Asking are gigs the future of work is vital because this employment option has serious deficiencies.
For example, the average Uber driver earns less than $10 on the average trip, Ridester calculates. Specifically, on 31 of the 37 Uber trips Ridester analyzed drivers earned less than $10. In fact, Ridester claims the average Uber driver in Houston earns $2.29 a trip.
Moreover, the return on investment (ROI) participants receive from gigs is falling. For instance, Ridester calculates an Uber driver had to drive 2.36 miles to make $10 in 2013 and 4.71 miles to make $10 in 2016. Consequently, Ridester alleges, Uber and Lyft contractors have to drive 99.6% more to earn $10 in fares.
Consequently, claims Uber drivers could make more money flipping burgers at McDonald’s seem valid. However, gig work like Uber and Instacart offers far more freedom and flexibility than “traditional jobs.” In addition, there is no idiot, high school dropout boss trying to micromanage you at Uber.
The Gig Economy Dangers
Conversely, I think other deficiencies of the gig economy are far more destructive than low pay.
For example, the lack of health insurance, which most Americans receive through their jobs. To clarify, almost all American gig economy workers lack access to health insurance and healthcare because the United States lacks single-payer healthcare.
Disgustingly, many contractors will be better off not working in some American states. To explain, in states like Colorado, persons who make under a certain level of income receive Medicaid health insurance from the state.
How Gig Workers fall into Poverty
An even greater danger from gig work is following into poverty because of bad luck.
Notably, notably two decades of freelance writing taught me that inconsistency is the greatest danger in gig work. For instance, one week you will get so much work you cannot keep up. However, a month later you will bang your head into the keyboard because there is no work.
To explain, if the gigs stop there is no money. A traditional job restricts your freedom but it offers a steady paycheck.
Thus, it is often impossible for gig workers to pay the rent or feed their families. In addition, there is no unemployment insurance for gig-economy workers.
Consequently, any bad luck that keeps you from working will lead to poverty. For instance, a breakdown or a car accident for an Uber or temporary disability such as a broken leg.
The Gig Economy is not New
The gig economy is hardly new, in fact, many professionals ;including actors, musicians, writers, artists, carpenters, dentists, painters, and lawyers have worked by the gig for centuries.
For example, they pay an actor for the performance or production. Specifically, film actors often paid separately for each movie. Meanwhile, customers pay a carpenter or plumber for a specific task such as rebuilding a kitchen or installing a new toilet. Plus, most charge for specific tasks or by billable hours.
Additionally, most small business people work by the gig. For example, when my dad was in TV repair; way back in the 1970s, he charged for each repair. Thus, my dad made good money back in the days when television sets were complex and fragile devices that went haywire every few months. When industry came up with reliable TV sets, my dad went into the satellite business instead.
The Gig Economy Today and Tomorrow
The difference today is that the internet, Wi-Fi, and digitalization make it possible to move many more jobs into the gig economy.
For instance, Lyft, Uber, Instacart, and GrubHub turn driving into a “gig” job. In addition, Upwork makes it possible to turn most office, accounting, marketing, and software development work into digital gigs.
Moreover, companies like Aitheon and SyncFab want to use the blockchain to transform a wide variety of manufacturing and technical jobs into gigs. For instance, the ultimate goal at SyncFab is a marketplace where machine shops will sell their services to businesses through the blockchain.
The Future of the Gig Economy
Aitheon is even more ambitious, its CEO Andrew Archer wants to build a digital marketplace where “pilots” will operate a wide variety of remote-controlled machines through the blockchain. For instance, a man could run a bulldozer at a worksite in Alaska from his recreation room in Ohio.
I think cheap virtual reality (VR) devices like the $399 Oculus Quest headset makes widespread adoption of technology like Aitheon’s inevitable. To explain, the man in Ohio will use a VR device to see what’s happening in Alaska through cameras on the bulldozer or a drone flying overhead.
Obviously, it will be far cheaper to pay a guy in Ohio to operate a dump truck; or power shovel, by remote control than fly him to Alaska. Notably, the machine’s owner will not have to pay for the plane ticket, meals, and accommodation for the Aitheon Pilot.
The Gig Economy is Coming for Your Job
Nor is just heavy equipment operators who need to fear the gig economy. In fact, the gig economy already threatens professionals like software engineers.
To explain, Microsoft bought something they call GitHub for $7.5 billion in June 2018. In detail, GitHub is a giant decentralized marketplace and repository for software, apps, and other digital tools and products.
In fact, anybody anywhere in the world can create an app or software and put it on GitHub. Currently, GitHub claims to offer over 1.1 billion solutions from over 31 million developers to 2.1 million organizations through 96 million repositories of software.
How the Gig Economy can Drive Down Incomes
Furthermore GitHub boasts the demand for pull requests on its platform or “Octoverse” grew by over 33% in 2018. In addition, the number of repositories and organizations on GitHub grew by 40% in 2018. To explain, a repository is a digital storehouse for digital products on GitHub.
GitHub’s Octoverse threatens jobs because it could be cheaper for a company that needs an app to buy it on GitHub than hire an engineer or developer. For instance, a company in Denver could buy its apps from somebody in India rather than pay the $84,065 a year the average software engineer makes in Colorado.
Consequently, unemployed software engineers in Colorado will have to sell their services on GitHub further driving down pay in their field. To explain, the Colorado software engineer will have to reduce his prices to compete with his brethren in India or Argentina.
Additionally, gig economy platforms are raising costs for participants and adding restrictions. UpWork, for example, now charges contractors between 15₵ and 90₵ for connections clients, Time Doctor reports.
How the Gig Economy Drives Income Inequality
The gig economy breeds income inequality because most platforms operate on a straight gig model.
In the straight gig business model the employer pays a contractor for each piece of work or “gig.” This leads to income inequality because platforms pay most workers the lowest rate possible.
For example, the average microtask worker on Amazon Mechanical Turk earns under $2 an hour, The Atlantic alleges. To explain, Amazon Mechanical Turk is a platform that pays tiny amounts for mindless, routine tasks, like cataloging photographs. The pay on Amazon Turk is so low because users pay people by the microtask (a few seconds of labor).
On the other hand, Disney paid gig economy worker Robert Downey Jr. $5 million a day to play Iron Man in Spider-Man: Homecoming, Gamespot claims. In fact, Downey earned $75 million from one gig, Avengers: Infinity War.
The gig economy breeds such horrendous inequality because it lets corporations base pay solely on somebody’s contribution to the platform. To explain; Disney made $1.2 billion in a weekend from Avengers: Endgame, while a contractor might make $1 or $2 from a cataloged photo. Thus, Downey gets to fly around in private jets and live in Malibu, while Mechanical Turk jobbers stand in line at the food bank.
Can we Fix the Gig Economy
Interestingly, there are other economic models that could spread gig economy benefits to all workers. For instance, a platform could pay a dividend or royalty to all contributors.
Notably, a few platforms like Steemit are trying to employee variations of this model. Unfortunately, platforms base most royalties on the number of users a contributor attracts.
Thus, a popular Medium writer or Spotify musician could make a lot of money. Meanwhile, the average contributor starves. Therefore, efforts like Steemit only magnify the gig economy’s problems. In particular, stars popular writers, or musicians make big money on Spotify and Medium; while everbody else struggles to make a few pennies from a song or article.
Consequently, I think the fixes to the gig economy will need to come from outside probably from government. In fact, I think the government could make the gig economy deliver on its promises of more freedom and flexibility while guaranteeing a good living to all citizens.
Can Andrew Yang Fix the Gig Economy with Basic Income and VAT?
Notably, entrepreneur turned long-shot US presidential candidate Andrew Yang (D-New York) proposes three interesting solutions to the gig economy’s shortcomings in his fascinating book The War on Normal People.
First, Yang proposes the federal government pay every citizen a $1,000 a month unconditionalbasic income he calls the Freedom Dividend. Under Yang’s scheme everybody will receive $1,000 in cash each month with no strings attached.
Hence, the Freedom Dividend will form a safety net for gig economies. To explain, the Dividend will give a gig economy enough extra cash to live or cover emergency expenses if work dries up. In addition, the dividend will provide income if the contractor cannot work because of illness, family emergency, injury, or bad luck.
How Andrew Yang wants to Fix the Gig Economy
Yang proposes America fund the Freedom Dividend with a value-added tax (VAT). To explain, a VAT is a direct sales tax the government collects each time somebody adds value to a product.
For instance, a manufacturer will pay VAT when buys raw materials to make a widget. Second, wholesaler pays the VAT when it buys widgets from the manufacturer. Third, a retailer will pay the VAT when it buys widgets from the wholesaler. Plus, Amazon will pay the VAT when it sells you the widget through Amazon. Finally, Amazon will pay a VAT on any fees it charges the retailer.
Essentially, Yang wants to turn the entire economy into a giant platform that reward all citizens who participate in it. Notably, Yang hopes to compensate citizens for the harm the gig economy does with a dividend.
Second, Yang wants government to cover everybody with health insurance under Medicare for All or single payer health insurance. Lack of single-payer puts American gig workers at a terrible disadvantage.
For example, an American software engineer; who pays several hundred dollars a month for his health insurance, will soon compete with a Scottish software developer. The Scot could charge less for her services because she gets her healthcare free from the National Health Service. Conversely, The New York Times estimates up to 37% of an American’s wages goes to taxes and health-insurance premiums.
Could Gamification and Cryptocurrency Fix the Gig Economy
Third, Yang proposes the government use gamification and cryptocurrency to enter the gig economy business.
Specifically, Yang proposes using gamification and a cryptocurrency or digital token calls the Digital Social Credit in Chapter 18 of The War on Normal People. Yang will use Digital Social Credits to fuel a scheme he calls Modern Time Banking.
In detail, the Digital Social Credit is a rewards token citizens will receive for socially beneficial activities such as volunteering or helping neighbors. Each Digital Social Credit is a rewards point based on time with a small monetary value. For example, one Social Credit could be worth five minutes of time or 2.5₵ to 5₵.
Can Andrew Yang Gamify Volunteering ?
To demonstrate, a Time Bank Platform will reward you in Digital Social Credits for socially beneficial tasks. For example, driving your elderly neighbor to the hospital, serving on the planning commission, volunteering at a school, or serving on a volunteer fire department.
Then you could cash the Digital Social Credits in, spend them on Amazon, or use the Credits to purchase time or services from your neighbors. For instance, you could use the Social Credits you receive from serving as a volunteer firefighter to “pay” your neighbor to fix your roof or mow your lawn.
Furthermore, individuals will earn different amounts of Social Credits for different tasks. For example, you might earn 1,000 Social Credits a day for serving as a volunteer firefighter, but just 50 credits an hour for caring for puppies at the animal shelter. To clarify, the more socially beneficial or difficult the chore, the more Social Credits you receive.
Can Gamification Save our Communities from the Gig Economy?
Essentially, Yang hopes to use a strategy known as gamification to rebuild communities while alleviating one of the gig economy’s fundamental flaws. Specifically, gig work; like much of modern technology, encourages people to be selfish and self-involved.
To clarify, gamification means encouraging people to perform a task by turning it into a game. Moreover, most gamification strategies use rewards or points as a motivator.
Yang believes a Time Banking platform that pays in Digital Social Credit Reward Points could encourage socially beneficial behavior. To elaborate a Time Bank is an exchange where people trade their time or labor for the labor and time of others. If it works as advertised Time Banking could help rebuild communities and restore neighborhood ties.
Can Rewards Points and Cryptocurrency save us from the Gig Economy?
Interestingly, the Digital Social Credit will probably be a platform token cryptocurrency. A platform token is a digital coin you can only use on one platform.
Most likely, the Digital Social Credit will be a stablecoin. To explain, a Stablecoin is a cryptocurrency designers program to release payment in a fiat currency like the US Dollar through a smart contract.
For an example of what the Digital Social Credit might look like and how it could work examine the Kin (KIN) Ethereum-based cryptocurrency. Kin’s creators plan a cryptocurrency that could function as a rewards point.
Can Andrew Yang Save the Gig Economy From itself?
Finally, time banking and social credit can encourage volunteer work without force. The government will not force people to volunteer as presidential candidate Pete Buttigieg (D-Indiana) proposes.
In the final analysis, Andrew Yang could fix the Gig Economy by expanding it. To explain, the Digital Social Credits and Time Banking will bring volunteering and community services into the Gig Economy. Thus, we could make the Gig Economy work by allowing everybody to participate in it and share the benefits.