What's the Gig Economy, and Is It Good for NC?

June 24, 2016

For better or for worse, America’s economy now depends on two things: the internet and self-employed people. Digital technologies (raise your hand if you’re reading this on a smartphone!) make it easy to work in nontraditional places, like your living room couch. The resulting rise of freelancers and contract workers is staggering, frankly. It’s called the Gig Economy, and it’s not going anywhere anytime soon.

Employment's Done Gone Digital

 

2010’s Intuit 2020 Report claimed that between 25 and 30 percent of U.S. workers were contractors. It expected that number to spike to 40 percent by 2020. That means that in a few years, more than 48 million people 20 years and over could be working merrily away without ever setting foot in an office building.

Who are these folks? Many of them are traditional freelancers like writers or accountants, but there are a whole bunch of new kids on the block: “on-demand” workers who offer basic services like transportation and housing, often through phone apps. If you’ve ever stayed in an Airbnb or taken an Uber, you’ve used the services of a self-employed person who needs little more than a phone to turn his or her primary asset into a money-making machine.

Article after article tout the benefits of this trend, citing everything from feminism to manifest destiny. The Gig Economy is great for parents trying to juggle childcare. It’s helping battle unemployment, too, because workers who can’t find traditional jobs can turn to one-off projects or temporary employment for help. (You can read more about that here [link to blog 4: Gig Economy and Unemployment]).

And for consumers, the Gig Economy offers exceptional convenience. Anything you need, from designers to doctors, is available online in minutes. (Yes, actual doctors.) 

But we have a question: is gig work actually good for people?

The Gig Is Up

Some say there’s a seedy side to the Gig Economy: a failure to protect workers the way traditional employers do. It can smell a lot like exploitation. Uber, for instance, just settled a class-action lawsuit in which a group of drivers argued that by employing them as contractors, the company unfairly avoided paying for their health insurance or any other benefits.

Uber, of course, disagreed. They coughed up $1 million in an attempt to prove that contract drivers’ healthcare isn’t their problem, and it worked. Here’s why they were happy to pay the million:

gigeconomyequation1.jpg    

gigeconomyequation2.jpg

That’s almost as much as the NBA made in profit last season. From that perspective, Uber’s decision makes perfect sense.

So who’s right?

Protect Workers and Employers: Lower Health Insurance Costs

They both are. The fact is that healthcare is getting more expensive for both individuals and employers. Employer contributions for family coverage have increased 61% in the past ten years, and in that same amount of time, worker contributions have increased 83%. Both figures are pretty astronomical. 

Look: we’ve tasted on-demand rides home after a night of celebration. We’ve enjoyed last-minute beach vacations, and we’re never going back. The Gig Economy isn’t going anywhere because we don’t want it to.

But new ages require new solutions, and right now, healthcare’s first up. When regulation-happy legislatures jack up insurance prices unnecessarily, the fiscal health of every gig worker is at stake. In today’s world, that means our whole country’s economy is on the line.

Note: The average employer's individual health insurance contribution in 2015, according to the Kaiser Family Foundation.


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