The gig economy versus a traditional economy

The gig economy remains strong in subletting and transportation because those industries lack the enforceability of other industries. (Abhijit Bhadur/Flickr Creative Commons)

According to recent labor statistics, the “gig economy” or contingent workers has remained relatively constant since 2005. It has not overtaken the traditional company labor. However, neither has it disappeared. The gig economy remains strong in subletting and transportation because those industries lack the enforceability of other industries. This is a restoration of the journeyman and “Harold Hill” travelling salesmen of the past who were self-employed. Before the mid 20th century, a majority of U.S. workers were self-employed. Independent contractors are one form of alternative employment arrangements as are on-call workers and temporary help agencies. Vaudeville had a similar self-employment vibe, as did jazz and other musicians in the past. The largest groups of non-gig alternative employment are in construction and agriculture. These workers both weaken labor and strengthen it. Due to the decentralized nature of contingent work, it both forces them to take jobs to make a living, turning them into scab workers. On the other hand, such decentralization offers a means for unions to fight for wage increases by utilizing the threat of contingent competition to force the employer to accede to their wishes.

When the ride sharing economy first entered Europe, London taxi drivers protested the increased competition, fearing that the gig economy would replace traditional taxi services. While this is true, those protests increased the visibility of those ride-share services and ride-sharing, as competition which striking taxi drivers could perform during the strike, could apply pressure to the company to increase the commission rate to avoid losing drivers to the ride share economy. On the one hand, contingent workers and other alternative employment workers owe no more loyalty to any group in labor disputes outside of the monetary incentive, making them dangerous scab workers for the employer, as the contingent workers can leave when another more lucrative offer is made to them, or their contract expires as in the case of independent contractors. The role of independent contractors and other gig workers is what holds the current system in place; they offer a competition to the owner which prevents him from holding too much power over the workers. On the other hand, by presenting an alternate workpool from the unionized workers, they prevent the union from having a stranglehold on the owners, especially in light of the recent Supreme Court case preventing unions from collecting dues on non-members.

While most people are aware of the ride-sharing and musical version of the alternative employment arrangements, the others can explain partially the structure of the American welfare system, which is based on an assumption of temporary unemployment replaced by new gigs. In fact, the modern gig economy became strongest in the recession. These are the jobs which are paid by commission, like Uber and Lyft. This job possesses more fluidity than traditional employment, leading to more uncertainty regarding income flow. In fact, many workers engage in traditionally contingent jobs as a means of supplementing their wages, instead of a primary source of income. This explains why contingent work will never replace the traditional economy, outside of transportation, hostels and why alternative employment arrangements are viewed unfavorably by many who are employed in alternative arrangements. The gig economy bases itself on the assumption that a gig will occur in the future. This makes it less likely to maintain benefits as employment for contingent work and contractors is on a case-by-case basis, disincentivizing the company to offer benefits or salaries to such workers. Such workers log hours, distance travelled or some other metric of the work performed to obtain wages or commissions. Contingent workers and contractors are less likely to have employer-based healthcare as the relationship of these workers to the company employing them is transient, in flux and likely to change more rapidly and may end at any point when another offer appears or the company decides to end the contract for myriad reasons. Such workers, therefore lack company-based insurance plans, excepting those with long contracts that include insurance, those who bought insurance independently or possess another job with such a benefit. This makes this group more likely to benefit from Universal healthcare, if not for the fact that those who gain plans will lose them as such plans may be invalidated. Furthermore, these jobs often assume that the employee will be reemployed quickly, weakening pensions and the safety net relative to countries where Unions and traditional employment prioritize reducing incentives to leave a given company. In order to ensure that the employees do not search for other jobs, countries with a strong social democratic component and strong traditional employment have more liberal welfare because they are not focused on entrepreneurs and the transient nature of the gig economy.

The gig economy and other non-traditional employment arrangements have been around for a long time and will neither replace the traditional company nor be displaced. The two will remain parallel as the current economic system allows for both to exist and has not led to irreconcilable differences yet. The gig economy will stay at current levels because such levels are stable and enable both the flexibility of the alternative arrangements and the security of contracting and traditional arrangements.

Jacob Ningen is a campus correspondent for The Daily Campus. He can be reached via email at