The Gig Economy Part I, What is it, and How did it Come About?

Hungry? You can use Uber Eats to get food from your favorite restaurant delivered to your doorstep in a matter in minutes.

Need a place to stay? You can use Airbnb to find a local place to stay for the night that’s within walking distance, and cheaper than a hotel.

Need help with something around the house ASAP? Use Amazon Home Services to get same-day professional help ranging from lawn services to plumbing, to iPhone repair!

We’re becoming more and more used to receiving services instantaneously, cheaply, and from relatively anonymous individuals. This is the Gig economy. The gig economy has unleashed itself in professional fields as well, with teachers, physicians, engineers, etc. taking on various short-term employment positions throughout the year rather than long-term positions.

The term “Gig economy” stems from the well-known concept of a musician playing gig after gig to make a living. Similarly, anyone who works on short-term contracts, or is self-employed with multiple jobs or projects is considered by most to be in the Gig economy.

Some signs of Gig economy can be self-employment, compensation for limited contracts, zero-hour contracts, having more than two sources of income, and working from home.

The US Department of Labor reported in May 2017 that some 16.5 million Americans are working “alternative work arrangements.” Of these, 5.9 million held contingent, temporary jobs, while the other 10.6 million were working as on-call workers or independent contractors. However, most experts agree that these numbers are low, as it’s obviously hard to track exactly who is temporary work when and how often.

As this national phenomenon unravels and develops, some questions we need to ask ourselves are: what are the direct/indirect implications for the workers in it, the industries it lives in, and of course, the consumer? Don’t forget the name of this blog though, in this blog we’ll be taking a comprehensive look at the origins of the gig economy.

The story begins in the late 2000s when shutter sunglasses and The Black Eyed Peas were all the rage. Between 1998 and 2008, the number of young Americans enrolled every year in college grew from 14.51 million to 19.1 million, a 31.6% increase. It would take about two years for the US economy to recover from the economic downturn of 2008, a time marked by record-high unemployment and gas prices. College enrollment only increased during this time, finally dipping in 2012.

Before we talk about what millions of unemployed, college-educated 20-year-olds did in the early 2010s, we need to talk about one last thing, the internet. The end of the 2000s marked a paradigm shift in American culture and lifestyle. The number of “internet users” in the US increased from 121.87 million in 2000 to 225.31 million in 2008, a whopping 84.9% increase. More and more Americans had the internet in the palm of their hands, with home computers, laptops, and smartphones providing access to fast, cheap, and reliable internet.

What else happened? A second generation of promising internet companies including Youtube, Facebook, and Twitter emerged to inherit the suds of their bubble-popped internet ancestors of the early 2000s (Yahoo!, eBay, Mapquest, to name a few). Internet activity became a part of everyone’s lifestyles, and soon enough, arguing over having a Yahoo! vs Gmail vs AOL email became just as common as arguing over having a Ford vs Chevy vs Chrysler.

Ok, so back to the original question: what happens when you have millions of unemployed, educated 20-year-olds in a slow economy? The emergence of a global movement bent on changing the way we live our everyday lives: the gig economy.

College graduates usually acquire two new things from college: some sort of specialized skill, and debt. Ideally, the skill obtained pays for the debt accrued, but obviously, this isn’t always the case, and it surely wasn’t in the early 2010s.

Student debt was on the rise then as it is now. The College Investor reports that college students who graduated in 2008 have an average current student-debt of $23,228, and the class of 2012 has an average student-debt of $29,384. Debt payments are a great motivator to get someone to make money, and that’s what happened! Young professionals began providing their services on unorthodox platforms for low prices in order to get ahead.

The most popular platforms include(d) craigslist and Facebook, among many. Making a Facebook business page and advertising it to your exact market only takes a few minutes and even fewer dollars. Same with craigslist. Peer-to-peer platforms that provided all kinds of goods and services sprouted and grew all over the internet as consumers found it easier, cheaper, and sometimes more efficient to get what they needed.

The tools on the internet: large social media companies, online job boards, blogs, temporary job postings, etc. gave every and any American the ability to find skilled labor for otherwise expensive and bureaucratically entangled work. Likewise, it conversely gave every and any American the ability to sell his/her services in a very deregulated way.

Ok, so now Grandma can have someone anonymously come water her plants while she’s in Florida instead of asking her grandson (who always seems to not do it), but how does this change industries, and what effect does it have on workers?

Here’s where it gets a little complicated because each industry has its own nuances and differences. We can’t talk about temporary medical staffing like we do yard work. There’s paperwork, credentialing, background checks, etc. that would need to be met. Every industry has its own “red-tape,” so how would that work? How broadly can we discuss the details of the gig economy without rewriting Tolstoy’s War and Peace? Read our next post to find out!