It’s a work arrangement that seems tailor-made for a high-cost, tech-savvy university town like Flagstaff: Create part-time, on-demand jobs by using the Internet to match customers with the service or product being offered. Shed a regular schedule and a boss, but at the same time go without health insurance and paid vacations.
Welcome to the gig economy. If you haven’t heard of Uber, Lyft, Airbnb, Etsy, Instacart or goPuff, you will. Estimates put a quarter of all workers as being involved in the gig economy, rising to half 10 years from now.
In Flagstaff, freelancers and independent contractors sprang up like topsy after the Great Recession led to layoffs and reduced hours from 2009 through 2012. Many who managed to keep their homes and vehicles credit stringing together a variety of part-time jobs – gigs – even if they didn’t come with benefits.
KEEPING THEIR GIGS
Today, the Flagstaff economy is perking, which also means housing costs are again at the top of the region’s unaffordability index. So workers who are back in the office or classroom haven’t given up their gigs, and the new online facilitation apps have attracted even more participants.
As we’ve been reporting this week, the Flagstaff gig economy supports a dynamic mix of multi-tasking entrepreneurs and artists, teachers driving for Uber on weekends, self-employed editors and Airbnb hosts. They share a tolerance for taking risks with a new business model that untethers their labor from direct supervision and corporate red tape. But they also have forgone the synergy of face-to-face collaboration with office colleagues and the social support that comes with most workplaces.
Flagstaff employers are also part of the gig economy, like it or not. Small businesses are competing for workers who might prefer being independent contractors, resulting in some employers offering more workplace flexibility in return for retaining some control over assignments and performance. On the other hand, as the minimum wage in Flagstaff climbs to $15 an hour within three years unless overturned by voters, gig work that nets much less than that may seem less attractive than even a half-time retail store job that guarantees as least $300 a week.
NOT GETTING RICH
And so far, financial rewards have not been the linchpin of the gig economy. Yes, some Airbnb hosts in upscale neighborhoods report incomes of $10,000 a month. But the bulk of part-time, online gig jobs are netting less than $500 a month, according to surveys. And if the only way an Uber driver can earn a weekly living wage is to drive more than 40 hours, how flexible can their work schedule really be?
The biggest concern with the gig economy among economists is the untethering of gig workers from health and welfare benefits without an adequate welfare safety net in place. Unless Obamacare survives as a portable health insurance program, gig workers will have little recourse to affordable policies in a U.S. system that anchors health coverage in the workplace. And as for short-term disability insurance, jobless benefits and paid vacations, the U.S. system simply doesn’t recognize the labor put in by an independent contractor as equivalent to that produced by an office or factory worker.
Some countries in Europe have already set up portable benefits portfolios that are based on income, regardless of where it is generated. And some states, like Massachusetts and California, are arguing in court that Uber drivers and other gig workers are essentially employees for the purpose of minimum wages. Arizona, however, has taken the opposite tack, contending that the so-called “sharing economy” of Uber and Airbnb deserves no regulation at all. In fact, the Legislature and governor have barred cities from regulating Airbnb in any way, potentially turning residential neighborhoods in vacation hot spots like Sedona and Flagstaff into short-term rental enclaves.
We don’t think that regulation necessarily should be a first response to disruptive technologies and new business models. But as Arizona has recently learned with its hands-off approach to Uber’s self-driving vehicle test runs in the Valley, when things go wrong there is no oversight in place to determine why and how to fix it.
That’s a big risk to take with something as important as potentially half the labor market by the year 2030. If workers are to be cut loose without a net – either by their own choice or by employers – then it makes sense to take a close look at which parts of the current gig economy serve the common good and which ones fall short.