Gig Or Job? The Future Of Gig Economy Jobs

NPR did an article recently about the gig economy that really got me thinking.  Firstly, the article cited the research I posted about last year that claims to gig economy is actually getting smaller.  

This is of course contrary to what most people think and to the general sentiment one would get from the media, but they have numbers to back it up.  It wouldn’t be the first time that perception is very different from reality.

The article also highlighted a gig economy evangelist name Arun Sundararajan who thinks the data that show the gig economy is shrinking are wrong.  But one thing they all agree on is that most people doing gig economy work are either rideshare drivers (Uber, Lyft) or Airbnb hosts. 

Housing and transportation are two of the three big expenses, so it shouldn’t come as a shock that folks are using their expensive houses and cars to make money and ease the hit those items have already put on their net worth.

But here’s the thing, ride sharing and Airbnb hosting are not “jobs”.  They’re gigs. 

This article from The New York Times, details a long time Uber driver and laments that he does it full time and only makes around $40,000 a year.  I found the comments even more enlightening – lots of folks saying that Uber is exploiting its drivers and not paying them a “living wage”. 

But driving for Uber isn’t meant to be a full-time job.  I do understand that in the past Uber may have released some not-so-thought-out advertising to the contrary of that.  And that was stupid on their part.

Uber is selling convenience, plain and simple.  And they’re doing it in two principal ways.  They’re selling convenience to the person who needs a ride since Ubers are now everywhere and they’re (theoretically at least) cheaper than traditional taxi cabs.

And Uber is selling convenience to the drivers in a big way by allowing them to make money whenever they want.  A real taxi driver usually has a real job, with scheduled shifts, and must work them.  He or she has mandatory hours, may or may not have any say over those hours, and cannot just pick someone up on their way to the grocery store if they so desire to make an extra buck. 

 

Non-Monetary Benefits

So when you drive for Uber or Lyft you’re trading in some of the hourly rate that a real cab driver would get for the extra benefit of autonomy, flexibility, and convenience.  Of course you’re also using your own car, so there’s that.  But you have to make those calculations to see if it’s worth your time, like in any other paid endeavor. 

It’s rigid hours and the taxi company’s car versus flexible hours (or none) and your own car.  You can’t have them both.  

And let’s face it, isn’t this trade-off the same for most gig economy jobs? 

We’ve all seen the spam emails and ads – Want to make money from home?  Just be a proofreader!  Yay!  Until you find out that after a few months you may have made $600, but your hourly rate was less than minimum wage.

However, you did the work sitting on your couch in your Spiderman underwear for crying out loud!  And you only took a project when you were in the mood.  Isn’t that worth something?  You can’t do those things in a real job that pays a “living wage”.

 

The Market Has Spoken

Whether blogging, freelance writing, graphic design, or ride-share driving, the common thing you hear about most gig economy jobs is that it’s really tough to make a living out of them.  This is because the market is having it’s say.  If something is super accessible, flexible, and doesn’t necessarily require a lot of education, then the market will of course put less of a value on it.

It’s also a design feature of gig economy jobs – you’re probably not supposed to do one of them full-time and claim it’s a full-time job.  It’s certainly possible to achieve a solid full time income doing gig work like freelance writing, but it’s probably going to be hard. 

The bottom line – driving a traditional cab isn’t hard to do and isn’t particularly high paying in most cases.  But driving for Uber is even easier to do, so of course it pays less.

 

What If

The gig evangelist from the article envisions a future where gig work will become dominant and the old “company model” of work will lose out.  At first I read this and chuckled.  No way. 

But then I thought about it…

What if financial independence and frugality go viral and tons of people start living on way less?  What if we all spent less? 

Could the reality of a gig-dominated economy come to fruition if the income potential from those “jobs” was actually enough to cover our expenses and lifestyles?

Then again, could the overspending of the majority be reduced without affecting what these gig jobs pay?  If we all spend less we’d be taking fewer Ubers and booking fewer Airbnbs on the beach.  If that happened would those gigs pay even less than they do now?

In the end I’m back to my original thought.  No, I don’t believe gig jobs will take over the economy as the professor from the NPR article forecasts. 

I believe in free markets, and the market will decide what these “jobs ” pay.  If they don’t pay enough for the effort required to do them, people will stop doing them and they’ll go away.  That’s how markets work.

 

New Development

In late April the Labor Department made the decision that gig-economy workers are contractors, not employees.  They based it on these six principles:

• the degree to which employers have control over workers
• the permanency of the workers’ relationship with the employer
• the employer’s level of investment in workers’ equipment and facilities
• the level of skill required for the work
• the workers’ potential to earn profit,
• the integration of the workers’ services into the employer’s business.

To me the first two in that list are the big ones.  Uber, Lyft, or AirBnB have very little control over you if you choose to use their platforms since you can just as easily stop using them.  There’s no permanent relationship.  I don’t even see them as being contractors in a traditional sense.

At my job we have tons of contractors and for most of them they’re tied to us and committed for a year or two at least depending on the contract.  But the contracting company cannot just wake up one day and say “nah, we don’t want to do this anymore”.  They’d be in breach of contract and would be sued.

Also #3 in that list is important to highlight.  As far as I know, Uber and Lyft do not give their drivers any equipment or facilities (except maybe a sticker).  If you’re a driver it’s your car and your phone that allow you to drive with them.  

In the end, I love the gig economy, am participating in it, and can’t wait to see where it goes.  I love the flexibility it gives me and I don’t mind making way less than a W2 salary to get that flexibility.  It’s another one of the superpowers that financial independence provides – the ability to make way less doing something you enjoy.

Your turn AF readers – Do you think gig economy jobs will take over traditional jobs in the future?  Have you ever done a gig-economy job and if so what did you do?