The Sharing & Gig Economy’s Effect on Employment, Work Life and Careers

The sharing economy is disrupting the nature of work, employment and entrepreneurship. Most sharing/gig economy workers are working as independent, contract workers, not employees. This means that they do not qualify for company-provided benefits such as health coverage or retirement plans. Many of them conduct work for two or more sharing economy firms. That is, a worker might drive for Uber at night, do installations for TaskRabbit on weekends and shop for Instacart on weekdays. They may vary the schedule according to the demand level, which can be constantly monitored via smartphone.

In one-on-one interviews, Plunkett Research has found that many sharing/gig workers consider themselves to be “entrepreneurs.” While they may not have created a new company that employs others or makes products, they nonetheless work for themselves, independently, using their own tools or vehicles and setting their own schedules. In that regard, they are literally running a business, in the same way that a one-man plumbing shop is a business.

Working independently in the sharing/gig economy generally requires no specialized education, and no licensing beyond a drivers’ license. This type of work lends itself very well to people, such as retirees or students, who only want to work part-time, or who want a part-time sideline in addition to a regular job. One study (MBO Partners) found that a significant portion of part-time independent workers also had a full-time traditional job.

MBO Partners publishes an annual report “The State of Independence in America,” that studies the independent worker market. MBO estimated the 2022 level of independent workers in the U.S. at 64.6 million, up dramatically in recent years. (Their total includes three categories of independent worker: full-time, part-time and occasional. Many of these people have multiple jobs.)

There is a significant debate underway in many nations as to whether or not people working as Uber drivers, Instacart shoppers and similar agents are actually employees, rather than contract workers. Legislative reform may well be attempted on large scale in this regard. In some cases, class action lawsuits have been filed by the contract workers. If governments rule that such workers are employees, it would have a massive effect on the business models of sharing economy firms. In the U.S., for example, it would mean that firms were subject to paying payroll taxes such as Social Security, and were subject to very high levels of labor, safety, health and anti-discrimination laws. This debate will likely continue for many years to come and may well lead to legal reform in some nations. Another outcome may be the formation of contractor workers’ unions or union-like organizations that might demand better pay or working conditions. The “Independent Drivers Guild” now exists in New York City, representing tens of thousands of local Uber drivers, but not quite acting as a true labor union.

Over time, there could conceivably be massive changes within gig-based companies of all types. Multiple laws and regulations that protect employees and regulate the ways in which firms must treat them could come into effect, such as minimum wage, unemployment coverage, employer’s liability, OSHA, EEOC and a long list of additional rules. On the other hand, there is already intense competition among gig economy employers, such as Uber and Lyft, to find and hire new workers. Sign-on bonuses, incentives, perks and better revenue share for workers are now common. Better treatment and pay may have the effect of neutralizing calls to turn contract workers into true employees.

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