The “Gig Economy” Isn’t Long for This World
There’s a fantastic story about the “gig economy” in Fast Company, meaning companies like Taskrabbit, Exec, and so on. These are companies that promise to let you work the hours you want on the jobs you want and provide a more flexible way to work. So how is it trying to cobble together a living income walking dogs and delivering sandwiches via your smartphone? Well, it kind of sucks.
This makes sense. Wages are a function of supply and demand, and demand doesn’t just mean the demand of companies for workers. It also refers to how willing workers are to perform the work – workers demand a wage premium for work that is difficult or demanding, which is a large part of why plumbers and garbagemen get paid better than most blue-collar laborers. Imagine I was to offer you two jobs doing roughly equivalent unskilled labor. One is on a regular schedule and relatively simple but the other requires you to scramble constantly, take orders via the phone, prone to cancellation on very short notice and with no visibility into schedules beyond the next day. You’d demand a much higher wage for the second job. Yet the Taskrabbits of the world are offering less money than minimum wage.
I think that these companies are mostly a fleeting phenomenon of the financial crisis. The economics of these things mostly work out when you can pay people insultingly small amounts. It works great when the gigs are digitized like Odesk or Elance, and you can take advantage of wage differentials to have everything done in Bangladesh or the Philippines. But that’s extremely hard to do with meatspace work, where you have to rely on First World labor and pay them more money to make up for the hassle and unpredictability of the work. It seemed, in the slack labor markets of the last five years, that you could get the economics to work out because of the hordes of unemployed.
But the Fast Company article suggests that when the slack finally tightens a bit, the cost structures of these ventures will turn prohibitive pretty quickly.