What’s New, and Not, About Gig Work

The Gig Economy is #4 on SIOP’s Top 10 Workplace Trends and, as part of SIOP’s Smarter Workplace Month, Emily Campion, assistant professor of Human Resources in the Strome College of Business at Old Dominion University, agreed to answer some questions to help us understand why it is growing in importance (moving up six spots from number 10 in 2018).  

What does the term gig economy mean and who qualifies as a gig worker?

This is a great question and one that is a bit difficult to answer. What makes the gig economy so interesting, but also so frustrating is at times, is that it can seem like this amorphous blob of workers, the jobs they do, and the organizations that contract them. Gig work is generally thought of in three ways:

1. by its structure: short-term, project-based, and separate from the client or organization.
2. by its nature: gig work is highly autonomous, workers have power over their schedule, career path is uncertain, and they may face job insecurity.
3. as a legal classification: gig workers often receive 1099s and do not receive benefits from their clients.

Yet, these ways of thinking about gig work aren’t necessarily mutually exclusive. We would expect that short-term, project-based work (structure) may not have the stability (nature) of full-time employment. Despite a general agreement around these distinctions, there are still instances that we likely consider gig work but do not meet all of these conditions.

For example, I was at a conference a year ago on procurement and spoke with someone who worked at a temp agency for more highly skilled workers. They would connect these workers with organizations in need of talent, but technically the workers were employed by this third agency and would receive W-2s. So, although the temporary nature of the work meets the work structure criteria, it fails the 1099 criteria. I throw this out there to illustrate why we don’t necessarily have a clean definition, but I suppose that's in line with the sometimes-emerging nature of gig work anyway. For example, when I was working on my dissertation, I met some folks who were launching an online marketplace focused solely on projects paid by equity rather than cash. The founders of this marketplace were telling me that this approach was being used by smaller startups who did not have the means to pay someone in cash for certain tasks (e.g., building an app) but could offer equity in the company. Future definitions of gig work may want to consider that pay may not always include cash.

So, as we see gig workers and others push and stretch our preconceived notion of the gig economy, it requires a fairly broad definition to accommodate those changes. This is a key challenge for academics and practitioners alike, particularly because organizations tend to have their own terms for this type of worker (e.g., external worker, contingent worker) that differ from how gig workers describe themselves (e.g., freelancer, consultant).

Is gig work all precarious work?

I really appreciate this question. We make the assumption, and have for so long, that short-term labor is somehow tied to low skill and/or is undesirable. Yet, that is not always the case. What my colleagues and I are finding is that people are being pushed or pulled into the gig economy similarly to how we see people being pushed and pulled into careers. More often, it is likely a mix of push and pull. For example, those who are highly skilled and pushed in gig work may still have the option to work in projects that fall within their skill set. It might sound silly to say, but we have the Internet to thank for that. Historically, working short-term labor meant working in jobs available to you proximally. Now, you can do jobs that align with your abilities using online marketplaces.

Another way to answer this question is everyone's favorite answer which is, “well, it depends.” It can depend on an individual’s skillset, which is often tied to social class. It appears that the gig economy works off the “the rich get richer” model, not unlike other systems in our society. Those who are highly skilled will likely see more opportunities to use gig work to advance their own career goals, whereas those who are less skilled will likely experience and view gig work as precarious. This, then, begs the question, “Does gig work help, hurt, or do nothing to lessen the wage gaps among demographic groups?” So far, few papers have directly tested this question and those that have tend to suggest the same thing. For example, Stanford Professor Cody Cook and his colleagues (2019) summarized their study on the gender earnings gap of rideshare drivers as follows: “Our results suggest that there is no reason to expect the ‘gig’ economy to close gender differences.” Although this is just one study, theory and neighboring disciplines support this notion. As more studies emerge, we will likely find that individuals make choices on which gig worker they contract based on interpersonal similarities and other biases, just as we have seen some traditional hiring systems.

This is all to say that not all gig work is precarious, but it is likely not going to be the antidote to the wage gap and other inequalities that some have hoped it would be.

Where do people find gig work?

The difference between modern day gig work and previous generations of gig work is the Internet. Individuals are finding gig work through apps or online marketplaces, and because of this, they are not necessarily bound by geographic location. This has tremendous implications for workers and the clients and organizations who hire them. For organizations, this means that they have a greater quantity of potential gig workers, and it is almost unthinkable to try to use some of our traditional human resource (HR) hiring practices here. We wouldn’t necessarily put gig workers through assessment centers because organizations contract them for the purposes of a specific project, not long-term, full-time employment.

Similarly, not being bound by geographic locations also means that a gig worker with the right skills in Indiana can bid on a job in California. Why restrict the search to just those nearest you? This is even more interesting when we think of someone who is based in India bidding on a project posted by someone in Australia. This isn’t the same as a large multinational corporation offshoring jobs to another country; this is one person in Australia seeking help on a short-term project by another person with a specific skill set. Historically, this individual would simply tap their local networks. However, utilizing these online marketplaces affords opportunities for different perspectives and perhaps more creative problem solving. This could be particularly helpful if the individual in Australia is an internationally minded entrepreneur and is looking to sell a product or service globally. Importantly, this also has implications for compensation regarding different rates for services between countries, the exchange rate, and few, if any, formal avenues for the gig worker to ensure payment. 

What are the realities of gig work for workers? Organizations? I-O professionals? 

The reality for gig workers is complex. In some instances, we see that gig workers are more empowered than traditional workers, and in others they are notably more vulnerable due to fewer regulations and difficult access to things like healthcare and retirement benefits. In regard to organizations, it seems they still have the most power in this relationship because organizations use gig workers to scale and address immediate needs without expanding their permanent workforce. This means gig workers can also be on the chopping block when organizations need to cut costs. As organizations continue to use this workforce, they may rely less on their traditional workforce, potentially pushing some traditional workers into gig work. This means that developing and maintaining a broad skill set—and being adaptable—will be necessary for future workers to be successful.

On the other hand, organizations are responsible for managing the quantity versus quality of available talent, which means they need to develop systems to efficiently and effectively evaluate and choose the correct contractors for the job. This will likely include AI and machine learning. It is difficult to look behind the curtain at these online marketplaces, but it appears that some are moving into the AI space for this purpose (e.g., Upwork, 2019). Organizations also have to be cautious when classifying workers, as we have seen in the past (e.g., Microsoft) are currently seeing with Assembly Bill 5 in California.

Finally, the realities of gig work for I-O professionals is that they have a lot of work to do to ensure they are providing sound practices for procuring and managing this workforce. We are in a unique position to be able to pivot between these two groups and address needs on both sides to help organizations continue to be successful and help gig workers thrive.

September is Smarter Workplace Awareness Month! Smarter Workplace Awareness Month is all about celebrating and promoting the science and practice of I-O psychology and how I-O psychology can help to make workplaces better. This year, we are focusing on the Top Ten Workplace Trends for 2019.

References

Ashford, S. J., Caza, B. B., & Reid, E. M. (In press). From surviving to thriving in the gig economy: A research agenda for individuals in the new world of work. Research in Organizational Behavior.

Campion, E. D. 2019. The gig economy: An overview and set of recommendations for practice. SIOP White Paper Series. Retrieved from http://www.siop.org/Portals/84/docs/White%20Papers/Gig.pdf?ver=2019-06-04-161253-170

Cook, C., Diamond, R., Hall, J., List, J. A., & Oyer, P. (2019). The gender earnings gap in the gig economy: Evidence from over a million rideshare drivers. Retrieved from https://web.stanford.edu/~diamondr/UberPayGap.pdf

Dwyer, C. (2019, September 11). California lawmakers advance bill to redefine and protect gig economy workers. NPR. Retrieved from https://www.npr.org/2019/09/11/759691730/california-lawmakers-advance-bill-to-redefine-and-protect-gig-workers

Manyika, J., Lund, S., Bughin, J., Robinson, K., Mischke, J., & Mahajan, D. (2016). Independent work: Choice, necessity, and the gig economy (McKinsey Global Institute Research Report). Washington, D. C. Retrieved from http://libguides.stthom.edu/c.php?g=194131&p=1278043

Schafter, S., & Joyce, A. (2000, December 3). Microsoft to settle with temp workers. The Washington Post. Retrieved from https://www.washingtonpost.com/archive/business/2000/12/13/microsoft-to-settle-with-temp-workers/6f59576a-0725-4bea-93cc-3e2d759bda45/?noredirect=on&utm_term=.5f7bd44f9418

Society for Human Resource Management and SAP SuccessFactors (2019). Want your business to thrive? Cultivate your external talent. Retrieved from https://externalworker.com/wp-content/uploads/2019/06/SHRM-SAP-External-Workforce-Whitepaper.pdf

Upwork. (2019). How it works: An overview of how work happens on upwork..Retrieved from https://www.upwork.com/i/how-it-works/client/