The Gig Economy Fallout
When I first started researching this “gig economy” thing I was constantly coming across articles about the flexibility and freedom it offered making much of it seem so sunshine and rosy primarily due to the constant referencing of what I’ve come to call the Uber Et Al’s which is primarily the On Demand Economy which can be more succinctly classified using a JP Morgan Chase study called “Paychecks, Paydays, and the Online Platform Economy” (February 2016) where it distinguishes these various On Demand Gig Economy elements into the Labor Platforms and the Capital Platforms. This Platform Economy doesn’t include traditional freelancers so it’s still not a complete picture of the entirety of the Gig Economy. The majority of these articles I originally read made this whole thing sound wonderful but from my discerning eye I was sniffing marketing or at the very least a lack of understanding depending on the intention of the writer. The more I looked into it the more I discovered that they are not as wonderful as they appear especially in the level of income they generate if you are accustomed to making more than the average $15/hr many of the Uber Et Al’s yield. This is primarily because getting started in the larger income arenas of the Gig Economy such as freelancing takes time to build what Seth calls “Trusted Connections”; these don’t happen overnight so are you prepared for the interim? Do you have an Unemployment Contingency Plan? The Big Picture aka serious income generation is more in alignment with conclusions from the excellent report by the McKinsey Global Institute called “Independent Work: Choice, Necessity, and the Gig Economy” (October 2016) where it delineates the type of people involved with the Gig Economy into four categories; Free Agents, Casual Earners, Reluctants, and Financially Strapped. It is from this that I now refer to myself as “The Reluctant Gigger”. This does include freelancers which appear to be where the better income generation is overall. This is expected where labor won’t generate as much income as specifically honed skills especially when they come with some tenure. Seth’s wisdom addresses this where he discusses the difference between the Average Freelancer and the Quality Freelancer where the averages ones are more often engaged in some element of the race to the bottom in contrast to the quality ones which are in the race for the top.
The point is that not everyone entering into this arena are doing it only because they are seeking the glories of the “freedom and the flexibility” regardless of percentage of total income. Many people, myself included, dream of being independently employed, answering only to ourselves, working the hours we establish instead of those often excessive corporate workweeks of way beyond the “traditional” 40 hours without all of the corporate politics etcetera yet it’s that “Real Job” or “Permanent Employment” resulting in that “Steady and Dependable Paycheck” that we’ve been conditioned to adhere to as a form of being a “responsible adult” that keeps us going instead of voluntarily pursuing it. We admire those who have it at a distance yet cower in fear of the reality of having to always “hunt down” that next bank deposit, all of which is also mirrored in the wisdom of Mr. Godin.
Some are seeking it because they have no choice such as long term positions being eliminated resulting in immense re-employment difficulties in conjunction with depleted cash reserves essentially “shoving” them into the Gig Economy whether or not they’ve heard of it and whether or not they like it as a desperate attempt to maintain some element of their current lifestyle. Or finding work that pays the same but now you’re a contractor which then can mean when that gig is up Continue reading
This post marks the return from a very long and unexpected hiatus from regularly posting my blogs. At first it was only supposed to be a small one of a couple months while I put all of my focus on creating a course on Udemy called The Gig Economy Preparation Guide which is essentially a “One Stop Gig Economy Information Central”. It’s primarily an analysis driven course of 4 hours yet I consider it to be a “Living Course” that will constantly be updated and expanded as I continue to explore this phenomenon. That being said, I already have plans for updates and a major new lesson on the AI impact. Shortly after the course was launched essentially my life informed me that it had other plans all of which were related to dealing with becoming The Reluctant Gigger which I will go into in future posts. I’m now permanently back with lots to say so let’s get on with it…
It’s not too much of a stretch for anyone who takes even a few moments to ponder the relationship between Corporate America and the Gig Economy that they are interdependent. The purpose of this post is to bring forth elements of companies that feed into this expansion of the Contingent Worker and to some degree have caused the expansion of what has now come to be known as the Gig Economy including its many various nomenclatures. It also shouldn’t be too much of a revelation that much of this revolves around its financial aspects. Before I embark upon this little adventure I want to emphatically state that I am not in any way an economist or financial analyst. Everything I will be discussing comes from over 18 years of experience as a Metrics & Reporting Analyst coupled with my innate analytical ability to take in large amounts of information, see their eventual patterns, and from that construct well thought out conclusions.
Over the course of my career, some of my reporting has gone from the “worker bee” to the C-Suite and all points in between. Because of that level of visibility, some people in management would befriend me to get an “inside track” of their information. From that relationship they sometimes would relate some of the “inner workings” of the company. For example, one company was involved with a proposed merger that would give them a better predominance in a region they didn’t have. The news was all a buzz about how this would be used to dominate that market driving prices higher. Their response was that this was not the case and just business expansion. Yet after the merger didn’t go through, I was secretly told that dominating the market and driving up prices was exactly their intention contrary to what was said in public. A combination of these “Whispers at the Watercooler” in conjunction with various news items over the years has resulted in this perspective.
This will not be a one sided account on the “Evils of The Corporate” as I will be covering elements of the Good, the Bad, and the Ugly. I will be using these as a foundation when exploring the recent merger of Amazon and Whole Foods where you’ll see they have participated in these elements to some degree.
The Entrepreneur Spirit
Many companies start out with what can be called the Entrepreneur Spirit. One or more people have a vision that fulfills a need or even can see a need before anyone knows it and then embarks on the creation of this vision. There are many examples of humble beginnings in a living room, garage, basement, or small store with little or no startup cash, long hours and loads of diligence. This can also easily start out as freelancing. Seth Godin says, “Freelancing is the single easiest way to start a new business.” It is the Business Model that determines if the initial business is entrepreneurial or just an independent business. The determining element of this Business Model is the concept of scalability. The vision must be able to expand beyond the initial efforts of those that initiated their vision to the point that they eventually oversee it such as becoming the CEO. This then brings in the element of “money while you sleep”. Referencing Seth again, “Entrepreneurs make money when they sleep. Entrepreneurs focus on growth and on scaling the systems that they build. The more, the better.” This then can go in one of two directions. The Entrepreneur(s) either sell the business and move on or continue to have a hand in its ongoing development as it continues scaling. Eventually outside money becomes involved in order to reach the higher altitudes of scalability. “Entrepreneurs use money (preferably someone else’s money) to build a business bigger than themselves.” – Seth Godin. Throughout several videos and articles Seth gives multiple examples of how businesses can appear to be entrepreneurial but are not because of this fundamental concept of scalability. One reference to this is “infinite growth” which is an important reference to the next foundational element, Profits. Without this, there is no business no matter how big, small, or scalable. Continue reading
It is actually somewhat stupefying the wide variety of ways the definitions used to describe the Gig Economy are used. As I continue to investigate this I keep coming across the same words but not always used in the same way. There are some basic things that are the same such as being an independent contractor and perhaps a Freelancer yet beyond that it’s almost the author’s personal preferences of how to use them especially the term “gigging”. Some gigging articles don’t even mention freelancing and only focus on the On Demand app aspect of this. If you’re like me finding yourself at the short end of a very long stick requiring you to re-invent yourself to some degree, this can be very confusing leaving you to figure it out for yourself even if it means using these terms for your own personal use. It appears that pre-Uber et al, gigging and freelancing were easily interchangeable especially in consideration of the origins of gigging. Freelancers would have a continuous flow of work or gigs some of which are one offs while others would be repeat business of some degree. When Uber et al entered the picture then this concept began to morph into something else which is when “On Demand” entered the Gigging Vernacular differentiating itself primarily via being app based, a “Tap and Go” sort of activity which is not part of freelancing because it is more connections based mostly through Social Media and referrals.
What’s in a name? Well if used to describe something you do, then your identity is involved such as Continue reading
My research into what this “Gig Economy Thing” is all about continues to uncover more and more interesting aspects that I’m not sure are truly being addressed by any one person or organization resulting in a myriad of opinions some of which appear thought out and others not so much. Some of this is due to it not just being relatively new but also as a result of these activities, there appears to be a new employment designation arising as a result of these confusions as this continues to iron itself out which I will explore in a future post. The first question was the most obvious; “What’s the difference between Gigging and Freelancing?” I discovered that although they are frequently used interchangeably, digging deeper demonstrated that is not the case especially due to the persistent growth of the On Demand App aspect which doesn’t necessarily require a specific skill set whereas Freelancing does. You can review that here. The one thing that differentiates a traditional employee from those in the Gig Economy is their tax status of 1099 from which I discovered that this is not a simple tax designation as evidenced by the number of various tax codes. This then brought up the fact that technically those that are considered “entrepreneurs” are also under the 1099 designation so how does that play into the Gig Economy thus explored?
Interestingly and amusing that poor ol’ Freelancing is stuck in the midst of this contrast again, yet when being compared to entrepreneur there appears to be better definitions which at the onset would make one think that it’s better defined but not so much as it appears that many are stuck on the allure of the word “entrepreneur” with some of them either refusing to accept it or at the least not happy about it. The illusion comes from the misconception that anyone who is in business for themselves is an entrepreneur and even further compounded by attempting to understand if one is better than the other or that there’s a wide gap between the two or putting the two together as if they were the same thing but never delineating it. Frustrating when all you want are answers on what they are and how they are different so as to know how it all applies to this Gig Economy.
The dictionary definitions that many articles use further compounds this confusion because although they all have similar initial definitions, it’s when you look at the second definition that it becomes apparent how this definition is being confounded due to “cherry picking” the one you like the best. I’ll use the version from dictionary.com for my example:
- a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.
- an employer of productive labor; contractor.
Its origin comes from the French word entrepredre which means to undertake (1875-80; < French: literally, one who undertakes (some task)). There’s also an indication of its use in connection with theatrical production; 1828, “manager or promoter of a theatrical production,” reborrowing of French entrepreneur “one who undertakes or manages,” agent noun from Old French entreprendre “undertake”. The word first crossed the Channel late 15c. but did not stay. Meaning “business manager” is from 1852”. In contrast to this is the Oxford online dictionary’s definition; “A person who sets up a business or businesses, taking on financial risks in the hope of profit”. This definition only references “business” with no reference to enterprise, both mentions risk, yet the latter “hopes” for profit. Using the French derivative of “one who undertakes or manages” you can understand how some would think that if they are in business for themselves in any capacity they are “undertaking or managing” a business yet its use has continued to expand over time.
That’s enough of these “Blathering Vernaculars of Confusion” as the more you look, the cloudier one’s understanding becomes. A post on Seth Godin’s SAMBA Blog titled “Freelancers vs Entrepreneurs” Continue reading