‘Gig economy’ is convenient, but is it fair?

The new gig economy — it’s a big deal, but is it real?

The gig economy, the sharing economy, the collaborative economy, the peer economy. You’ve probably heard or read the names, whether you know what they actually mean or not. What you do know is that it’s further proof that, armed with dazzling technology, we’re all living in the future.

Technology creates new markets

Actually, it’s not that complicated. They’re all terms used for a new socioeconomic ecosystem of sharing of human and physical resources made possible by the Internet, our digital devices and apps. Basically, we can get the things we want (a taxi ride, a grocery delivery or an inexpensive one-night stay in a spare bedroom) or offer services ourselves (as a taxi driver, a grocery deliverer or a spare bedroom renter) with little more than a smartphone as the go-between. Companies such as Uber, Lyft, Airbnb and TaskRabbit have taken off, with Uber completing a funding round this past summer that saw the 5-year-old company reach nearly $51 billion in valuation, surpassing Facebook’s record.

It’s also not that revolutionary. The gig economy allows for part-time, multiple and piecemeal jobs, which people have been doing for centuries. Technology just creates mindboggling new ways to monetize labor and goods.

Consumer freedom or wage slavery?

There’s quite a big fuss brewing over this new gig economy. On one side, you’ve got those who say that the gig economy offers providers independence, flexibility and more opportunity to earn a living. On the other, you have detractors who say these services are a bad deal for providers. Because they’re not full-time employees, gig economy workers aren’t entitled to employee-sponsored health insurance and retirement plans, unemployment insurance and disability benefits.

As Stanley Aronowitz, director of the Center for the Study of Culture, Technology and Work at the Graduate Center of the City University of New York, told The New York Times last year, “It might as well be called wage slavery, in which all the cards are held, mediated by technology, by the employer, whether it is the intermediary company or the customer.” In the same article, labor economist Guy Standing said a new labor class is emerging, one dependent upon precarious work and wages. Instead of the proletariat, it’s the “precariat.”

Lawsuits could affect gig economy

The fuss has gotten nasty — lawsuit nasty, even. Last month a California judge allowed some Uber drivers — considered contractors by the ride-hailing service — to proceed with a class-action lawsuit against the employer for traditional employee rights. The case will likely go before a jury next year and could drastically affect the gig economy. Last year, California FedEx drivers won a case that ruled their independent contractor status a misclassification that allowed FedEx to take advantage of them.

No one, by the way, doubts that the gig economy is great for consumers. With greater choice, and convenience at oftentimes lower prices, what’s not to like? The popularity, coupled with the gig economy service’s ability to sidestep payroll, benefits and other costly overhead, have made venture capital firms very willing to back the gig economy. TaskRabbit has raised tens of millions from investors, Lyft hundreds of millions and Uber billions.

The gig economy is even presidential-campaign material. In July, Hillary Clinton expressed the downside of an informal workforce in July in her economic vision speech. You know a thing has arrived when it’s getting debated by White House aspirants.

The gig economy is a big idea, there’s no question. But is it a reality — are we living in the future or, in this case, is the future still in the future?

It’s big, but is it real?

A few months ago, The Wall Street Journal published an article called “Proof of a ‘Gig Economy’ Revolution Is Hard to Find.” The writers point to official government data — which relies on surveying workers and employers as well as the number of people paying into unemployment — that shows those holding multiple jobs or classifying themselves as self-employed are down versus 10 and even 20 years ago. Others such as Harvard economist Larry Katz and Princeton economist Alan Krueger say current measures of self-employment and multiple job-holding are missing key evidence, such as the increase in 1099 and Schedule C filings throughout the 2000s. The first is used by independent contractors and the second for reporting profits and losses in home businesses.

I, for one, would like to know: Does the gig economy offer worthwhile job opportunities today to my generation, the millennials? Does it provide the answer to our quandaries about work-life balance? Is it how we’ll all work in the future? More reliable data would help. But more than anything, we’ll have to wait and see.

Jennifer Pagliara is a financial adviser with CapWealth Advisors LLC and a proud member of the millennial generation.