The government’s interest in the gig economy appears to be increasing. Last week saw a U.S. House Committee on Education and the Workforce hold a hearing on the gig economy. The committee met to discuss the massive influence of the rising gig economy – and what to do about it.
So why would Washington be so intrigued by the gig economy?
Workers are choosing the gig economy.
The gig economy is from being a last resort for people who couldn’t get a “real job.” Rather, it continues to find itself filled with people who are there because they want to be. A recent report revealed a whopping 89 percent of gig economy workers do the job either part- or full-time because they want to.
Why are they choosing the gig economy? Speakers at the committee meeting said flexibility was the top reason. The gig economy lets its employees work when they want. They can also work for multiple competitors simultaneously. That’s an advantage no other industry can offer.
However, although the committee recognized the opportunities, it also appeared worried that the move toward the gig economy signaled a shift in the types of jobs we will see going forward.
Gig economy workers make more than their traditional job counterparts.
One report said gig economy workers are pulling in an average of $34 an hour. This dollar figure compared to $26 per hour for traditional workers. Another (probably more realistic) examination put the number at $12.50 an hour. Either way, gig economy workers consistently earn more than their traditional (usually minimum wage) workplace equivalents.
Since income tax is based on a percentage of a worker’s income, the federal government has a direct monetary interest in supporting well-paying jobs.
The gig economy threatens the status quo.
The gig economy is part of what is being termed the New Economy. This shift causes traditional boundaries and practices of employers to come into question. However, while economic change and growth provides new opportunities, it also poses issues.
Sharon Block, executive director of the Labor and Worklife Program at Harvard Law School, pointed out that the gig economy stands in danger of trading security for its flexibility.
One hot topic in government right now is the classification of gig economy workers as contractors rather than employees. Notable exceptions to this rule include Managed by Q and Hello Alfred. However, most gig economy platforms use this classification to get around traditional labor protections for workers.
Since the government is in the business of protecting the rights of workers, it will have to figure out how to support the gig economy while still providing security to its workforce.
A possible middle ground
New York University’s Stern School of Business professor Arun Sundararajan offered a possible solution to the issue of security and flexibility. He said the new economy will probably look like a variety of partnerships, rather than negotiated terms of employment.
He also encouraged lawmakers to favor policies that treat the gig economy workers as neither traditional employees nor contractors. Rather, he encouraged them to see these workers as microbusinesses.
“We should really encourage those platforms that are inducing the creation of tiny businesses,” Sundararajan said in a story reported by Inc. He said policymakers should look at these small businesses as making their own pricing and inventory decisions, merchandising, and building a brand.