Let’s talk about the “gig economy” for a few minutes. You might have heard that buzzterm lately — Great to host TED talks about! Great to discuss at SXSW! Great to get a funding round for! — but the actual gig economy? Well, it’s a little different.
What Is The Gig Economy?
Jia Tolentino at the New Yorker just wrote a great piece called The Gig Economy Celebrates Working Yourself To Death that you should really read.
It hit home for me. Almost Millions is all about money and business issues in the 1099 economy deal with. Personally, I’ve been working some mix of full-time, part-time, and freelance work for the past decade.
I write for Fast Company magazine and freelance as a content strategist and ghostwriter, while running Almost Millions as a side project. I may earn more than the typical Lyft driver or Fiverr freelancer, but I deal with many of the same financial issues.
So do many self-employed architects, graphic designers, engineers, and other professionals — the 1099 economy is a continuum where Airbnb hosts, self-employed software developers, Caviar delivery drivers, and yoga teachers all have more in common than differences.
What You Need To Know About The Gig Economy, Marketplaces & Contract Workers
The gig economy isn’t really about gigs:
Fiverr is a freelance marketplace where anyone in the world can offer small jobs (for instance, designing a logo or recording a short video) to clients. Gigs start at $5, though you’d probably have to pay over $25 for most services.
Uber and Lyft are platforms which allow anyone to sign up and chauffeur random passengers around for money. TaskRabbit lets you do chores and tasks for random clients and get paid in exchange. All of these sites take commissions from the workers who sign up for their platform… and they’re paid as 1099ers (that is, they don’t receive any benefits from their “employer” and don’t have any taxes taken out from their paychecks.)
Where I live in Los Angeles, a lot of the people I know work in the entertainment industry and drive for Uber/host Airbnb seasonally. Others are entrepreneurs embracing the hustle mentality — I once met a Lyft driver who uses his car as a lead generator for a business offering Disneyland shuttles to foreign tourists, and an Uber driver who doubled as a real estate agent. He credited his Uber job with helping him find out about properties he’d otherwise be oblivious to.
But many more gig economy folks are people who want full-time jobs and can’t find them. The Bureau of Labor Statistics’ metrics on underemployment are full of sadness and there are rent checks to pay.
The Gig Economy, Marketplaces & Contract Workers: Willing & Unwilling Entrepreneurs
There are two main groups of gig economy participants — Entrepreneurs who use it to subsidize their other businesses, and involuntary entrepreneurs piecing together an income.
The first group is pretty straightforward. Plenty of Airbnb hosts have full-time jobs and use the service to build nest eggs or pay for their childrens’ school tuition. Plenty of Fiverr freelancers in countries like India, the Ukraine, and Malaysia earn good incomes providing quick-turnaround online services for customers in other parts of the world.
But they aren’t the whole story.
People in the second group are stressed-out and confused.
There are retirees driving for Uber so they’re not on the streets, single parents who don’t earn enough money at their part-time retail jobs, and strivers trying to find full-time jobs in parts of the country where there aren’t a lot of work options.
As Almost Millions’ editor-in-chief, I’ve met readers from both groups. People in the first one are usually the ones developing business plans, figuring out their best hours to drive with Uber or Lyft to get bonuses, or hiring accountants that help guarantee they get every tax exemption under the sun.
But many people in group two feel overwhelmed! They might not understand that they have to pay $2500 out of pocket on taxes for the $10,000 they earned driver for Uber the year before. They don’t know about tax deductions which could let them take a lot more money home. Many of them never heard of things like lead generation, sales funnels, product diversification, retail arbitrage, or similar things the blog/Reddit entrepreneur world discusses.
Many of these 1099ers are just busy trying to make ends meet, and have life throwing too much at them to improve their situation.
The Gig Economy, Marketplaces & Contract Workers: The New World’s Structure
First things first: Companies like Fiverr and Lyft aren’t exploiting their workers. They are part of the global economy, and if they didn’t exist other companies would do the same thing.
If Uber didn’t exist, Lyft or another startup would operate with a similar business model. If TaskRabbit didn’t exist, other companies would offer TaskRabbit-like services.
The internet means that a musician in Brooklyn or an artist in Oakland looking to make a few extra dollars on a platform like Fiverr competes with similarly talented individuals in Mumbai or Minsk with much lower living expenses.
Limo drivers in Los Angeles who have driven for years through a relatively well-paying dispatch agency see the corporate clients who were their bread and butter for years using Uber instead.
And for the masses of workers in America, the past 20 years have been a financial death by a thousand cuts.
The Affordable Care Act works relatively well in states like New York and California with a wide variety of insurers, but is unaffordable in many southern and midwestern states.
The Gig Economy, Marketplaces & Contract Workers: Market Forces
When I worked retail jobs as a young adult (My first three jobs were at Wendy’s, Officemax, and the K-Mart loading dock — pretty typical growing up in Staten Island), I was paid by check or direct deposit — if I bugged my bosses. These days, pay at many retailers is via debit cards.
Getting your pay automatically loaded onto a debit card is great for the company, which pays much less in accounts payable and human resources expenses, but sucks for employees who need to pay a $2.95 or $3.95 ATM fee every time they need to withdraw money. That shit adds up.
Many employers also only offer part-time work these days instead of full-time work. That is hard when you have kids, college debt, credit card loans, or all three.
The gig economy exists because of many big, impersonal market forces that make part-time, on-demand work with no benefits appealing. The gig economy also exists because of many investors who think companies like TaskRabbit, Airbnb, and Fiverr can make lots of money.
So how do we help people make a living in the gig economy? At Almost Millions, the answer is teaching self-employed folks to make more money, manage their money better, and master freelancing and self-employment. Join us.
The Gig Economy, Marketplaces & Contract Workers: Other Resources
Medium: Let’s Talk About The Gig Economy
(Images via Fiverr, Uber, and Taskrabbit)