The harsh realities of the gig economy

On Behalf of | Apr 27, 2017 | Blog |

Career and financial stability is something everyone strives for, but in this gig economy, few will actually achieve. You’ve been taught that hard work pays off and the workforce all about “climbing the ladder.” You must start at the bottom, pay your dues and work your way up. Unfortunately, this business motto has seen better days. Economic inequality is growing rapidly and the gig economy could be to blame.

Are you familiar with the term “gig economy?”

Google defines the gig economy as, “a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.” Silicon Valley and other tech markets have set the standard for these “flexible, non 9-to-5 jobs” that can afford you the luxury of making extra money on the side while continuing to pursue your passions (i.e. Lyft, Amazon, Instacart, etc.).

Larger companies have taken cues from the operations side of these organizations by replacing once protected professions and turning them into independent contract positions. These positions still require you to meet the same qualifications for eligibility, but leave you without benefits, a career path or fair compensation.

Why don’t people just avoid those jobs and look for one’s with more stability?

Finding a stable job is ideal, but is becoming increasingly difficult. The last couple of decades have paved a rough road for many major companies who’ve begun outsourcing a large number of jobs due to the intense pressure to increase revenue and cut down on costs. It is anticipated that 40% of American workers will be in independent contractor positions by the year 2020.

How has this economic shift lead employers to violate labor laws?

As an employee of a major company, your wages, benefits and opportunities for growth tend to increase over time. When that same job is contracted out, not only does your earning potential drop significantly, it also diminishes access to benefits and on-the-job training, which leaves little room for career advancement.

To add insult to injury, as an independent contractor you’re also less likely to be protected by unemployment insurance or workers’ compensation benefits.

The real issue here is that a lot of these companies have gotten greedy and continue to misclassify employees as independent contractors in an effort to cut costs.

Is anything being done to protect independent contractors?

The Department of Labor’s Wage and Hour Division has been slowly cracking down on companies who use independent contractors. They’ve conducted investigations to ensure that employers aren’t cutting corners by misclassifying workers as independent contractors, often taking them to court. How far will it go? Only time will tell.


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