What’s next for the gig economy?

What’s next for the gig economy?
Source: Lucy Nicholson, Reuters
“Today, a company is looking at the world as a market for talent, not a city. They are willing to use platforms like Upwork, among others, to find the right talent, for the right period of time, at the right price. That’s not an incremental shift; that’s an order of magnitude.”

Ride-share driving. Delivering food and groceries. Freelance graphic design. These jobs are integral parts of the gig economy throughout the world, but they might just be the beginning.

The gig economy makes up more than a third of the United States workforce, with various reports estimating that gig economy workers make up around 36% of the country’s total workforce. Some estimates even state that the number could grow to more than half of the total workforce by 2023.

The gig economy experienced even more growth during the pandemic, which resulted in not only a major increase in gig economy workers, but also increased diversity among gig workers. As of October of last year, two million Americans had joined the freelance work force, helping to contribute US$1.2 trillion to the US economy.

“The pandemic has certainly given the gig economy an even bigger boost,” Beerud Sheth, the founder and chief executive officer of Gupshup, told TMS. Sheth was one of the founders of Elance, now known as Upwork, and is one of the pioneers of the online gig economy.

According to Sheth, the pandemic didn’t just increase the number of people working in the gig economy, it has also altered how companies hire people to get jobs done.

“Today, a company is looking at the world as a market for talent, not a city. They are willing to use platforms like Upwork, among others, to find the right talent, for the right period of time, at the right price. That’s not an incremental shift; that’s an order of magnitude.”

This shift is happening on both fronts.

For businesses, the incentive is to hire workers only for the job needed, allowing for potentially lower costs in the long run.

Companies are already starting to take advantage of the freelance workforce, with 90% of bigger companies reporting that freelance workers are a meaningful part of their work ecosystem. Though few companies have a mostly freelance workforce, many of them are adopting blended workforces that combine the stability of a permanent team with the cost-effectiveness of a freelance one.

But for individual workers, the flexibility is becoming increasingly enticing. Individuals who are able to conduct their business online, such as web developers or graphic designers, are able to live anywhere in the world and work just as seamlessly as if they were in the same city as the companies they work for.

As remote working has become more popular, so has living outside of big cities. Millions of Americans have relocated to live in suburban areas with lower costs of living, with 2020 seeing a particular increase in such moves.

For workers, the shift to freelance work has also meant that many have been left without the benefits you would typically get from working for a company, such as health-insurance or paid sick leave. Gig workers globally have been dealing with this challenge, with many looking for companies like Uber and Deliveroo to treat them as employees and grant them the benefits they otherwise wouldn’t have.

The global response to this request of workers has varied. Almost everywhere gig workers are considered self-employed freelancers who simply do work for gig hubs, a position that was strengthened by California’s controversial proposition 22, which passed in November.

Other rulings in the United Kingdom and in France, however, have laid the groundwork for future decisions that could declare that gig workers working for companies like Uber or Deliveroo are employees who require employee rights.

To Sheth, though, the problem looks a little bit different in the white-collar space that platforms like Upwork cater to.

“With businesses warming up to hire more gig workers, what ensues is an engagement framework that protects assets and intellectual property and information systems.”

“Gig platforms have also been adding features for ‘enterprise engagements’ that provide these safeguards,” Sheth adds.

The conventional perspective is that work done by an employee is the intellectual property of the employer, but in instances where freelancers are doing the work, some lawyers argue that the intellectual property rights should belong to the freelancer and that contracts should reflect that.

“But one thing we must remember is that the gig economy creates a virtuous cycle,” Sheth states. “A gig worker, if he or she wants to be in business, would always aim to deliver and honor any agreement made with the client.”

As for what the future holds for the gig economy, Sheth said that he thinks things like legal, accounting, or business consulting could be next. According to him, what’s holding the industry back is in part the technical problems associated with them as well as the “mental cloud” that surrounds people’s willingness to share private information with strangers.

These, he says, “tend to be … businesses where people are concerned about security and privacy of data and who they are sharing it with.”

“The fact that you have portfolios, profiles, feedback and reputation makes it a lot easier to be able to do these services. At this point you have to be crazy not to use this because anything else would be far more complex and far more complicated.”

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