A freelance graphic designer who moonlights as an Uber driver. A journalist who publishes several different articles, in wildly different topics, for several different magazines a month. A part-time high school teacher who tutors math and science for money on the weekends. These are the workers of the gig economy—and, in the rising gig economy, the workers of the future.
A gig economy is a system in which short-term positions are plentiful and organizations hire independent contractors for part-time work as opposed to full-time employees. A factory worker who stays at the same company for thirty years is emblematic of the traditional economy, while a laborer who uses Craigslist to find different jobs each week is a gig economy worker. The success of Uber and AirBnb, which are replacing taxis and hotel services, demonstrates that the gig economy is quickly supplanting traditional services. A study by Intuit predicted that by 2020, 40 percent of American workers would be independent contractors.
The gig economy was facilitated by a number of influences—the loss of jobs in the Great Recession of 2008 and the subsequent pivoting of the workforce towards part-time jobs, and more positively, by the Internet. Because of the Internet, both freelancers and businesses could offer and request services globally, driving growth as the “best of the best” linked up with each other. Both parties received benefits—workers would receive higher short-term pay and job flexibility, while businesses had a higher talent pool to draw from, as well as no longer needing to provide the costly benefits (healthcare, retirement) that come with long-term employees.
Those who desire the job security of last century may wring their hands at the hustling mentality needed to thrive in the gig economy. Hillary Clinton acknowledged as much when, earlier this year, she said “this on-demand, or so-called gig, economy is creating exciting economies and unleashing innovation. But it is also raising hard questions about workplace protections and what a good job will look like in the future.”
To succeed in the gig economy requires an understanding of its trends and a willingness to adapt to its unique, unprecedented challenges. Here are 3 things CTOs should know about Gig Economy in 2017.
- Power is becoming concentrated in one player per vertical.
Time creates monopolies. Ten years ago, the Internet was still a veritable Wild West, with Friendster, Myspace, Facebook, and other social media services competing amongst one another to be top dog. Today, only a few are left, each the king of its own domain—Facebook as for social media, Instagram for pictures, Youtube for Videos, Google for search. Similarly, the gig economy is concentrating into one or two players per service—Uber and Lyft for ride-sharing, AirBnB for hotel services, Tinder for dating. Look for this trend to continue, and any would-be gig economy business would be well served in focusing on untapped services.
- The gig economy will further promote globalization of the workforce.
The gig economy isn’t unique to the United States. The European Union saw a 45 percent increase in independent contractors from 2012 to 2013 alone, and currently, India fills approximately 40 percent of the world’s freelance jobs. A coder in America now must compete with a coder in India—bad news to the nationalists of 2016 who voted Brexit and Trump in an attempt to conserve their country’s jobs, but good news to globalists looking for the “best of the best” in their workers.
- The fate of Obamacare will affect the gig economy
Obamacare, in many ways, enabled the gig economy to flourish in the last seven years. Not only could millennial stay on their parents’ plan until 26—allowing them to pursue different kinds of part-time work—but the 20 million or so people who were able to receive government healthcare could also pursue part-time work without worrying about finding a job that provided healthcare.
Whatever Trump and the Republican administration decide to do with Obamacare will have great bearing on the gig economy. Brian Kropp, human resources practice leader at business advisory firm CEB, says that “if [Obacamare] is replaced, the gig economy will take a big hit.” One can hope that the purportedly pro-business administration acknowledges this and keeps some of the provisions, such as allowing children to stay on their parents’ plans until 26, intact.
Image Credit: Sandy Petrykowski
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