Recent Changes in the 'Gig Economy'
The gig economy now accounts for as much as 4 percent of the American workforce. Should you sign up?
If you've used services like Uber, Lyft, AirBnB, Instacart and many more, you've been part of a massive movement reshaping how people conduct business around the world. The "gig economy" is a collective term for services like these that often streamline or optimize already existing markets - transportation, vacation rentals, delivery services - using digital tools and a pool of part-time workers. The gig economy is so-named because it relies on an abundance of people with time and services to offer but no reliable way to make money from those assets.
These kinds of services are still young and changing quickly. If you're one of the millions of people looking to make extra money from one of them, here's what you should know.
Gig economy opportunities
Companies that characterize the massive gig economy were almost all nonexistent just 10 years ago, but they now comprise a massive slice of total employment in the U.S. and elsewhere. According to a 2016 report from the McKinsey Global Institute, around 4 percent of American workers had earned money through the gig economy in recent years. Uber alone boasts an active pool of around 600,000 drivers in the U.S.
Some of the major drivers of growth for these businesses concern the development of mobile technology and broader economic trends. As more people began carrying cell phones with internet access, it has become easier to access both service providers and customers, as well as enable third-party managers to reach either one more easily. At the same time, the 2008 recession resulted in high numbers of layoffs and more people working part-time instead of full-time.
However, at least one of these trends has shifted noticeably in recent months. The economy has improved in the U.S. and elsewhere, with more people being hired for full-time work and earning higher wages in almost every kind of employment. The Wall Street Journal reported that as of 2017, gig economy businesses were finding it harder to attract and retain available workers, primarily for these reasons.
Some of the most popular gig economy service providers are responding with tantalizing incentives for workers, which could make these jobs more desirable now than previously.
- Uber recently announced it would allow riders to tip drivers through the phone application, a feature not available previously. It also said it was rolling out driver insurance programs and the potential for more drivers to be hired in full-time support roles.
- Lyft, a major competitor to Uber, is offering more perks to drivers including tax preparation services, health care coverage and car maintenance plans. These services are available to only the most active drivers, however.
- Instacart, which connects users with delivery drivers, will begin offering discounts on cell phone plans.
While these new incentives are clearly designed to manage a more competitive labor market, some are also in direct response to lawsuits and legislation aimed at gig economy services. The growth of these types of jobs has added new complications in the discussion on workers' rights. In most cases, companies don't need to provide the same protections and benefits to independent workers as they would full-time employees. Income taxes for part-time or freelance work are also different. These are crucial concerns for anyone considering taking on work with a gig economy job.