Tuesday, October 13, 2015

Problems and Uncertainty Dog Gig Economy

How big is it? And is it a ripoff?

Posted By on Tue, Oct 13, 2015 at 10:25 AM

Just what is the Gig Economy and how big and significant is it, really?

Those are crucial questions for many, including the nation’s 83 million millennials ages 18 to 34 who are said to want the new kind of flexibility and freedom that working several jobs at once provides. Or, the secure jobs their parents had no longer exist.

“Today, millennials don’t ask each other where they work but rather what they are working on,” U.S. Sen. Mark Warner says, acknowledging the rise of such online-based job connectors as Uber, TaskRabbit and Etsy.

People who take contractor jobs typically do so without the benefit of health insurance, pensions, labor agreements or other benefits. “What happens when it hits the fan?" asks Warner, who made millions in the 1980s as an entrepreneur in the cell phone industry.

To lay out how Gig workers can be helped, Warner has formally asked the U.S. secretaries of treasury, commerce and labor to provide tax, census and labor survey data so he can determine just how large the Gig workforce is and what it needs.

Warner has also held a series of meetings with young entrepreneurs in Richmond, Charlottesville, Fredericksburg and Northern Virginia.

U.S. Secretary of Labor Thomas Perez likewise is making headlines by drawing attention to what the Gig Economy really is and how workers can be open to abuse. Like Warner, he believes Gig workers need a safety net.

The significance of the Gig Economy isn't a given, however. The Wall Street Journal has reported that there are fewer self-employed workers today -- 6.5 percent -- than there were in the mid-1990s, raising questions about how important the Gig economy is.

Slate has weighed in that the Gig Economy is a “Giant Myth” that is “a figment of the Internet’s imagination,” while acknowledging that firms such as Uber and Airbnb raise issues about fair labor contracts, regulation and local zoning laws.

Fast Company magazine says the Gig Economy won’t last because it’s being sued to death, mostly because of disputes over pay, benefits and taxes.

For an example of the problem, look at “WeWork,” a web-based startup that began supplying independent contractors as office and apartment cleaners in New York City. They were paying workers $10 an hour with no benefits. The workers wanted from $12 to $18 an hour and when they started to organize a union, the company laid off scores of them of them.

Warner says he wants to finish gathering economic and demographic data and come up with proposals by the end of this year that might remedy safety net issues.

One possibility, he says, would be for multi-job millennials to use mobile credit card swiping devices to pay for benefits. With each swipe, part of a payment would instantly go into a savings or benefits fund. Tax breaks could make doing so attractive.

New government programs may not be needed. Warner told me that ideas could be borrowed from the old “hour banks” of years ago. “If you were a carpenter and you worked for 10 different contractors," he said, "you as a carpenter chipped in and the contractors or chipped in for a fund. It wasn’t run by the government but by a trusted third party."

Not long ago, Warner was having one of his meetings with Gig workers at the Greenbriar Café and Coffeehouse near Virginia Commonwealth University. Sitting across from him was Shaylan Broughton, who moved back to Richmond to run her own art firm after attending the Savannah College of Art and Design. “I’m a big risk-taker and I don’t have much coverage," she said, "but I have just taken out an insurance policy."

Other twenty-somethings are forced to work several jobs at once just to make ends meet, such as Walter Alonzo of Manassas.

From late March until late October, Alonzo labors for Prince William County, setting up traps for mosquitoes so they can be tested for West Nile virus. Two days a week, he works at Urban Outfitters in Tysons Corner. Otherwise, he’s studying environmental sustainability at George Mason University although he’s now taking a break.

No long ago, he got a shock. “I was on my parents' health plan and I turned 26 so I’m off, which sucks," he says. "I have to pay ridiculous amounts of money. I’ll probably sign up for Obamacare. Who knows what happens if I lose one my jobs?”

It’s a question that needs answers.



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