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The Gig Economy

March 23, 2017

We are at the dawn of the Gig Economy. This is where independent contractors perform services on an as needed basis. Examples are the people that work for Uber, Lyft and Airbnb.

This model is working because there is a paradigm shift by overhead laden companies toward using people that cause, and have, little or no overhead. Further many of the people performing the services are either out of work or underemployed and cost less than a fulltime employee. However, some of these people are highly skilled with the demand for their services fragmented but that are utilized globally creating steady work at premium prices. The Gig Economy also permits a better work-life balance for contractors that have choices.

The Gig Economy is enabling temporary assignments and short-term projects to replace full time positions. Digitization and the Cloud has created a mobile work force that can work almost anywhere. Starbucks, McDonald’s and public libraries have replaced many offices for those that want to get out of their house. Many businesses, particularly professional service firms, have eliminated offices and adopted a hoteling set up with work stations for those that need to be in the office in any given day.

The Gig Economy has created agility for a company where they can seek out and use specialists without having to either hope they have someone with those skills, train someone or add a permanent person that would only use those skills sporadically. Further the web has become a consolidator of worldwide outreach opportunities for user and contractor. Additionally, depending on time zone differences, work with tight deadlines can be turned around quickly – sometimes the next morning.

As a new business model there is great disruption in certain areas. Established taxi and hotel businesses are being displaced with free lancers and people renting their private homes. Newspapers, magazines and publications are releasing long-time staff writers and editors and replacing them with part-timers working on specific assignments. Graphic designers and illustrators are being engaged virtually on a project by project basis. Bookkeeping services and tax return preparation are also being doing globally. We all experienced customer care center personnel from all over the world some of whom work from home. In the “old days,” the piece worker model was popular. It seems it has been resurrected in the form of the Gig Economy.

There is a down side. The lack of a permanent and trained work force in some cases can affect quality. If I wrote this twenty years ago I would have included “loyal” after “permanent” but wide spread layoffs have destroyed much of the employer/employee tit for tat that breeds loyalty. Money saved in payroll costs offset some of the loss in production and quality but with the right oversight and management profits can still result. Systems and processes are stepping up to fill the gap. Contractors lose the security of a steady paycheck, and in many cases working gigs is not their first choice but it fills a great need for them.

The Gig Economy is new, but it is here and growing. How it develops remains to be seen, but for now, it seems to be taking hold.

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