What Does the Gig Economy Mean for Workers?

Source: Sarah A. Donovan, David H. Bradley, Jon O. Shimabukuro, Congressional Research Service, CRS Report, R44365, February 5, 2016

The gig economy is the collection of markets that match providers to consumers on a gig (or job) basis in support of on-demand commerce. In the basic model, gig workers enter into formal agreements with on-demand companies (e.g., Uber, TaskRabbit) to provide services to the company’s clients. Prospective clients request services through an Internet-based technological platform or smartphone application that allows them to search for providers or to specify jobs. Providers (i.e., gig workers) engaged by the on-demand company provide the requested service and are compensated for the jobs. Recent trends in on-demand commerce suggest that gig workers may represent a growing segment of the U.S. labor market. In response, some Members of Congress have raised questions, for example, about the size of the gig workforce, how workers are using gig work, and the implications of the gig economy for labor standards and livelihoods more generally. With some exceptions, on-demand companies view providers as independent contractors (i.e., not employees) using the companies’ platforms to obtain referrals and transact with clients. …. However, gig jobs may differ from traditional freelance jobs in a few ways. For example,
coordination of jobs through an on-demand company reduces entry and operating costs for providers and allows workers’ participation to be more transitory in gig markets (i.e., they have greater flexibility around work hours). The terms placed around providers’ use of some tech-platforms may further set gig work apart. For example, some on-demand companies discourage providers from accepting work outside the platform from certain clients. This is a potentially important difference between gig work and traditional freelance work because it may limit the provider’s ability to build a client base and operate outside the platform. …. In addition, certain other benefits (e.g., paid sick leave, health insurance, retirement benefits) that are often associated with traditional employment relationships may not be available in the same form to workers in the gig economy. Should Congress choose to consider ways of increasing access to such benefits for non-traditional employees, new mechanisms, such as portable benefits or risk-pooling, could serve to provide benefits to workers in the gig economy. ….