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The Way Forward in the Gig Economy Debate


By Daniel Matthews

Where do you stand on the gig economy debate? Given America’s economic picture, how we answer this question is extremely important.

Let’s look at the picture and the debate as it stands. According to TSheets Time Tracking, a startup highly interested in this subject, the number of gig workers stands to jump from 3.2 million “on-demand” workers in 2015 to 7.6 million in 2020. These workers stand to benefit from the following:

  • Flexibility: 73 percent of Uber drivers prefer the flexibility of on-demand work to traditional jobs.

  • Options: Workers can choose from Uber and Lyft if they have a car, and AirBnB if they have a living space, among myriad others in a variety of niches.

  • Safety cushions: All of the options don’t just make for one safety net — they make for many.

At the same time, there are risks and challenges — which is why there’s room for debate about whether the gig economy is a good thing. Some of these hurdles are:

  • Inconsistent income: It’s a come-and-go situation, wherein your given line of contracting could dry up from bad reviews or litigation, affecting the company through whom you’re contracting.

  • New costs: Costs, such as 15 percent employment taxes and work-related expenses, come into play for the gig worker, who has to pay them all.

  • Fewer protections: This has been the big one for Uber drivers: Protections afforded to normal employees — including severance pay, disability leave, paid time off, sick days, workers compensation and health insurance — don’t apply to gig workers.

The economic picture

For Generation Z, millennials and the 46.7 million Americans living in poverty as of 2014, the debate is a matter of economic and social mobility. The pro-gig viewpoint says the impoverished and young can benefit from the greater number of options. A disenfranchised worker, unhappy with wages and stuck in a bottom-rung job, could choose to ply a trade or offer a service through a middleman and potentially be much better off than working for, say, Walmart.

One group that has a big stake in this is graduates saddled with student loan debt. Defaulting on student loans can mean facing collections agents, lawsuits and a declining credit score. Furthermore, if you have a default on your record, you can’t work for a federal agency. State and local agencies often follow the same suit. If you already work for the government and default on a student loan, they garnish your wages, take your tax returns, withhold a portion of your Social Security benefits and more. This applies to government contractors, too.

American college graduates are crippled with over $1 trillion in debt. The gig economy offers what may seem like a solution, at least for now — it means plenty of available work toward meeting regular loan payments. For the student, it could mean picking up extra work on the side: flexible work allowing for school schedules and lessening debt. And, for the graduate who defaults on loans, gig economy jobs could replace the jobs you wouldn’t be able to get working for the government.

The debate picture

Heard of the Good Work Movement yet? If you haven’t, it’s probably because companies such as Uber and AirBnB get more press. The Good Work Movement, founded by the National Domestic Workers Alliance in October 2015, is a gathering of gig economy companies pledging to deliver the protections and benefits companies such as Uber notoriously fail to offer.

Dan Teran is the CEO and cofounder of office management company Managed by Q, one of the founding Good Work Movement members. Echoing Marco Rubio (or Rubio is echoing him), Teran says:

“The way we work in the United States is undergoing a fundamental shift, but our current social structures, programs and policies have not kept pace with the realities of our 21st-century workforce. As leaders in this space, we’re in position to help shape the future of work, and with that comes the responsibility to ensure the jobs we’re creating are good ones.”

This statement gets at the heart of the gig economy debate. Detractors argue that the jobs this economy creates aren’t good ones because they don’t take care of workers. They also argue this economy lowers the bar for businesses, creating an atmosphere in which companies copy an unethical model: contracting employees, treating them poorly and getting rid of them if there’s a problem because there are no regulations against it.

In the absence of policies to ensure worker rights and ethical treatment, the Good Work Movement and its code say it’s the companies’ prerogative to reach out to workers. Managed by Q, for example, is offering a bonus program, base benefits including a 401(k) and stock options. The company is also “calling for household employers to commit to fair pay, clear expectations and paid time off for domestic workers.” There’s no guarantee that household employers will answer the call. But they are more likely to do so if Managed by Q expects it.

Proponents of regulation would have the type of voluntary commitment that Good Work Movement companies are making become the gig economy policy. But would that stifle the gig economy and slow the economic progress it’s facilitating? Would the gig economy be the gig economy anymore if the come-and-go atmosphere becomes a more traditional employment situation?

Whatever the implications of regulation, it’s clear we should strike a middle-ground. We want to preserve the innovation and options, and we want to maximize freedom and fair work, following the Good Work Movement’s example. Let’s talk about this. To tweet at the Good Work Movement, find them at #goodworkcode.

Image: Ai-jen Poo, Director of the National Domestic Workers Alliance, courtesy of Wikipedia 

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