Every day seems to bring some kind of development or news flash in the world of Uber, Lyft, Airbnb – or some new on-demand product or service. In many ways, it’s part of the evolution of our traditional business models. And yet, as some aspects of our economy and working lives change, others manage to be simultaneously reinforced.
Brick-and-mortar retail shopping gives way to on-line purchasing, as evidenced by the disappointing year-end holiday season. Department stores close branches, and people are laid off. And yet, Amazon announces plans to open its first-ever store locations.
On-line purchases (soon to be delivered by drones, perhaps) lead to greater demand for delivery services, including the U.S. Postal Service, thought to be nearly extinct because of the displacement of snail-mail delivery by e-mail and other electronic communications. Thousands are hired for part-time, seasonal work in both the public and private sectors; many are offered full-time employment.
The assembly-line factory model for manufacturing automobiles by the Big Three U.S. auto makers, complete with life-long, union-protected jobs, gives way to off-shore sources of cheaper labor, factory-floor robotics, and a reduction in collective bargaining over many years.
And yet, foreign-owned car companies open plants in the U.S., bringing back jobs from overseas, some of them as union shops. So too, in the new, on-demand economy, battles rage (some granted class-action status by the EEOC and other authorities) over the definition of an “employee” vs. an “independent contractor.” And these are far from settled definitively.
A New Line of Work, Or Just Extra Pay?
A recent Bloomberg Business article addresses just that question about the on-line gig workforce. The author estimates that 10.3 million Americans (roughly 6.5% of the total U.S. workforce) earned income through so-called “web-based platforms” between 2012 and 2015.
Such “gig jobs” occur when one individual performs a task for another, often through on-line “labor” platforms (services like Uber or Lyft, where freelance workers provide customers with a service) or “capital” platforms (think Airbnb) that sell customers goods or assets, such as a hotel room. Research by the JPMorgan Chase Institute indicates that the labor, freelancer-oriented platform is growing faster than the capital model.
And yet. While the study shows a definite trend in the making, most Uber drivers do the gig work to supplement their incomes rather than as a full-time avocation. Some are mothers looking for part-time work to accommodate their childcare needs. Others are freelancers looking to earn extra money on their own times and schedules.
Most participants in the gig economy are young, between 18 and 34. Still, even as gig work, it reflects a changing trend in the way American workers are supporting themselves.
From Taxi Rides to Healthcare: the “Brand” of You Inc.
As a 2015 article in The Economist presciently pointed out, the burgeoning on-demand economy is about providing customers with way more than just ride-sharing or door-to-door meal delivery. Downloaded apps in smart phones and tablets can provide a doctor, a lawyer, an accountant, a computer programmer–basically any kind of freelance or contracted service–literally at our fingertips. Some 53 million Americans now work as free-lancers (more than a year later, that figure is doubtless bigger now).
Even as economists applaud the utilization of “underserved resources” by on-demand businesses, this dramatic shift toward freelance and gig work is best explained by technology and a reallocation of resources toward “people who have money but no time and people who have time but no money”; and these groups wanting to do business with one another. In other words, on-demand providers of goods and services are middlemen who oversee connections and quality control.
In this new economy, Uber drivers and other gig workers are responsible for their own health insurance, retirement planning and other erstwhile perks once provided by full-time employers. The burden, or risk, as exemplified by the Affordable Care Act, is increasingly being shared, if not shifted, from employers to individuals. The author of The Economist post sees a trend toward freelance workers ultimately managing their own “brand.”
Slowing Down Uber’s Fast-Lane Progress
While a recent piece in the Boston Bar Journal acknowledges the rise of the on-demand economy, it also cites the ongoing legal conflicts around the country over how workers are classified in this brave new world.
Workers, businesses – and even some municipalities – are struggling to address the questions of wages, benefits, overtime pay, not to mention Medicare and Social Security taxes, and who is responsible for them. Uber’s high-profile lawsuit in California was given class-action certification by the court overseeing the case. The trial is set to begin in June.
Some companies lacking Uber’s capitalization and ability to secure additional funds from investors have been sidelined, and even permanently derailed, by defending against worker lawsuits. This past December, the Seattle City Council approved a bill that would allow drivers for Uber Lyft and other ride-hailing services to negotiate wages for drivers, and even to unionize. The jury is still out (literally) on whether independent contractors are eligible, under federal laws, for collective bargaining, but the issue of what constitutes an “employee” or an “independent contractor” remains very much unresolved.
So what will be next in this fast-growing, evolving, on-demand economy? Very likely, some new and interesting career paths for workers (whether they’re ultimately classified as “employees” or “independent contractors,” or something in between), and opportunities for more providers of online platform services.
Still, many members of the traditional workforce are not quite ready to give up their traditional status as employees with all the traditional benefits and security that status affords. And their employers may not yet have carte blanche to treat their free-lancers exactly as they might please.
To some extent, the more things change, the more they stay the same.