The Gig Economy

Is it good psychologically? Economically? For society? A debate.

Posted Sep 21, 2016

Mark Warner, CC 2.0
Source: Mark Warner, CC 2.0

In the past 50 years, the U.S. workforce has grown by 100% but by 300% in the number of part-time/temp/contract workers who'd rather be working full-time. 

Our move toward replacing more full-time, benefited, stable jobs with temp, part-time, and contract gigs is often called, the gig economy.

Is that trend a net good: psychologically, economically, and as a society?

ANTI GIG ECONOMY: Clearly not. All those victims of the gig economy get less money and fewer benefits, with all the attendant economic and psychological malaise.

PRO GIG ECONOMY: But is it the employer's job to pay people more than fair-market value? If an employer wants to give charity, s/he can but it's wrong for the government, which already hits both for- and non-profit employers so heavily--not just in taxes but mandates from raised Social Security limits and raised Workers Comp and MediCal payments to Obama Care and Paid Family Leave--to impose yet more forced charity. 

ANTI-GIG ECONOMY:  Because externalities such as race, class, and gender affect likelihood of being a Have, it's just to redistribute from the Haves to those who lost in the genetic or environmental lottery.

PRO GIG ECONOMY: You're giving too much weight to external factors and too little to people's intelligence, drive, and willingness to delay gratification.

ANTI GIG ECONOMY:  You can't argue with the fact that the Gig Economy forces all those temp workers to spend more time looking for work. Every time a gig ends, they have to spend weeks, months looking for their next gig. Both job seekers and employers suffer from all that time wasted. Not to mention, it's psychologically stressful for all concerned.

PRO: GIG ECONOMY: Some people like the freshness of going from gig to gig. The freedom to go on vacation when they like. The freedom to say, "I don't like this gig. I'm quitting."

ANTI GIG ECONOMY: Most people like to spend their time working seeing the ongoing results of their efforts. They like socializing and building relationships with coworkers long-term. They don't like looking for work and then scrambling to learn the ins and outs of a new job that pays less and with fewer benefits. And if you're not a star--and most people, by definition, aren't---you'll have long periods of unemployment.

PRO GIG ECONOMY: For a moment, put yourself in the employer's shoes. Employers are people too. If you owned a business, would you survive, especially in global competition, if you had to employ everyone 52 weeks a year, whether you needed that person or skill set or not? Remember that in addition to paying their salary when unneeded, you'd have to pay for all the aforementioned employer mandates. Plus, you're more likely to have to defend a wrongful termination suit--the government has given permanent employees many bases on which to claim wrongful termination: hostile environment, discrimination based on race, gender, sexual orientation, age, whistleblowing, disability, etc. Even if you didn't have to compete with China, India, etc., you'd be more likely go out of business because your labor costs were so high that too few people could afford your product. If you're a nonprofit, you'd have less money to help the needy.

ANTI GIG ECONOMY. There's a huge gap between rich and poor. Allowing employers to hire as many part-time/temp people as they want only exacerbates the problem.

PRO GIG ECONOMY: You're overstating the case. See this review of the data by Stanford/Hoover economist Thomas Sowell.

ANTI-GIG ECONOMY: Sowell's a conservative. The liberal Economic Policy Institute claims the gap is huge.

PRO GIG-ECONOMY: Everyone agrees that rich people earn much more than poor people but remember that, typically, employers pay a given employee more because s/he adds more value: better ideas, more more reliable, has difficult-to-acquire, in-demand technical skills, is smarter, cooler under pressure, lower maintenance and/or brings out the best in coworkers. Would the world be better if less productive people were paid the same as more productive ones?

ANTI-GIG-ECONOMY: I'm not saying they should be paid the same, just not so differently.

PRO GIG ECONOMY: Liberals present statistics distorted to make their case. For example, they cite Fortune 500 CEO pay. Not only does that group constitute a trivial share of the population, CEO stock options benefited from the past stock market rise. If the market goes down, their stock options are worth $0. Besides, per this Bloomberg report, you can't generalize from the top 0.1% to the far more significant top 10 or 20%. that is far from doing as well.

ANTI GIG ECONOMY: As you know, plenty people get promoted because of factors other than merit.

PRO GIG ECONOMY: The Ol' Boy Network nor reverse discrimination play as large a role as you're implying. Anyway, you're getting off-topic. We're talking about the wisdom or lack thereof of the U.S. government restricting employers from hiring people part-time/temp. Doing that would only ensure, as I said, that nonprofits have less money for their cause and make companies to shrink or go out of business, losing out to other countries, which are far less likely to impose such restrictions on employers. That wrests jobs from the very people you claim to want to help. And don't forget, every time government puts a restriction on employers, it increases the cost-effectiveness of employers automating jobs. That further hurts would-be employees.

ANTI GIG ECONOMY: The U.S. should not participate in a race to the bottom. We're the richest country on earth. Humaneness should, pardon the pun, trump profits.

PRO GIG ECONOMY: It won't feel humane when a nonprofit has to cut services to the needy or when a U.S. business automates or goes bust and thus no one will have a job, part-time or full.

ANTI GIG ECONOMY: Don't catastrophize. Employers have enough profit to redistribute more without eliminating many jobs. For example, a review of the literature on the effects of raising the minimum wage finds only small job loss but a significant increase in low-level workers' standard of living.

PRO GIG ECONOMY: Raising the minimum wage costs not just the employer but all of us. When the minimum wage is raised, employers pass that on to us by raising prices. And with many fast-food workers earning minimum wage, that hurts the poor, because they disproportionately patronize fast-food restaurants--You're robbing one poor person to pay another.

And don't forget, raising the minimum wage does cut some jobs. And when those jobs are cut, we all suffer longer wait times, poorer customer service, less clean restaurant and hotel bathrooms, etc.

Nothing can trump the foundational economic certainty that if you raise the cost of hiring, employers will raise prices, cut some jobs, and automate or offshore more, killing more jobs.

ANTI GIG ECONOMY: You're ignoring the fact that when an employer--for- or nonprofit--offers most full-time jobs with reasonable job security, employee morale improves, which not only makes their lives more pleasant, psychologically healthier, it likely improves productivity, decreases employee theft, and so on.

PRO GIG ECONOMY: The question is whether the benefits outweigh the large cost, the inflexibility that full-time employment causes, and the ever greater restrictions on employers. It makes an employer want to say, "The hell with it. I'll get a government job."

ANTI GIG ECONOMY: This may be the most important point: The less you pay people, the sadder or more violent they get. Human contentment must be considered. Plus, when people can't afford to buy things, companies have to reduce their workforce even more, which makes people yet sadder and more prone to violence. If you pare  people's livelihood, you pare people's essence as well as the fabric that holds society together.

PRO GIG ECONOMY: But if you force employers to have obese payrolls, businesses get heart attacks and die. As with many things, maybe the answer lies in moderation: encouraging employers to consider all the psychological, economic, and societal impacts of converting full-time jobs into gigs and/or automating them: impacts on the employees, customers, and the broader society. That way, they'll more likely make wise hiring decisions.

ANTI GIG ECONOMY: Well, that's a place to start.

The takeaway

So did these arguments move your position on the question of whether the  government should restrict employers' ability to hire part-time/temp workers?

Marty Nemko's bio is in Wikipedia. His newest book, his 8th, is The Best of Marty Nemko.