The “Gig Economy” is a real big thing right now. People are talking about how companies are doing short-term or project based hires more than ever. Here’s why it’s awesome… it gives corporations more and convinces individuals that they get more. It’s the perfect capitalist situation!
Delineating : Employee, Gig Worker, Corporation
Governments around the world have been working for a long time to set up protections for employees as far as fair wages, safe working environments, required benefits, etc.
The main way gig workers are protected is that governments try to figure out when a gig worker is actually an employee. This is a very effective way to keep gig workers safe by bringing them into the protections already setup for employees. Here’s the USA’s IRS rules for what makes someone an employee…
| Behavioral Control: A worker is an employee when the business has the right to direct and control the work performed by the worker, even if that right is not exercised. Behavioral control categories are: > Type of instructions given, such as when and where to work, what tools to use or where to purchase supplies and services. Receiving the types of instructions in these examples may indicate a worker is an employee. > Degree of instruction, more detailed instructions may indicate that the worker is an employee. Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor. > Evaluation systems to measure the details of how the work is done points to an employee. Evaluation systems measuring just the end result point to either an independent contractor or an employee. > Training a worker on how to do the job — or periodic or on-going training about procedures and methods — is strong evidence that the worker is an employee. Independent contractors ordinarily use their own methods. Financial Control: Does the business have a right to direct or control the financial and business aspects of the worker’s job? Consider: Significant investment in the equipment the worker uses in working for someone else. > Unreimbursed expenses, independent contractors are more likely to incur unreimbursed expenses than employees. > Opportunity for profit or loss is often an indicator of an independent contractor. > Services available to the market. Independent contractors are generally free to seek out business opportunities. > Method of payment. An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time even when supplemented by a commission. However, independent contractors are most often paid for the job by a flat fee. Relationship: The type of relationship depends upon how the worker and business perceive their interaction with one another. This includes: > Written contracts which describe the relationship the parties intend to create. Although a contract stating the worker is an employee or an independent contractor is not sufficient to determine the worker’s status. > Benefits. Businesses providing employee-type benefits, such as insurance, a pension plan, vacation pay or sick pay have employees. Businesses generally do not grant these benefits to independent contractors. > The permanency of the relationship is important. An expectation that the relationship will continue indefinitely, rather than for a specific project or period, is generally seen as evidence that the intent was to create an employer-employee relationship. > Services provided which are a key activity of the business. The extent to which services performed by the worker are seen as a key aspect of the regular business of the company. |
If you read all that, and you’ve been an independent contractor for a while, you probably said, “Hey wait!” Yes. The independent contractor thing is very often abused, and I know the US government still hasn’t figured out how to fix it.
Employees are protected. Independent contractors are not. Corporations are.
We know that corporations have lots of great protections. They’re our precious babies that keep us full of corn syrup.
The majority of the problems are new
Two things that are really going to crush the potential income for gig workers are provided by technology : long-tail connection & globalization.
Long-tail connection for example Uber connected people who weren’t able to connect without technology. Only a few people wanted to drive a taxi, and enough people wanted to take a taxi to pay for the industry. Technology made it possible for the few people that wanted to drive a little bit and pickup some cash to connect with the people that wanted to save money on a taxi. There was no way before for a dispatcher to call thousands of out of work standups and actors and ask them if they felt like driving that moment.
Globalization is incredible. You can pay someone in romania $500 in five minutes. A lot of websites are connecting you with the service you need and you don’t have to know where in the world that gig worker is.
The use of globalization and long-tail connection is going to be amplified by this pandemic because now companies are realizing their localized offices are not that important to productivity. Soon they’ll notice that their loyal employees are not adding as much value as delegating projects overseas to specialists.
Corporations are going to keep looking for ways to save money within the law, the government will not be able to protect gig workers.
If we don’t want to be employees during this time, we most likely want to own businesses.
… a business that can not be gigged out. That means…
- Offer a unique value that can’t be compared
- Communicate your unique value
- Make the value so high that you can charge enough to afford growth and operating expenses
If you don’t have a strong brand that stands out from the pack, you’re going to be competing on price. There will always be someone who can charge less. A business that’s not growing is dying.
Oh my god, I’m a gig worker!
The time is now to start big picture planning. Being a “good” comedy writer, or a “creative” director, or a “funny” author that charges enough to pay bills is not enough.
Get a job on a staff where you can build your value and never be gigged out. Or, start a business where you offer a unique desired service.