Northwest Arkansas Democrat-Gazette
Gig Economy big, here to stay
Some see contract work making full-time spots obsolete
NANCY DAHLBERG
MIAMI — Tiffany Zadi creates leather shoulder bags, totes, accessories and jewelry. While trolling thrift shops for materials she’ll recycle for her fashions, she’ll snatch up vintage finds and resell them through Etsy.
The Little Havana resident also teaches piano to several students, and lately she has been leading handicraft “experiences” for small groups through Airbnb.
Joseph Nay builds and designs websites, including steady work for a content studio and a digital marketing agency. That has led to other freelance jobs. The largely self-taught Hollywood resident also creates and edits motion graphics and assists a nonprofit focused on helping Haiti. “It’s been a fun ride, tiring but fun,” he said.
Zadi and Nay leverage their skills, experience and passions into a diverse portfolio of multiple work assignments and revenue streams to thrive in the Gig Economy, a fast-growing worker movement that includes consulting and contracting, temping, freelancing, self-employment, side gigs and on-demand workers.
While Zadi and Nay enthusiastically jumped into the Gig Economy — Zadi gave up a law career to pursue her passions — others are thrust into it by necessity, as full-time jobs have slipped away. Some want the supplemental income as wages remain largely stagnant while still others use it as a buffer as they ease into retirement.
Experts differ on exactly how large the Gig Economy is — these jobs don’t fit neatly into categories the government tracks — as well as on the pluses and drawbacks for workers and the economy. But there is consensus that the Gig Economy is growing faster than traditional employment. And it is here to stay.
A 2016 McKinsey Global Institute Report found that about 27 percent of workingage people in the United States and Europe engage at least partially in independent work. A 2016 study by the Minneapolis Fed found a 37 percent engagement rate in the United States, while government economists have estimated that about 40 percent of Americans will be working outside traditional full-time jobs by 2020.
“There’s this myth that the Gig Economy equals Uber driver,” said Diane Mulcahy, who recently wrote a book on the subject. “If you are not a full-time employee in a fulltime job, you are part of the Gig Economy.”
While gig workers have been around as long as there have been handymen, tutors, writers and musicians, what’s new about the Gig Economy is how quickly it has infiltrated white-collar professions and industries such as health care, finance, the law and technology, Mulcahy said. She is a
private equity adviser for the Kauffman Foundation, which studies and supports entrepreneurship. As proof, she said, look at the growth of national online placement services like Toptal for tech and finance workers and Axiom for lawyers.
The one-two punch of tech advancements and recessionary times accelerated the Gig Economy.
Just before and during the most recent recession came the premiere of several key tech-enabled online services, including ride-hailing companies Uber and Lyft, Airbnb for lodging and websites helping consumers find people to teach, write or fix something for them. Other websites popped up to pool contract workers, like call-center reps, hospitality workers and accountants.
At the same time, corporations were already increasingly using cheaper contract labor that can be deployed when and where they need it.
A national survey by the Freelancers Union and online freelance job board Upwork found that two-thirds of the
55 million Americans who freelanced in 2016 did so out of choice, up 10 points from their survey in 2014.
Economic realities are also driving more people into the Gig Economy to pick up a second source of income alongside their full-time jobs.
Nicole Dominguez, 44, and a mother of three in Miami, works full time as a docketing clerk at a law firm but signed up last year for extra work at Liveops, a work-at-home call center platform, to finance a trip to visit her son in Japan, who was in the military. But she took to it and stayed with it, and her husband joined too.
Dominguez sees her gig job as something she could do in retirement too, and she’s not alone. While millennials are typically identified with gig work, it’s even more prevalent among baby boomers, economists at Harvard and Princeton found. About half of Uber and Lyft drivers are over 50. Airbnb identifies women age 60-plus as their most successful hosts and the fastest-growing community of providers. DogVacay reports that people over 50 constitute 25 percent of their pet sitters.
Contract workers cost employers at least 25 percent less in benefits and give them the
ability to hire contract workers only when demand spikes. But full-time employees likely would be more committed to the company vision, and some companies see the value of having their employees under one roof. Training costs can be high, too, particularly if a contractor doesn’t stay.
For the economy, though, the news isn’t all cheery. The cost of health insurance drives some gig workers to forgo it altogether, a risky financial move for them that also could lead to emergency room treatment at public expense. Home ownership has already started to fall nationally and could fall further. Social Security’s safety net could be stretched with fewer paying into the system at the same levels.
The rise of the Gig Economy has also put the spotlight on the lack of worker protections. A worker might end up being paid less than minimum wage if a task takes longer than expected. If the worker can’t find a follow-up gig, he or she isn’t eligible for unemployment benefits. Some companies take advantage by hiring contractors to essentially be full-time employees without paying benefits. There’s even a term for it now: Perma-lancing.
Some U.S. lawmakers have begun to introduce legislation that could form the framework for portable perks, such as parental leave, workers’ compensation and tax advantaged retirement savings. In New York state, lawmakers are considering allowing online job platforms to pay into a benefit fund for the workers who use their apps. The city of New York, meanwhile, has considered surcharges on riders to pay benefits for delivery and ride-hailing service workers.
Yet, this all comes as the economy has already fundamentally changed.
“This is the future of work,” Mulcahy said. “The full-time employee is getting to be the worker of last resort.”