Some wins for gig workers are they can choose assignments that make the most of their talents and passions and allow for flexibility of work hours and locations. Millennials in pursuit of greater work-life balance or baby boomers in pursuit of extra income to off-set limited retirement funds and still allow time for travel, etc. are two segments most enthralled with gig work. Others are low-income families looking to earn additional income above their full-time jobs in order to make ends meet.
The development of new technologies has paved the way for a quantum leap in the growth of gig opportunities, allowing transactions between providers and consumers such as Uber, Lyft, DoorDash and Airbnb. In 2017, the Bureau of Labor Statistics reported that 55 million people in the U.S. are “gig workers,” which is more than 35% of the U.S. workforce. That number is projected to jump to 43% by 2020. (Forbes 7/29/18)
Wins for the employer are possible saving on brick and mortar office space, costly health insurance and other required benefits of full-time employers. They are able to maintain an on-call contingent workforce for temporary expertise, for higher volume times, etc. on an as-needed basis, saving significant dollars in costly full-time employees.
However, recently the gig economy has been viewed as exploitative for these same reasons for the lowest paying gigs which are most often held by the more disadvantaged groups. Livable incomes (hourly minimum wage), overtime compensation, job security, unemployment and workers compensation, on-the-job expenses, paid sick-leave, ability to form unions, etc. are not available to lower-income gig workers. Fair Labor Standards Act, American with Disabilities Act or the Civil Rights Act protections are not available to gig workers.
Last week, California’s Legislature passed a “groundbreaking legislation” preventing many companies from claiming workers are independent contractors. AB 5 passed has passed the House and Senate and now is awaiting Governor Gavin Newsom to sign it into law. Under their “ABC” test, a worker are employees if:
- they perform tasks under a company’s control
- their work is integral to the company’s business and
- they do not have independent enterprises in that trade
This will have a tremendous impact on Uber and Lyft who expect to have an 20%-30% increase in their costs should the bill become law. Interesting to note, Uber just signed a 10-year lease for a 450,000 square feet office space in the Old Post Office in downtown Chicago making it their second largest office behind its headquarters in San Francisco. Uber also has their Uber Freight trucking business headquarters in Chicago. Click Here for more details on Uber’s expansion in Chicago.
More states are expected to follow suit in addressing issues of California’s AB 5. Stay tuned as we follow this potentially groundbreaking shift in our workforce.