The pandemic unveiled difficult truths about the gig economy, challenging myths we’ve been sold for years
by Emily Smith CardineauMs. Cardineau is director of content marketing for Cake & Arrow, a research and design firm focused on the business marketplace. Reprinted with permission. This blog post is based on a webinar we recently conducted. To watch the webinar on the same topic and download the presentation click here.
The term “gig economy” was popularized in 2008. It came about amidst the convergence of two historic events–an economic recession that kept millions of workers from securing full-time employment and the simultaneous boon of smartphone technology. It was during this time that the Ubers and the AirBnBs of the world were born, matching unemployed and under-employed workers with “gigs” and/or helping them monetize their assets using smartphone technology.
While the idea of independent work was nothing new, the way that these platforms took advantage of the economic situation by harnessing new technology, was indeed novel. They have since played a monumental role in shaping our popular imagination around gig work. From them, we get the idea of gig work as empowering, as flexible and free; a means of taking control over our life, our destiny, and our labor; a way of becoming our own boss. Meanwhile, recent legal battles around how gig workers are categorized teamed with new economic realities related to the pandemic have finally begun to debunk some of the most prominent myths we’ve been sold about the gig economy for the last decade.
Over the last three years, Cake & Arrow has been conducting our own research into the gig economy, uncovering insights about gig workers that likewise don’t align with the popular mythology–insights that the pandemic has made plain. Here are the five of the most prominent myths about gig workers our research has proven false:
Myth 1: Gig Workers are Millennials
The stereotype of the gig worker as a Millennial–young, carefree, and unburdened by the constraints of full-time work–is as untrue about gig workers as it is about Millennials. Graduating into the 2008 recession, a time when full-time employment opportunities were meager, many Millennials had little choice but to enter the workforce as precarious workers, picking up work where they could and attempting to cobble together a career and an income amidst an economic recession. This may explain where the myth of gig workers as Millennials originates.
The truth is that …
Millennials comprise the majority of Gig workers but also make up the largest portion of the labor force at large
Whether looking at the labor force at large or specifically at the gig economy, you’ll find that Millennials–now the largest living generation–also make up the largest percentage of both workforces. So while there are indeed more Millennial gig workers than gig workers of other generations, there are simply more Millennials in the workforce. In fact, their representation in the gig economy is roughly commensurate with their representation in the labor force at large. And this is true across the board when looking at generational representation in the gig economy. Workers from all generations perform gig work, to the same extent that workers from all generations engage in full-time work.
Millennials overwhelmingly prefer full-time jobs – and most of them have them
Recent data suggests that only 7 percent of Millennials rely on gig work or independent work as their primary source of income. And while many Millennials were excluded from full-time work a decade ago, as a generation, they have been making strides in this regard, especially in recent years. In 2016, only about 45 percent of Millennials were employed with full time jobs, while by 2018, that number had climbed to 66 percent. This resonates with a 2018 survey we conducted with Millennials which found that 71 percent were employed full-time. Recent surveys have also shown that not only do most Millennials have full-time jobs, but the vast majority prefer them to short-term gigs or contract work.
The pandemic has made traditional employment more elusive for millennials
These hard-earned wins, however, may be short lived due to Coronavirus. Millennials have suffered significant job losses since the onset of the pandemic. Up to 62% of workers under the age of 45 have been furloughed or had their hours cut due to Covid-19. Some experts believe that in the long term, Millennials will be the generation most adversely affected by the pandemic’s economic losses. If they do end up disproportionately comprising the gig workforce, it may not be out of choice, but for the same reasons many ended up doing gig work in 2008.
Myth 2: Gig Workers are Platform Workers
When we hear the words gig economy, ride-sharing, delivery apps, and on-demand platforms like TaskRabbit or Instacart immediately come to mind. The connection between gig work and platform work is so entrenched that we tend to think of the gig worker and the platform worker as one in the same. Although the emergence of these platforms did indeed give rise to the term gig economy and the proliferation of gig platforms continues to contribute to the growth of the gig economy, gig work itself is nothing new, and it certainly isn’t limited to platform work.
The truth is that …
Platform work makes up only a small percentage of Gig work, and most do it only sporadically
While at least a quarter of the workforce engage in some form of independent work, only about 1 percent of the entire labor have used gig platforms (like Uber, Lyft, TaskRabbit, DoorDash etc.) to arrange work in the past month. For most, platform work is little more than a side hustle. 68 percent of those using platforms work three months or less each year and only 10 percent do platform work year round.
It’s becoming harder and harder to make a living doing platform work
Although platform work still represents only a small percentage of gig work, it is nevertheless contributing to the growth of the gig economy. As consumer spending on on-demand goods and services increases, so does the number of platforms, and so does the number of workers, ultimately driving down costs for consumers and wages for workers. For many doing platform work, gig work is a hustle to the bottom. While consumer spend has been increasing over all, per-person consumer spend has been decreasing resulting in workers being incentivized to do more and more work for less money. Between 2013-2018 rideshare drivers saw a 53% decrease in earnings. Things have only worsened amidst the pandemic.
There is a class divide in the Gig economy between platform workers and freelanders
Not only is platform work becoming less lucrative, it also tends to be riskier than other types of freelance work and is more likely to facilitate lower-skilled gig work like transportation, leasing, and reselling. This contributes to what our research has identified as a class divide in the gig economy. Freelance workers not only tend to make more money, but are also more insulated from risk than workers doing platform work. We found that freelancers engaged in professional and creative services are more financially prepared to whether a period where they might not work, are more likely to be working amidst the pandemic than other types of workers, and that they are far less concerned about the risk the pandemic poses to their health than platform workers, particularly delivery workers and rideshare drivers.
Even so, the pandemic has tightened the job market for everyone, including freelancers. In April alone Upwork saw a 50 percent increase in freelancer sign ups and Instacart tripled its number of workers. The pandemic has offered a case study in how even high skilled labor can become commoditized as competitors offer increasingly lower prices and trends like AI, robotics, and machine learning squeeze the price point independent workers are able to demand.
Given that platform work represents such a small fraction of gig work, it plays an outsized role in defining how we think about work, and is slowly changing the definition of work–turning workers into entrepreneurs and users–and in doing so, fundamentally altering the terms and conditions of labor–for everyone.
Myth 3: Gig Work Is A Choice
The appeal of gig work highlights it’s innate flexibility, independence and freedom. We are taught to believe that gig workers choose to do gig work because, unlike traditional workers, they are brave nonconformists looking to define the terms of their labor and wrest control over the schedules, their lifestyles, and their work itself. But is this really why people choose gig work? And is gig work even a choice at all?
The truth is that …
Most don’t actually voluntarily pursue Gig work
A McKinsey survey of independent workers from 2017 found that more than 50% of those performing independent work are doing so out of necessity, either because they cannot land a full-time gig or because they are financially strapped and need to supplement their income to make ends meet.
Gig work isn’t simple choice between Gig work and full-time work
When we surveyed gig workers in September of 2020, we were surprised to find that 76 percent of respondents told us that they choose to do gig work. But when we dug deeper, asking them to describe in their own words why they do gig work, we found that the idea of choice wasn’t so simple. Among those who said they choose to do gig work, some told us they were actors, filmmakers, or costume designers and that in their field, gig work was the only option. Others told us that they were parents or caregivers of aging relatives and that doing gig work was the only way they could stay in the labor force. We also heard from aging workers who had either left bad jobs or exited the labor force for a period of time and were having trouble securing full-time employment at their age. Which is to say, that many gig workers aren’t exactly choosing gig work. They are choosing instead to work in a field they love, to care for their children and aging family members, or simply choosing to work, and gig work is the only option.
Gig work as a choice is a luxury dependent upon a competitive labor market
In late 2019, right before the pandemic struck, the freelancing platform Upwork published a study of freelancers indicating that, as the labor market had recovered from the 2008 crisis and become more competitive, more and more gig workers were choosing to do gig work and these workers were feeling increasingly secure working independently. With unemployment at historic lows at the time, the study suggested a strong connection between a competitive labor market and the idea of gig work as a choice.
Since the publication of the study, unemployment has of course soared to record highs, not only destabilizing the full-time labor force, but also the gig labor force, as more and more full-time workers are pushed into the gig economy. When we surveyed gig workers in April, we found that 57 percent has ceased their gig work entirely, while 32 percent reported having much less work than before the pandemic. When the economy suffers as it has and the labor market gets less competitive, the promise of gig work as a choice becomes even more empty, as for many, it becomes the only option.
Myth 4: Gig Workers Value Flexibility Over Stability
The myth of gig work as a choice suggests that gig workers choose gig work for its flexibility, independence, and freedom, not for the many other reasons outlined above. It also reinforces a narrative about gig workers as people who would rather work on the beach or in their pajamas than have health insurance or be able to save for retirement. While there are certainly gig workers who fit this stereotype, our research found that for most, quite the opposite is true.
The truth is that…
Most Gig workers take financial responsibility seriously
When we spoke with gig workers in 2018 to better understand their risk profiles, we found that the majority engaged in low-risk behaviors and took their financial stability seriously. They expressed interest in providing a strong financial safety net for themselves and their dependents and were actively compensating for the lack of benefits in independent work.
Choosing between flexibility and stability is more of an uneasy tradeoff thank a choice freely made
Our research has found that while gig workers value flexibility and independence they don’t value these things any more so than other types of workers. Although they appreciate the flexibility and independence their gig work affords them, they report high levels of dissatisfaction with the level of stability it provides, particularly in terms of income security and benefits– priorities which our research has shown actually rank higher–significantly higher –than flexibility. Again, for most gig workers, the idea that they are choosing gig work for its flexibility is simply not the whole story. Rather, gig workers are choosing their families, their passions, their craft, and in doing so making uneasy tradeoffs.
The pandemic has threatened what little stability Gig workers had
Generally speaking most gig workers are hustling to create a sense of stability and security for themselves and their families, even if they are doing so outside of the traditional employment-based framework. But under new economic conditions related to the pandemic, this is becoming increasingly difficult. When we asked gig workers how they think their work will look a year from now, they were at best cautiously optimistic, while many were already looking to alternative work arrangements, including new careers and full-time jobs for fear that their gig work will never fully recover.
Myth 5: Gig Workers Don’t Want Insurance
The idea that gig workers don’t want insurance is a part of a larger myth about gig workers as irresponsible, carefree, risk-takers with little concern for the future. As we learned earlier, however, gig workers tend to be financially responsible individuals working hard to create a sense of security and stability for themselves and their families. Then why is it that gig workers don’t buy insurance? Hint: it isn’t because they don’t want it … exactly.
The truth is that …
Gig workers don’t see insurance as protection, they see it more as a requirement to get the job
When we asked gig workers about their decision making around buying insurance, we found that among those that have purchased it or have considered purchasing it, many have done so because they had to do, not because they wanted to do. Some were DJs working at venues that required they be insured, others were rideshare drivers obligated to buy specific policies that would cover their rideshare work, still others were freelancers whose clients made purchasing insurance a condition of their contracts. Few actually bought insurance as means of protection.
It’s not surprising then that gig workers are largely underinsured. We found that only about 18 percent of gig workers have specific policies that cover the risks of their gig work. The reasons for this are varied, and range from gig workers simply being ill informed about the spectrum of risk related to their work to workers assuming that if they were personally at risk, their platforms or clients would inform them, and require them to buy insurance.
Gig workers want income-protection, but don’t associate this with insurance
Still, most gig workers we spoke identified loss of income–due to illness, injury, or inability to secure work–as a risk of their work, but did not see insurance as a means of protecting against this risk. While 74 percent indicated that their ideal employment benefit would be income protection in case of injury or illness, only 43 percent were actually interested in purchasing workers’ comp or disability-type insurance products, and less than half of those were actually policy holders.
Even for Gig workers who do ‘want’ insurance, many aren’t in a position to buy it
According to a framework developed by the Freelancers Union, gig workers tend to fall into four categories based on the stability of their work and their income–unfree, hustling, empowered and influential. Only those in the influential category, about 15 percent of all gig workers according to our research, truly see themselves as entrepreneurs, aware of their risks and financially empowered enough to buy insurance to cover the risks of their gig work. So even while many might be interested in income protection products, only a small percentage are in a position to actually buy it.
The pandemic exposed how unprepared Gig workers were for a loss of work or income
When we surveyed gig workers in April after the pandemic hit, 63 percent told us they had done nothing to prepare for a loss of work or income. Among those who had prepared, most told us that the main thing they had done was save money, and even that wasn’t enough. For those who hadn’t prepared, it wasn’t because they didn’t want to or didn’t think they needed to, it was because they were living paycheck to paycheck before the pandemic, and didn’t have extra money to save or to protect their incomes in other ways.
Gig Work and the Future of Work
For many decades, independent workers–contractors, freelancers, actors, artists, temporary and seasonal workers, sole proprietors and the like–have been pursuing stability and security for themselves and for their families outside of the framework of traditional employment. In more recent years, largely thanks to the advent of platform work and periods of economic recession, the number of people doing so has steadily grown, and the pandemic, by all accounts, will only further this trend. Yet, as a country we continue to see employers as the organizing principle in people’s lives–determining where people live and buy homes, who they make friends with, how they organize their family life, and of course how they get insurance and other benefits.
But with every passing day, this idea of employment is less and less true for more and more people. We know that before the pandemic, at least a quarter of the workforce were categorized as independent workers. And since the pandemic hit, tens of millions more people have lost their jobs, excluding them from this employer-employee dynamic. And while job losses have recovered somewhat, many of the formerly unemployed have gone back to work as freelancers, contractors, or only part time.
Even among those that have been able to keep their jobs, with the rise of remote work, the relationship between the employer and employee is starting to look different. Full-time workers are getting a taste of some of the flexibility of gig work–working and living in their location of choice, making their own schedules, finding new ways to integrate family and work etc. In some ways, the pandemic has made everyone a little more like gig workers, for better and for worse. And for now at least, full-time work is more flexible, but also like gig work, for many it feels less secure.
By busting these prominent myths about gig workers we’ve actually busted another myth–and that is that there is a clear binary between full-time workers and gig workers. We’ve learned that gig workers not only want the same things as traditional workers, but that traditional workers also want some of what gig workers have too–protection for themselves and their families and the flexibility to pursue meaningful work while also upholding their deepest values–around family, home, health, and creative fulfillment.
The task for our society–for individual workers, private businesses (like insurance), state, local, and federal government, and of course employers is to work together to find new ways of supporting the needs and values of all types of workers (both gig workers and full-time employees) around stability, security, flexibility and independence.