Temporary workers have to face the reality of a changing world

By Yashvardhan Bardoloi

It’s easy to be part of the gig economy, but rapid technological development means that many jobs may disappear in the near future

By Yashvardhan Bardoloi |

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Ride-hailing companies such as Uber and Lyft have seriously threatened taxi drivers.

The gig economy has attained rock-star status in the job market. Ever larger numbers of people are pursuing work with companies like Uber, Lyft, and Airbnb. It is predicted that in America, currently at the forefront of the gig economy, some 40 per cent of workers will be involved in freelance jobs instead of, or in addition to, formal, contractual employment.

Unlike gig economy work, a traditional job comes with a lot of benefits, including health insurance, pension plans, and paid holidays.

The term “gig economy” was coined during the 2009 financial crisis to describe people doing temporary jobs. It’s easy to be part of the gig economy – for example, anyone with a spare room can earn money through Airbnb, or anyone with a car can become a taxi driver for Uber.

A transition away from formal employment will have profound implications. People will be free to work on their own terms, while consumers reap the rewards of a more dynamic economy. Concerns, however, are plentiful, and come from all quarters.

Most of the prominent companies in this new economy depend on the “network effect” – the more people who use the service, the more useful it becomes, thus leading to more users and a virtuous cycle. This results in a tendency towards monopoly, which can hurt consumers.

But it remains to be seen whether companies like Airbnb and Uber will ever become monopolies.

More importantly, trade groups have led vigorous efforts to prevent gig economy companies from eating into their business. This is particularly the case with ride-hailing companies such as Uber and Lyft, which have seriously threatened taxi drivers.

Calls for regulation have come not only from trade lobby groups like taxi drivers; those employed in the gig economy have themselves expressed their concerns and frustrations. Recently, Uber agreed to a significant settlement with drivers for unlawfully deducting taxes from their income, instead of Uber’s. The New York Times has also alleged that Uber’s algorithms subtly manipulate drivers in a way that depress their earnings while boosting Uber’s profits.

Critically, even those who have found work as Uber or Lyft drivers may find their jobs disappear once self-driving cars become commonplace – something that may only be a few years away. In the near future, the income of those who own “capital”, such as robots and the technology guiding them, will continue to increase at the expense of “labourers” – workers, both in formal and informal employment.

The key is rapidly developing technology. Ultimately, a patchwork of regulatory measures to protect varied interest groups would be a misguided approach. There has been a tendency for governments around the world to bow to pressure and slap tough regulations on corporations like Uber. Typically, these regulations are there to protect consumers, but in reality, they benefit entrenched interests, while preventing the public from accessing desired services.

It is undeniable that the changing economy is harming some workers and industries, but these changes will only accelerate, and increasingly complex regulations are unlikely to be effective. As people find it more difficult to get highly-paid jobs, governments will have to ensure that those who do not have the capital are still able to share in the gains created by technological progress.

The gig economy, and the breakneck pace of technological development, are certainly not the problems. The real problem is ensuring a decent standard of living for people hard hit by the changes, and this is something governments must tackle more directly.

Edited by M J Premaratne