The gig economy

The gig economy

When finding stable employment becomes hard, many think that turning to gig-economy options can be the solution to having stable income. However, this type of employment comes at a cost.

These past five years have seen the rise of two ‘new’ types of economy: the sharing economy and the gig economy, and today I will talk about the second one.

The gig economy; it’s easy to picture when you think of it this way. Kids making extra cash during the holidays cleaning pools, working as waiters at Christmas parties, catering events. It used to be the employment for the people that had free time and weren’t looking for an actual job..

That’s no longer the case. In the past 10 years the gig economy of permanently self-employed contractors has exploded. Recent statistics in the UK show that 15% of all workers work on zero hour contracts; In the US, the Department of Labor doesn’t have yet a good tool to track the rise in self-employment but, recent studies in major US cities show that the number of self-employed in the transportation services alone (limo and goods transportation) just in one major US city has doubled in 15 years. These are scary statistics.

“Be your own boss”

Most people don’t know that construction carpenters are contractors

Oftentimes this is the main appeal of this type of employment; it’s what draws people to the driver services like Uber; you get to pick your own hours. You work as much as you want, and get paid per job.

What the ads don’t tell you, for example, is that when Uber slashes prices, they do so without asking the drivers, and they are the ones who take the cut in income. They also don’t tell you that if you’re idle, waiting for work, your engine running, you are not getting paid for the work not done nor the gas your car is using up. Meaning to make a certain amount of runs per day can take you anywhere from a few hours to the whole day.

“Opportunities for advancement”

That’s another catch in these types of jobs. Many claim opportunities to become permanent employment, and opportunities of advancement via internal training to expand your skill set.

In a temp agency, this would bean honest offer. But it is not the case in the private sector, where zero hour or contractor staff are treated differently, expected to learn on the job, and have no chances of being hired. During the research of this article I read the account of a nurse in the public healthcare system in Europe; her account of the zero-hour system is appalling.

Zero hour contracts

With this type of hiring, the employer doesn’t guarantee, at all, the number of hours the employee will work per week. Additionally, these jobs come with absolutely no benefits: the employee -in reality a contractor- has to pay his/her own taxes, has no paid holidays, no sick leave and no vacation. You don’t work, you don’t get paid.

Why would people work like this? When regular employment becomes difficult to find, workers still need to eat; this is why this type of economy is now surging.

Other forced contractor jobs? DJs, lighting technicians.

When it comes to having a roof over your head or feeding the family, many people need the work and will accept these jobs to stay ahead. They will do so at the cost of their own health, now and future; the opportunities of saving for retirement for workers on these types of jobs are slim to none.

As hiring practices change, regular employment with (what were once considered normal) benefits is disappearing. Employers who need to meet the demand of their clients look for alternative ways to hire people. The alternatives are temp workers, zero hour contracts and independent contractors; it’s the legalization of the old “getting paid under the table” jobs.

If small and medium companies may do this to stay in business, it’s somewhat justified; the problem comes when large corporations and multinationals make it part of their business model. These are jobs that do indeed provide income, and legally, but at a cost to the employee and the government.

The government

Many nations -the United States included- have employer-paid taxes (per employee) that the self-employed do not pay. When companies hire contactors to do long-term work, this comes at the expense of income that local and national governments never receive, while they continue to be responsible for providing basic public goods.

This is why you can see, at a local level especially, the increase in taxes, the cutting of budgets and the curtailing of services that previously were a given. The same, to a degree, is happening with national governments, yet at that scale the impact is difficult to pinpoint without better statistics but if the look at national budget crisis around the world is to be examined, the issue is clearly a global one. Granted, the gig economy is but one of many, many factors impacting national budgets yet, as the gig economy grows, the tax income of every nation is sure to fall.

Why change is needed

A labor force deeply ensconced in the pattern of temporary employment with no benefits is extremely detrimental to the economy of a nation. In the long term, as workers age, they find themselves in need of public assistance for which they themselves have been unable to pay.

Furthermore, these people will get closer and closer to retirement with no provisions made for it. It will lead to overwhelming poverty among retirees and unbearable pressure on the social benefits system. That’s because even if a government will not have obligation to pay out pensions to workers who have not accrued them, it will be bound to have to provide for them in other ways.

Possible solutions

The best option is for workers in these fields to consider unionizing. It’s a difficult process, but one that can provide leverage and protection for worker benefits in any field.

Another possible solution is for governments to enforce a basic wage provision for all temporary work. However, this solution will bust the system and result in the closing of small companies that depend on this type of contracts. As a result, we’d see a long-term rise in unemployment again.

Ultimately, it comes down to the same solutions, the ones that nobody seems to want to implement: the government must find a way to tax corporations better. For that, expecting companies to have insane quarterly results has to change.

We need to shift corporate mentality away from squeezing every buck out of every corner. Instead, they need to focus on making sure employees can thrive. Happy employees produce more, and produce better. Only this will provide a long-term answer that works for companies, the economy, and the global workforce.

And, to the naysayers who say that this is impossible, think on this: the gig economy only started surging in the last 15 years. Before that, corporations cared for their earnings AND their employees.

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