In a ‘’Gig” Economy, Workers Taking on More Risk


In order to receive work in the “Gig” economy (an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements) workers must not only contribute time and labor, but also inherit some risk by using their capital.

In the traditional economy businesses provide capital and employees provide labor. This traditional economy definition is being challenged by technology, specifically the multitude of digital matching platforms.

In this gig type of economy, companies are considered "asset light,” which refers to businesses making money through providing access to goods and services by making connections between smaller providers and consumers.

A few examples of gig work that use platform websites are Uber, TaskRabbit, Lyft, enabling work to be broken down into components which allows tasks to be allocated as needed.

Gig workers are increasingly taking risks related not only to their labor but also to their own capital. This occurs when continued ownership of the assets used in work are dependent on a set of circumstances outside the control of the worker. For example, Uber drivers are encouraged to borrow money to buy their cars. If a driver is then "decommissioned" by Uber or if Uber changes the amount it pays to drivers or if the market gets flooded with new Uber drivers due to the accessibility of the platform, the driver is burdened with debt, with no ready means to pay it back.

For platform providers there is a huge incentive to ensure their workers are not classified as employees in any sense – otherwise they would be liable for providing entitlements to workers, driving up their costs. It would also question the legitimacy of having "employees" provide the physical assets that the platform relies on to carry out its business.

The key claim of the platform providers is that their gig workers should be considered independent contractors, not employees at all. Contractors in the traditional economy, such as truck drivers, have also sometimes supplied their own "tools" but the gig economy differs in that the gig worker doesn't accumulate any goodwill that can be on-sold or leveraged for financial gain. The goodwill accrues to the platform provider, leaving the worker with fewer options.

As the gigging economy gains momentum, policymakers, labor activists and the media are asking questions about how we conceptualize work and protect workers.