the work effectively requires knowledge of the organisation or practices that takes considerable time to pick up then having a stable longer term workforce has a considerable advantage.
At a micro level, what job doesn't? Driving an Uber/package delivery is pretty much the only thing you're already more or less qualified for having a driver's license. I mean could you imagine running even a McDonald's on a gig basis, with people randomly showing up to work an hour? No. You need predictability and a rotation, even though you could probably quite easily get someone new into the system. You could say it's better designed for asynchronous work like rent-a-coder, but the transaction overhead for sane coders to find sane customers and create measurable acceptance criteria is pretty high. At least when I'm thinking of the gig economy as something other than part time/temp/contract work, like really taking on micro packets of work.
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...in 2008 we were in a drastic economic condition that allowed regulators to look away from business subcontracting employees to shed their responsibility in paying their fair share of taxes and benefits.
As our condition improved, regulators started to take a hard look at how employers were classifying their employees and a large amount of these employers saw the writing on the wall and hired their "contractors". The ones that didn't are currently taking their lumps with the AGs of many states.
So, companies got off not paying their fair share of comp, FICA, retirement, UI, and benefit packages for 4 or 5 years. You know, just like the banks. As usual, those "contactors" took it in the rectum and were held responsible to cover the full cost of taxes and insurance.
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... is more efficient.
We suffer more in our imagination than in reality. - Seneca
Long term software I mean. It is more and more important how long one can maintain the software, fixing it, improving it than how effectively, how quickly you can write it from scratch (which is what "gig" economy is about: drive-by writing). That relies on healthy long term employment of real FTEs.
I heard from one of my works a reply to my criticism of his software: "it works". That is the lowest level of readiness of the software.
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... is more efficient.
Yep. Kinda hard to staff a helpdesk by "gig", for example.
And the highest tier helpdesk are the programmers who actually know the system. Good luck providing that to your customers via "gig".
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.
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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I hate euphemisms, and "gig worker" is just a euphemism for slave-wage day laborer. We've been down that path before, is this really what we want to go back to? Color me shocked that people are resistant to voluntarily opting into this!
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.
30 an hour? I'd love to get those prices.
My yard won't take a professional more the 30 minutes to do, and the cheapest I could find was 130 a week.
House keeping? 175 for 2 hours.
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to get out of paying unemployment, pay roll taxes, benefits and minimum wage. They did it to taxi drivers for ages but it used to be mostly immigrants and the occasional ex-con 7 years past his sentence.
It wasn't right when we did it to them, but expanding it into the economy as a whole is bad juju for the entire workforce. It puts downward pressure on everybody's wages.
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Although back then it was called "Victorian working conditions" and it was shit and evil.
Arun Sundararajan is a hypocritical asshole - unless he's waking up every day wondering if he'll have any work to do at NYU Stern School of Business and is being paid the lowest possible wage the law will allow (because the free market will allow him to be charged to go to work - something that actually happened in Victorian days. You could be paid in company money which could only be spent in company shops).
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Be careful not to confuse the hourly rate you're paying as a customer with the hourly rate the worker is receiving. Even if they are self employed, working lawns carries several additional costs. e.g. Capital equipment (truck, trailer, mower, edger, etc.) and the maintenance on all those items, their time managing that maintenance, their time scheduling the work (and dealing with schedule changes), etc.
8 hours of pay is costing probably 12 hours of their time, which effectively brings their hourly rate from $30 down to $20. Now subtract expenses. I don't know exactly how much that would be but even if you estimate only $5/hr that brings them down to $15/hr which is only $31k/yr assuming they can work all year, which is not true for lawn care in most states.
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.
That 12 year old kid doesn't "own a business". Owning an actual business comes with tax an regulatory implications. You have to set up an LLC, pay both sides if FICA, arrange to pay yourself through the business, etc. Sure, it can be done. But it's not the same as some kid mowing lawns for spending money.
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Also, if you're doing everything above board, the guy doing gig work has to pay self employment taxes. As a W2 the employer would be responsible for half of your federal taxes; but as a gig worker you have to pay both halves. That 30/hr starts looking more like 10/hr very quickly once you factor all the typical expenses and taxes.
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Thank you for stating what should be obvious to each and all and why I think this /. posting is beyond pathetic and ignorant. Also, would recommend reading The Myth of Capitalism if you haven't read it yet (don't agree with all the authors' opinions, but do support their data!).
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.