Myth Busting the Gig Economy


As someone who helps people buck "the man" and go off and start their own thing, I have to be thrilled about the proliferation of money making avenues that don't fit in the traditional 9-to-5 mold. Gig economy website platforms such as AirBnB, Lyft, Etsy, Upwork, Rover, and many many others offer to let you sell or rent things or time you don't otherwise use for some extra cash, or even a whole income. While having easy access to a marketplace for these things is a great resource, this gig economy trend does have pitfalls and some very real drawbacks. 


The first myth of the gig economy is how easy it is. These sites advertise that customers are just WAITING for you to post your product or service and then you'll be swimming in business. The reality is that your profile is on a site full of people just like you. You need to rise to the top in some way to even be seen by customers. Each platform has a different system for standing apart from the crowd, and usually it takes some time to build up the credibility of your profile so that people actually see it and then choose you. Generally there is a lot written about each platform and how to succeed at it, so it's not impossibly difficult. But, there is a bit more involved than just posting a profile and then sitting back and relaxing while the money flows in. 

Your "spare" time

One of the other common ideas surrounding the gig economy is how it can be done in your spare time. AirBnB wants you to convert your spare room into a rental, and Lyft invites you to trade sitting on your sofa for an evening driving for them. Are your space and time actually "unused" though? You were probably using that spare room for something, plus house guests mean cleaning sheets afterwards and possibly cleaning common spaces beforehand, and all of that takes time. Sitting on your sofa might not be productive, but it's important to have time to unwind.

Trading your "spare" time for working time is far from a no-brainer. There were once riots over our access to "eight hours' labour, eight hours' recreation, eight hours' rest." (Read more about the 8 Hour Day Movement.) Giving up your "spare" time is converting your "recreation" time into "labour" time.  Personally, I often cherish my free-time as a luxury, but it's equally justifiable to look at it as a right, so consider it carefully before you agree to give it up.  

A Problem with the Bigger Picture

If all of that didn't already give you pause, there's a broader issue with the business model of these companies. The problem is that they do nothing to limit the number of providers, which is detrimental to provider revenue in a way that previously would have made a company wildly unattractive to work for. The problem of unlimited providers is shared with multi-level marketing (MLM) companies where anyone can sell their products. In fact, you get a discount if you're a member of the sales team, so why simply be a customer when you could be a rep for the company?! 

From a business systems standpoint unlimited sales people or service providers is a huge problem. You can't have more providers nor sales people than customers. In fact, in order to expect a staff person to receive a certain salary, you have to keep the number of staff to a small fraction of your customer base. The alternative pits the staff against each other in a subtle but real way.

If Jane recruits her friend Sally to also be a sales rep for a MLM company, that means Jane and Sally's mutual friends now have to choose which person they'd rather buy the MLM products from. MLM explains this away by giving the expectation that the market will expand. It's true that the people who are only friends with Sally will now learn about this company, but it's unlikely enough of them will become customers to actually make this sustainable in most cases.

The same is true for things like ride sharing; too many drivers means drivers are vying for fares. This is great for customers who have drivers falling over themselves to be the first and the best for customers, but not great for the drivers who have to go above and beyond in order to win a measly amount of fares. A business that has its staff fighting among themselves is a company that has no regard for it's staff. Gig economy companies get around this by arguing their providers are independent contractors and hence don't need to be regarded in this way.  

Doing nothing to guarantee the income of gig workers results in a subsequent problem: it undermines the livelihood of traditional workers. For example, prior to the existence of ride-sharing, taxi companies carefully coordinated drivers to not only anticipate demand, but help ensure the drives earned enough fares to make a full-time income. With the competition coming from ride-sharing, the taxi companies have less fares and can sustain fewer drivers. There is now less ability to make a full-time income from driving people around in either context because gig economy companies are not helping to ensure there are an appropriate number of providers. 

Realistic Expectations

Despite this criticism, the gig economy is here and it isn't going anywhere. It could be a great resource for you to make a little extra cash or give you some security when transitioning to self-employment, but it's also not guaranteed. I think the key thing to remember here is to embark into the gig economy with open eyes so that you're not facing unmet expectations and frustration later. It takes effort, time and ingenuity to make it in the gig economy, and if that's where you want to spend your effort, time and ingenuity then great, but you could just as well invest that in your own business that isn't reliant on these platforms.