Gig work as a symptom of economic insecurity

Over the last 40 years, America has gradually shifted risk from government and other large institutions like businesses back onto its citizens. (For much of the previous century, it was going in the other direction.) This shift was political as well as economic. 

It’s tempting to see the gig economy as furthering this shift, moving risk from companies to workers, and that’s clearly part of the story.

But the risk shift was well underway before Uber, Lyft, and Taskrabbit arrived on the scene. So it seems more accurate to think of these jobs at least largely as a consequence of risk shifting, and only secondarily as a cause.

Consider Uber. The majority of Uber drivers have another job, and more than half of UberX drivers drive less than 15 hours a week.  In their 2015 paper on Uber drivers, economists Jonathan Hall and Alan Kreuger conclude that “Uber’s driver-partners also often cited the desire to smooth fluctuations in their income as a reason for partnering with Uber.” 

That makes sense, since incomes have become significantly more volatile in recent decades. And as Jonathan Morduch and Rachel Schneider wrote on HBR:

Our first big finding was that the households’ incomes were highly unstable, even for those with full-time workers. We counted spikes and dips in earning, defined as months in which a household’s income was either 25% more or 25% less than the average. It turned out that households experienced an average of five months per year with either a spike or dip. In other words, incomes were far from average almost half of the time. Income volatility was more extreme for poorer families, but middle class families felt it too.

Uber drivers are responding to this phenomenon, using gig work to “top off” their income as necessary.

How you feel about this likely depends on your comparison. If you take the great risk shift as a given, this might be a mild improvement on the status quo since gig work can help supplement incomes in times of need. But if you compare it to a world where incomes are less volatile and/or risk is shifted back to government or large institutions, this arrangement looks lousy. 

The real culprit here is politics. Yes, Uber should treat drivers better, and companies in general can do more to make work less precarious. But the enthusiasm for gig work is made possible by a political system that has failed a large number of people. 

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