In such a strong labor market, is the gig economy past its prime? Learn more about the problems facing the gig economy.
Is the Gig Economy Jumping the Shark?
Since the Great Recession, gig jobs have been heralded as the economy of the future ㅡ but after a decade, are U.S. workers still banking on gigs?
The Rise of the Gig
Many of the biggest gig startups began in the fallout of the Great Recession of 2008
7.2% unemployment after the Great Recession spurred the demand for temporary and quick-starting jobs
In the decade since, the gig economy has expanded at an exponential rate
As of 2017:
AirBnb: 150 million users
Uber: 42 million users
According to some estimates there are as many as 75 million U.S. gig workers
47% of Millennial workers do some kind of freelance work
23% of workers age 55-64 consider themselves independent contractors
Gig work is expected to significantly change the U.S. economy going forward
Traditional workers
2017: 103 million
2027: 84 million
VS
Freelance workers
2017: 57 million
2027: 87 million
BUT gig workers are strugglingㄧ60% couldn’t come up with $400 for an emergency bill
After swelling numbers jumped on the gig bandwagon, many faced the realization that surviving as a gig worker was just not possible
A Tough Gig
With gig jobs come serious financial detriments
Impermanence
Income unpredictability
Lack of benefits
Many workers do not earn a living wage, according to the median monthly income
Non-transportation $793
Transportation $762
Selling $534
From 2014-2018, pay for even the most active participants dropped significantly
Active Uber and Lyft drivers* both saw wages fall
2014: $2,500 a month
2018: $1,277 a month
Comparatively, fewer gig workers feel they are doing their preferred type of work
Traditional 71%
Gig/independent 64%
In April 2020, the U.S. unemployment was half* of what it was in the midst of the Great Recession ㄧwith the job market recovering, are workers still willing to do gig work?
The Uncertain Future of the Gig Economy
Increasingly, workers may have realized that gig jobs cannot replace traditional work
Workers with non-standard working arrangements fell
2005: 10.9%
2017: 10.1%
Supplemental gigging is on the rise
2017: 12.9 million
2018: 14.9 million
While full time gig workers are decreasing
2017: 16.2 million
2018: 15.8 million
U.S. Department of Labor ruled that independent workers are contractors, and not entitled to minimum wage regulations or benefits including insurance
Consequently, gig workers may be realizing that with traditional employment steady, they are not willing to work as independent contractors
2005: 7.4%
2017: 6.9%
Some gig-providing companies have employee turnover as high as 500% each year
Traditional employers are now capitalizing on the rise of flexible workers
34% of employers utilize contingent workers for the long term
As of 2016, 1 in 5 organizations was made up of at least 30% contingent workers
As gig providers feel the burn of a retreating workforce, some are trying to keep up with traditional employers
Uber and Lyft both became publicly traded in 2020
Uber shares plunged 7.6% in value on its first day on the stock market
Lyft reported losses of $1.14 billion in the first quarter of 2020
“Uber Pro” rewards program offers free college tuition for top drivers
Still, to many disillusioned workers, their efforts are too little too late
In March 2020, Uber and Lyft drivers, not allowed to unionize, went on strike
Workers protested the lack of benefits including overtime and health insurance
With top companies in chaos and workers jumping ship, is the gig economy doomed?
Sources:
https://www.bls.gov/news.release/pdf/conemp.pdf
https://www.observanow.com/gig-economy-past-present-future/
https://www.bls.gov/cps/electronically-mediated-employment.htm
https://www.ft.com/content/b5a2b122-a41b-11e5-8218-6b8ff73aae15
https://www.wsj.com/articles/in-a-tight-labor-market-gig-workers-get-harder-to-please-11556942404
https://www.bls.gov/opub/ted/2009/jan/wk2/art02.htm
https://ipropertymanagement.com/airbnb-statistics/
http://www.businessofapps.com/data/uber-statistics/#1
https://www.federalreserve.gov/publications/2018-economic-well-being-of-us-households-in-2017-employment.htm
https://www.upwork.com/press/2017/10/17/freelancing-in-america-2017/
https://www.jpmorganchase.com/corporate/institute/document/institute-ope-2018.pdf
https://www.gallup.com/workplace/240878/gig-economy-paper-2018.aspx
https://www.bls.gov/news.release/pdf/empsit.pdf
http://cepr.net/images/stories/reports/cws-2019-02.pdf
https://www.epi.org/publication/nonstandard-work-arrangements-and-older-americans-2005-2017/
https://www.mbopartners.com/wp-content/uploads/2019/02/State_of_Independence_2018.pdf
https://www.cbsnews.com/news/labor-department-says-gig-workers-arent-employees/
https://techcrunch.com/2019/05/10/ubers-first-day-as-a-public-company-didnt-go-so-well/
https://techcrunch.com/2019/05/07/lyft-lost-1-14b-in-q1-2019-on-776m-in-revenue/
https://www.usatoday.com/story/tech/talkingtech/2018/11/02/uber-pro-program-offers-perks-drivers-including-college-tuition/1857137002/
https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf
https://www.vox.com/2019/5/8/18535367/uber-drivers-strike-2019-cities
https://www.marketwatch.com/story/the-government-has-no-idea-how-many-gig-workers-there-areheres-why-thats-a-problem-2018-07-18