The gig economy is here, and it’s not a pretty picture

The discussion about the changing nature of work — specifically with regard to the shift away from full-time employment to a freelancer-dominated, gig economy — has been growing. A number of items crossed my radar screen in the past week, including a number of financing announcements, that demonstrate that employment has become increasingly precarious for most people.

A new report has been released by the UK Commission for Employment and Skills (UKES), and it makes for scary reading. The report collates a great deal of data about the state of work in the UK and other countries, and casts a futures approach toward trends analysis. The skinny is that things are bad in the UK, with a marketplace and workforce that is the least educated in the EU after Spain, and with low growth projected. But the scenarios they concoct for the future all seem to converge into a dystopic future, where several trends prevail:

  • The only group that has any hope of stable employment are the well-trained and well-educated, but even they have modest hopes for increased pay.
  • The middle-skilled tier of workers are being pushed out by a number of trends: use of freelancers, migration of work to other countries (notably Asia), and automation.
  • Those in the bottom-skilled tier of workers are increasingly likely to be working as freelancers: part-time, ‘zero hours’ contract positions, which lack the benefits and stability of full-time employment.

This results in an hourglass workforce:

screen-shot-2014-02-27-at-12-41-58

Sarah Kessler’s Fast Company article, Pixel And Dimed: On (Not) Getting By In The Gig Economy, tells the tale of her attempt to make a living working for various web-based hire-an-assistant services, such as Fiverr, Postmates and Task Rabbit. The story is agonizing. She winds up spending enormous amounts of time applying for work that never materializes, and lands only a small number of paying gigs, all of which are short-lived, and several of which are really fronts for companies trying to select among candidates for full-time jobs. The epiphany for Kessler is when she is doing a Mechanical Turk gig, labeling slides for a Microsoft researcher who is investigating vision:

On my way to completing 61 slideshows, I begin to resent Larry Zitnick, the Microsoft researcher who posted this maddening task. When I call him later, he’s actually quite nice. Zitnick explains that my slideshow labels are helping to train a computer to recognize images. “In the early 2000s, our datasets generally had hundreds or maybe a few thousand images in them,” he says. “And now we had have datasets with millions of images in them. It’s because of Mechanical Turk.”

Labeling slideshows suddenly feels very important. But it still doesn’t pay. I make $1.94 an hour. Research suggests most people, like me, aren’t making substantial income off their Mechanical Turk work. Only 8% of workers surveyed by researchers at the University of California, Irvine, said that Mechanical Turk income always helped them meet their basic needs.

My best day at TaskRabbit suddenly seems like a winner. I made $10 an hour at the dance job (not counting the performance that will take place the next day), $15 an hour at the Harvard Club, and about $20 an hour wrapping presents: $95 in total. My eight-and-a-half hour day was a best-case scenario. There was no downtime. The only break I had was a 10-minute lunch that I grabbed next to TaskRabbit user Mark’s apartment before gift wrapping his presents. But when you factor in the time I spend commuting between tasks, I only made $11 an hour.

All the hustling only gets Kessler slightly above minimum wag, even if she could somehow push all the gigs together into a coherent workweek, which never happens to her.

Even those with more skills — the freelancers that can manage to find higher-paying work — are in a tough sport: they aren’t saving enough for retirement.

Screenshot 2014-03-27 08.20.40

Seven out of ten aren’t saving regularly, at all. Around 30% of Gen X and Y freelancers aren’t saving, at all. It’s not clear what they would be saving if they did have full-time jobs, but they’d potentially have access to employer-administered savings programs of various kinds, and the level of savings would likely go up significantly.

Meanwhile, consider these data points in the world of software:

  • Gigwalk — a service that matches freelancers with small gigs through a mobile application — raised a $10M Series B round by Nokia Growth Partners (NGP), included new investor Randstad Holding nv and existing investors August Capital, Harrison Metal and SoftTech.
  • SAP announced plans to acquire Fieldglass, ‘contingent’ workforce management solution. Terms are unknown, but SAP is working hard to establish itself as a leader in the market niche.
  • I was contacted by OnForce regarding its new release of a cloud solution for companies to manage their own freelancers, not just to be able to find and hire them through OnForce’s market. This caught my eye: ‘More than two million tasks assignments have been completed through OnForce’s platform, and 5,000 enterprises including Apple, Comcast/Xfinity, AT&T and Xerox have used OnForce to engage, manage and pay independent contractors found through OnForce’s IT workforce network.’

This posts comes across as ‘one thing after another’, and not like a coherently argued analysis of what is the likely outcome of these changes in our economy. This is part of the changing workforce that I have characterized as an undertow pulling at our feet, while the rise of mobile devices, cloud computing, and connection technologies are a tsunami crashing down on our heads.

It is not at all clear that society is prepared for the fallout from this radical shift to a contingent — or perhaps better, a precarious — work economy, where only the most skilled and educated are likely to have full-time, stable employment, and the majority are left to scrabble for low wage contingent task work.

This trend is now a central theme of my research agenda, and I will be exploring the ramifications, going forward.

 

Relevant Analyst
Stowe Boyd

Stowe Boyd

Lead analyst, future of work Gigaom Research and stoweboyd.com

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