The California bill aimed at protecting gig economy workers might be counterproductive because it would reclassify them as employees or actually limit them their ability to work. As state or national laws evolve regarding gig economy work, it’s important to understand the new nature of work in the gig economy.
It starts with commerce, which follows the law of supply and demand. When a hurricane hits, goods like plywood and batteries shoot up in price, and for Valentine’s Day, the price of roses and chocolates are sure to rise.
For many goods, this dynamic works quickly. It’s more complicated to achieve rapid supply-demand equilibrium with resources like real estate or human talents. The gig economy is changing this. Supporting the gig economy are the many digital platforms that match demand to goods or services. This makes it faster and easier to find resources without having to build, hire or acquire talent in a more permanent way.
Before the gig economy, choices were more limited. If you needed a taxi, you had to wait at a cab stand or call a local cab company with a finite pool of regular drivers. If you were a startup that needed office space, you had to lease or build. For consumers, it meant less choice and for businesses, it meant a time lag in being able to meet an opportunity.
Enter the gig economy, which involves millions of people. According to a McKinsey report, 49 million free agents in the U.S. and Europe actively choose independent work and derive their primary income from it.
As the McKinsey report explains, consumers and organizations benefit with this trend because of greater availability of services to fulfill demands. The report notes that digital platforms for the gig economy can “amplify” the benefits of using free agents through their large scale, seamless coordination and rich information signals.
As consumers, we come across gig economy platforms for many needs. On a recent family trip to Seattle and Vancouver, we rented an AirBnB right on a lake. The house was also listed for sale at $1.26 million, but had been on the market for over 90-days so the owners prepared it as a short-term rental.
The AirBnB platform matched the home-owners needs with ours. It allowed the homeowner to weather the storm for the time between listing for sale and closing. For us, it provided a great place to stay that differed from the usual hotel experience. There are other similar platforms, including VRBO and HomeAway.
Today, it’s the rare business traveler that hasn’t used Uber or Lyft online services for local transportation. When we get food delivered from a restaurant, we may be tapping services such as UberEats, GrubHub, JustEat in Denmark, or SkipTheDishes in Canada. These platforms make delivery possible for more restaurants without the overhead of hiring drivers, training them, added insurance or other costs such as car signage.
Many consumer needs are getting addressed by such platforms. Need a dog walker? There is a service called Rover. Need a handyman? There are platforms like Thumbtack.
Business needs also are targeted by gig economy platforms. Some services, for example, provide businesses with coworking space, while services like Field Day can help brands find people for local marketing or brand ambassador gigs, while People Per Hour can help a business tap expertise in software or search engine optimization. In the logistics realm, there are Uber-like platforms for matching truck capacity with freight requirements, or for finding warehouse space “on demand.”
The issue of pay fairness under some of these platforms has come into question, but that should work itself out over time since the more successful platforms will need to pay enough to attract talent. In the meantime, there is little doubt these gig economy platforms match up demand with independent resources in a nimble way.
For free agents, the attraction is flexibility. A study of Uber drivers published by Yale Insights, for example, found that they would require almost twice as much pay to accept the inflexibility of a typical taxi work schedule.
While these online platforms aren’t perfect or right for every business need, they are an alternative. For a business, they can quickly find the resources needed for a short-term project, or to expand rapidly to meet an opportunity, all without the time lags and expense that comes from traditional hiring or acquisition processes. It’s way of erasing the white space that often exists between a business need and the budget and time needed to fill it.
The human talent available within the gig economy makes it easier to test the waters in new markets or expand as an entrepreneur. The challenge for businesses includes knowing which platforms to trust, and keeping track of how well initiatives that tapped gig economy resources worked out. Here is where an online knowledge repository can help with issues such as knowing which tasks had good outcomes when outsourced to outside talent, and how project teams that mixed internal and gig economy talent were organized, led and trained.
The gig economy promises speed by not having to recruit specialized talent, but an enterprise still may want some blueprints for how to best mesh internal resources with external ones. Having a “single source of truth” about content, teams, policies and workflows will maximize the agility potential when tapping gig economy resources. Finally, labor laws around gig economy workers are subject to change. As state or national laws evolve regarding the gig economy – like the one California is considering – a knowledgebase can help avoid compliance issues.
When you make gig economy “lessons learned” part of your knowledge base, you can replicate successes, and avoid pitfalls. These are valuable resources. All we are doing is tapping into talents in a non-traditional, more flexible way.