Why the Quiet War on the Gig Economy?

You may have heard about the gig economy. It may have brought you to this blog.

It’s something that has allowed ambitious workers from modest backgrounds more opportunities. Those workers can offer services that larger companies didn’t think were profitable. But once those companies start, they can act on more opportunities.

Gigging has allowed people to take on side work on their own schedule. You don’t have to overcommit to a second employer for extra money. Bonus points if it doubles as a creative outlet.

A few have figured out how to make that work into their full-time gig. They enjoy enormous time and creative freedom because of it. Freedom they use to flood your YouTube feed with ads so you can do the same.

The gig economy also comes with a few snags the existing power structure doesn’t like. It centers around 1099 pay, but it takes some background to get there.

New Lessons

You see, freedom in the gig economy comes with a heap of responsibility. Though most people don’t learn this in school.

The structure you learned in grade school helps people become good employees. Somebody else sets the direction. Schools provide enough educated human capital to make the idea reality.

Easy right?

In previous generations, this set the baseline of a semi-comfortable middle class lifestyle. It also set a downside of layoffs when the economy takes a dive. Or sending jobs overseas.

Without any questioning involved, there’s also more room for pay scales to revert to the mean. Regardless of how much one’s effort moves the needle forward.

But when you have the freedom to negotiate your pay? There’s higher accountability for your effort to achieve the desired results.

Building a marketing plan for a client? No room to hide between annual evaluations here. That plan had better provide 3-10x returns on what they spent on you. That is, if you want repeat work or a referral.

New Entrants

What else gave the push to leave a frustrating 9-5 job? Reducing the tax rate for businesses.

Lower overhead made it easier for these business owners to move the needle in their own lives. And for the people they serve.

New businesses, franchise ideas, and associated service provider jobs all came into being. All much faster than pushing stimulus through large employers to open positions.

What makes this arrangement special is the 1099 pay structure.

If you’re not in the know, freelancers who work on limited scope contracts have their pay logged on a 1099 form. Part- and full-time workers have pay logged on a W-2 form.

A service provider can jump in where a company has more opportunity and money than workers. Then stick around as long as the relationship adds value.

If the company needs cheaper labor or better service, it can find it just as easy as before. Service providers needing higher pay or more interesting work can build on their successes and network.

If it doesn’t sound too different from a traditional W-2 relationship, it’s not. Larger companies still need what made those employees valuable in previous generations.

A working 1099 relationship benefits both parties. Resource flows are more stable, quality is known, and they build on past wins. There isn’t as much need for outside interference.

New Competition

But that accountability doesn’t jive with the social safety net.

Because it’s not only their working relationships. 1099 employees are also responsible for their own savings and medical expenses.

Whole industries also rose from the automatic and easy benefits from a W-2 employer. Like insurance and financial service providers. Now 1099 employees question where their money goes and what benefit they get from it.

Several millions of single-person LLCs are still created every month. Granted, the rate is off pandemic highs. But strong alternatives to W-2 employment create a funding problem for the establishment.

New Pushback

It’s not something they are taking quietly.

For example, the NRLB has been working on a rule that could make franchisees into middle managers. Regardless of whether they wanted to be part of the corporate entity.

Why? You can count on government to come down in favor of the biggest players with the most resources.

On the labor side, many contract employees don’t bother to learn their worth. Look at all the stories from Uber and Doordash. Workers complained about low pay, few job protections, or not being able to share enough of the benefits that the parent company made by hosting the platform.

They got what they were asking for. But there wasn’t a lot of room for advancement and pay raises depended on clients’ generosity.

These gig workers demand more pay for the same work to overcome their struggles. And low-skill work that anyone could do. Is it any wonder the market flooded and wages drove down so fast?

This friendly backdrop has allowed unions to enter working relationships that would otherwise stay flexible. But the protections they offer end up keeping people in low skill jobs. There’s less incentive to improve their skills to make more.

The working relationship has changed. It requires a set of muscles that hasn’t been used in generations. And if you don’t use that muscle, chances are it won’t be there when you need it.

New Hope

So is inability to negotiate or self-evaluate worth putting the economic genie back in the bottle? It’s tempting when you don’t get the professional respect you deserve. Or the pay.

After all, when did the government stepping in to make things fair ever go wrong?

Or are there alternatives when groups in the gig economy can’t see the path forward to higher pay? Is it better to create a coaching business to get those people there? Not only is one job created, but another job is sustained and several other clients are supported.

This doesn’t mean it’s everyone for themselves. It merely requires a new level of personal responsibility.

I mean, that opportunity is why I got into content marketing.

There is no greater power you have than the ability to negotiate. Negotiating 1099 relationships make growth in the gig economy accessible. And it does so for more people faster than large companies can with stimulus.

Negotiation does not guarantee a better future. Or even your next gig. It demands you keep your eyes open and question how you spend your resources greater than generations’ past.

But if you increase your skills and deliver more value, it can get you where you want to go faster.

Did this post strike a chord or a nerve with you? Let me know your thoughts on the gig economy in the comments.

Hungry for more thought leadership? Keep scrolling for my other posts below.