Does the Gig Economy Require Regulation?

The amount of people working the gig economy and thriving with side hustles has grown in recent years. It’s currently estimated that about 1.3 million people are now working two jobs or more, with many in this category classed as freelancers--a group that’s seen a 43 percent increase in less than a decade, according to a recent survey by IPSE. In fact, the freelance job market is predicted to rise to 40 million workers by 2019.

Nevertheless, this expanded rate of growth is not without its snags. Many “slashies” (The Guardian’s term for people working two or more jobs) are risking burnout due to a combination of erratic work schedules, heightened productivity, and stagnant hourly compensation.

Working More, Making less

The unique challenges springing up due to the gig economy have been explored by one Thomas E. Perez, who points out some interesting statistics. According to Perez, “from 1973 to 2013, productivity has continued to soar (an increase of 74.4 percent), while hourly compensation for the typical worker has virtually flattened (up only 9.2 percent).”

While some critics may argue that you don’t have to work in the gig economy if you don’t want to, and “if you don’t like your wage, tough cookies,” a wider majority may disagree. Uber CEO Thomas Kalanick came under fire in early 2017 for expressing a similar sentiment, responding to queries about the falling cost of uber driver fares by saying that “some people don’t like to take responsibility for their own sh*t.”

Perez himself offers a couple of proposals for adapting to this new system and establishing fairness--with the caveat that a certain amount of political willpower would be required to enact these proposals, however fleeting that will may currently be:

• Increasing minimum wage: The national minimum wage could be lifted in accordance to the cost of living, updated even yearly, suggests Perez. This way we’d people getting paid more to work fewer hours, instead of the other way around.
• Greater protection for workers: Perez indicates that gig economy laborers work just as hard and in just as dangerous conditions as many of your average 9-to-5’ers. These workers could be granted insurance and benefits.
• “Amplifying worker voices” and collective bargaining: Outside of the gig economy, workers are able to unionize and bargain collectively. Unfortunately, those with a side hustle are more divided and unable to fight wage stagnation and other issues because they don’t have a collective voice.

Perez warns that until some of these above conditions are met, workers may be “serving the economy better than the economy is serving them.”

Calls to Regulate

What Perez presents sounds a lot like a precursor to regulation. This sentiment comes in a time of global unrest when old regulation is on the way out, and new regulations are on the way in. Janne Berg and Valerio De Stefano posit that perhaps it finally has become time to add the gig economy to the “on the way in” list.

They point out that the gig economy is often seen as mere “sharing of favours,” the type of attitude that supports Kalanick’s initial “if-you-don’t-like-it-then-quit” sentiment. However, in a recent ILO survey of Amazon Mechanical Turk and Crowdflower workers, 40 percent of respondents say that crowdwork constituted their principal source of income, averaging 30 hours a week using one of these platforms. This indicates that this “new” labor market isn’t really new at all, but rather a hybrid of the traditional market integrated with advanced technology.

“The lack of protections for workers, the casual nature of the work and the elements of direction and control exerted by the platforms all point to a need to regulate the gig economy,” they write. “Self-regulation by the platforms, as is currently the case, cannot ensure better working conditions and can jeopardise the sustainability of well-intended platforms in what is a global race to the bottom.”

Perhaps more regulation of the side-hustles and the gig economy could help to settle legitimacy issues faced by companies that don’t fit within the traditional economy but would like to be treated as reputably as one within it would. Perhaps it is time to regulate the gig economy.