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Does Employee Experience Matter in the Growing Gig Economy?

Jacob Morgan | Oct 2, 2017 95 views No Comments

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Does focusing on employee experience even make sense in a world that is supposedly going to be dominated by freelancers and short-term employees? There’s been a lot of debate and confusion around this space, so it only makes sense to explore what’s going on here. Alternative work arrangements include everyone from Uber drivers to construction workers who work on independent contracts to those of us who work with staffing agencies for temporary employment. When most people refer to the gig or freelance economy, they are specifically referring to people who work through online intermediary sites, such as Uber, Upwork, and Airbnb. To make things easier, we refer to this as the online gig economy.

Growing Fast but not Dominating

The first thing we need to understand is that although the online gig economy is growing, it is by no mean going to dominate the workforce–not even close. The vast majority of us will continue to be full-time employees the way we are today. It’s true our workforce will be more dynamic and fluid, but employment as we know it isn’t going anywhere. A recent report found that the percentage of adults earning money from online platforms in the last year is around 3%. The number of people who make a full-time living from freelancing is undoubtedly much smaller.

Although researchers have found the online gig economy to be quite tiny, they also found that it is growing remarkably quickly. In fact, there was a 10x increase in the percentage of adults participating in the online gig economy each month in 2016 and a 47x increase in the cumulative percentage of adults who have ever participated in the online gig economy. Uber alone could represent half to two-thirds of all online gig economy work. If you were to remove Uber from the equation, the online gig economy would be almost nonexistent.



However, if we look at the broader category of alternative work arrangements, we see a very different story of much larger growth and impact. Alternative work arrangements have grown from 10.1% of all employment in February 2005 to an estimated 15.8% at the end of 2015, or around 24 million people.

The Effect on Employee Tenure

Another popular theory is that employee tenure is in rapid decline and that in the near future we will all be portfolio employees where instead of working for a single employer, we will work for many employers at the same time.

Data from the U.S. Census Bureau found that the midpoint of wage and salary workers’ length of employment at their current jobs was slightly higher in 2014, at 5.5 years, compared with 5.0 years in 1983. I find this quite interesting because from all the executives whom I speak with there is a consensus that employee tenure is not what it used to be–in fact, most think it is shrinking. It’s hard to look at national averages and apply those averages to specific companies. If you’re in a hot labor market, such as San Francisco or New York, the tenure might be different than if you’re in a part of the country like Wyoming or Minnesota. The industry also has a dramatic effect: those in the technology industry won’t have the same tenure as those in the construction industry.

Are all of these reports perfect and all the numbers 100% accurate? Absolutely not. It’s hard for anyone to provide accurate numbers around how large the alternative work category is, especially the online gig economy. That’s because the U.S. government stopped collecting any data on the contingent workforce many years ago. The good news is that it will once again start tracking this data as part of the 2017 population survey so we can finally get some accurate numbers around how big this space really is.

Does this mean we don’t need to pay attention to the gig economy or alternative work arrangements? Of course not. Instead of just looking at total numbers today, it’s also helpful for us to look at where things might be going. The numbers can sometimes appear to be conflicting, but based on the research, it’s safe to say that today the gig economy as it pertains to online platforms is a very tiny fraction of the workforce. Alternative work arrangements in general (including the gig economy) are growing, and adoption rates are staggeringly high. However, today many people are using these platforms as ways to augment existing work arrangements and income. This forces us to ask a broader economical question, “Why is it that so many people feel the need to augment their existing incomes, and if we paid them more, would they continue to do so?”

Wayne Gretzky famously said, “I skate to where the puck is going to be, not where it has been.” While we are still in the relatively early stages of alternative work and the gig economy, organizations should absolutely stay aware of the changes that are happening in this space.

This should be enough information to get you to think again when you hear someone talking about the end of employment as we know it. This should also help you understand why employee experience is so crucial, because full-time employment isn’t going away in the near future. So the answer to “Does focusing on employee experience even make sense in a world that is supposedly going to be dominated by freelancers and short-term employees?” is a resounding yes. You can read more about the employee experience advantage in my new book here.

My new book, The Employee Experience Advantage (Wiley, March 2017) analyzes over 250 global organizations to understand how to create a place where people genuinely want to show up to work. Subscribe to the newsletter here or become a member of the new Facebook Community The Future If… and join the discussion.

The post Does Employee Experience Matter in the Growing Gig Economy? appeared first on Jacob Morgan.

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