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Five myths about the gig economy

Shelly Steward, a sociologist and associate director of research for the Aspen Institute’s Future of Work Initiative, studies the changing nature of work in the U.S.

Shelter-in-place orders in response to the coronavirus pandemic have increased public awareness and scrutiny of the gig economy – from the DoorDash drivers who drop off ramen, to the Instacart shoppers who buy groceries, to the Amazon Flex drivers who deliver packages. (Jeff Bezos, the chief executive of Amazon, owns The Washington Post.) But many other kinds of laborers – including domestic and agricultural workers, temp agency workers, and freelancers – also piece together short-term jobs. Many are classified as independent contractors, which means they are not covered by laws that ensure a minimum wage, prohibit harassment or provide safety equipment. As millions of these workers stay on the job so others can stay home, here are five common myths about the gig economy.

Myth No. 1: The gig economy is taking over.

“The gig economy is coming for your job,”said a recent New York Times op-ed. One oft-cited 2017studyby Upwork and Freelancers Union predicts that the majority of the workforce will be freelancers by 2027.

The gig economy is here to stay, but it‘s not replacing traditional work. While gig work is notoriously difficult to measure, most studies agree that about 10% of workers earn most of their income from the gig economy, a share that has remained stable for more than 20 years. At least as many workers engage in gig work on only a part-time basis, to supplement other income. Increasing numbers of workers have engaged in these “side hustles” in the past decade, with the most growth among those using online platforms such as Uber, Instacart, and TaskRabbit. The JPMorgan Chase Institute estimates that the fraction of U.S. households that earned money through an online platform in the previous year increased from 0.3% in 2013 to 1.6% in 2018.Many of these side hustlers becomeactive on apps only after an income loss or an unexpected expense.

Myth No. 2: The gig economy has been driven by technology.

Technology “has created the digital gig economy,”according to the site TechNewsGadget. An International Labor Organization report on the gig economy asserts that “the development of newer technologies has brought fundamental changes to the way we work.” Just as the steam engine brought us industrial manufacturing, the story goes, smartphones brought us app-based work.

But the decisions of managers and policymakers shape the labor market more than technological development does. Beginning in the 1970s, corporations shifted their focus away from production and toward stock prices. Employees came to be seen as a cost to be cut rather than a source of profit. The use of temp agencies, introduced in the 1950s, exploded in this era. With technology no more advanced than spreadsheets and land-line telephones, reliance on temp agencies continued into the 21st century, laying the foundations for today‘s gig economy.

Shortly after after the Taft-Hartley Act, which passed in 1947, excluded independent contractors from the National Labor Relations Act, taxi companies began experimenting with hiring independent contractors instead of unionized employees. A series of court cases ruled in favor of this practice, opening the door for its proliferation. Uber and Lyft expanded the independent contractor model, taking advantage of a regulatory framework already in place. Technology can facilitate and accelerate change, but it doesn‘t drive it.

Myth No. 3: Gig workers are mostly millennials.

Millennials are often thought to make up a large share of the gig economy. A recent Vox article repeated many assumptions about the age of gig workers: “A lot of millennials have been stuck in piecemeal or gig work with no real security.” According to a Deloitte report from 2018, “The gig economy is going strong, and millennials are leading the way.” It predicted that they would probably account for 42% of self-employed workers by 2020.

But the age distribution of gig workers is similar to that of the overall workforce, according to data from the Bureau of Labor Statistics. The youngest workers, those under 25, are more likely to have gig jobs, because young people have always engaged in gig work. Students find jobs between semesters, and those just entering the labor market often take what work they can get as they search for more stable employment.

As a cohort, millennials tend to value job security – possibly because they came of age during the Great Recession – and are more likely than Generation X or baby boomers to say security is extremely important when considering a job, according to a Pew poll. Millennials also tend to hold jobs longer than the generation before them did at their age. These priorities make gig work unappealing to many millennials.

Myth No. 4: Gig work can be a backup option in a slow economy.

In the face of unprecedented unemployment, Fast Company encouraged people to “consider using freelance positions to gain experience and hourly gig jobs as a stopgap solution to paying your bills during a downturn.” MarketWatch suggested that “gig-economy jobs can earn you extra cash during the coronavirus pandemic.”

But gig work is not a reliable source of income during a recession. The number of jobs available depends on consumer demand: Though some companies, including the food delivery services Instacart and Postmates, have announced increases in work opportunities through their platforms, others, including Uber and Thumbtack, have reported steep drop-offs in demand since March, as consumers have stayed home. The dynamic pricing systems used by Uber, Lyft, and other platforms make not only job availability, but the rate of pay, unpredictable. Uber‘s own research has suggested that if more drivers are active, jobs can be harder to find and earnings lower.

Short-term jobs, arranged through an app or not, allow companies to shift the financial risks of a tumultuous economy onto workers. During the Great Recession, temp jobs accounted for 11% of job losses, despite making up 2% of employment. Rather than providing a saving grace, gig work exacerbates the uncertainty workers face during a recession.

Myth No. 5: Gig workers have lots of flexibility.

Gig companies often describe a trade-off: What workers lack in stability, they make up for in flexibility. “Most drivers prefer freedom and flexibility to the forced schedules and rigid hourly shifts of traditional employment,” the chief executives of Uber and Lyft wrote in a San Francisco Chronicle op-ed. Instacart has said that one of its goals is “to provide flexible earnings opportunities for shoppers.”

Not all gig work is created equal, though. Some contract work allows people to choose what they do, when they do it and what rates they charge: A freelance graphic designer with a respected portfolio, for example, may select her clients and set competitive rates. But several online platforms use variable pay, ratings systems and notifications to push people to accept certain jobs and work certain hours. These practices, called algorithmic management, limit the flexibility of work. Uber drivers report being monitored through their phones and deactivated without notice. Low, unpredictable wages and a lack of benefits can push people to work more hours than they would in a full-time job.

In fact, traditional employment can offer a schedule that’s both predictable and flexible, while gig workers can be given expanded benefits and protections. Major retailers, including Gap and Walmart, have introduced scheduling apps that give employees more control over their shifts. The National Domestic Workers Alliance has developed a platform for clients to contribute to workers’ benefits, increasing security for these gig workers. Flexibility does not have to come at the cost of job security and decent wages.

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