The gig economy is huge, comprising 34% of the American workforce now, and projected to reach 43% by the year 2020. But amidst all the growth and hype, both workers and employers ought to be aware of the challenges this model introduces to business.
For workers, the biggest drawback would be low and inconsistent income. While many enter the gig economy with hopes of earning a substantial paycheck, research and leaked internal documents show a different story. Uber drivers, for instance, across three major markets — Denver, Detroit, and Houston — earn an average of $13.25 per hour after expenses, and in Detroit’s case, $8.77 an hour. Meanwhile, people doing piecemeal jobs on Fiverr earn $103 per month. It’s hard to say how many hours it takes to get that $103, but suffice it to say, that’s not a big paycheck.
Benefits like health care and retirement plans are simply out of the question when it comes to the gig economy, of course. Benefits belong to the world of regular full-time work, not short-term contract work. The lack of safety and oversight for gig workers also raises health concerns.
Gig workers cannot look forward to any sort of upward mobility within the corporate structure. After some time, they may be able to lock in higher rates or more desirable assignments, but few gig workers will land a promotion into management or executive positions.
Finally, despite the initial impression that gig workers enjoy the freedom to decide when to work, their schedule is very much controlled by the apps and algorithms they use for scheduling. Bosses adding incentives like gifts and prizes to motivate their workers to perform at a higher level is nothing new, but it turns out that companies like Uber, Lyft, Handy and Instacart use behavior modification techniques developed by the video game industry to manipulate their workers into pushing on when they would rather call it a day. That pushes the boundaries of incentivization into exploitation territory.
“To combat these downward trends, workers in the gig economy should try to diversify their sources of employment,” recommends Net PEO. For instance, getting a part-time W-2 job will help steady out low or inconsistent wages earned by doing various gigs. Traditional employment also has a higher likelihood to lead to promotion within a company.
For employers using gig workers, team management becomes a serious challenge. Since relationships come and go, and workers are spread across wide geographical areas, managers may find themselves spending a lot more of their time just trying to maintain a level of cohesiveness.