The scariest thing about the gig economy is how little we actually know about it

Gig-ing along.
Gig-ing along.
Image: Collage by Quartz. Images courtesy DoorDash, Handy, TaskRabbit, Lyft, Uber, Washio.
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Earlier this month, hundreds of Uber drivers gathered outside the company’s office in Queens, New York, to protest a 15% reduction in fares.

It was the latest bout of labor unrest to flare since Uber began slashing prices in 100 North American cities in January. Uber insists these cuts benefit everyone by spurring demand in the slow winter months, but drivers watching their per-trip earnings plummet are unconvinced. “This is not partnership,” Mohsin Alvi, an Uber driver of three years, told me at the protest. “This is dictatorship. Uber is dictating this and telling us to do this whether we choose to or not.”

The scene outside Uber’s office that rainy Monday in Queens was familiar. New York drivers also assembled here in September 2014, after Uber lowered its pricing and tweaked the rules concerning which passengers they were required to pick up. Back then, hundreds of protesting drivers were too many to ignore, and the demonstration morphed into a small-scale public relations crisis that led to Uber partly backtracking on its policy changes. This time around, the company had 34,000 drivers in New York City. When a few hundred went on strike, Uber didn’t blink.

Such protests may no longer faze Uber, but that they still happen speaks to the larger tensions between companies and workers in the on-demand or “gig” economy. Workers like Uber drivers are independent contractors. They aren’t formal employees of the firms that pay them and they are free to walk away at any time. But many have come to depend on these services for their livelihoods. They’ve traded steady work and traditional benefits for the promise of “being their own boss.” When a company like Uber suddenly makes top-down changes to the model, it can be a jarring reminder of who’s really in control.

Uber has grown the fastest in the on-demand space and, in doing so, acquired the most vocal critics. But plenty of others could be next. Doordash. Handy. TaskRabbit. Washio. The gig economy is forging ahead, disrupting industries, as well as challenging the very structure of America’s labor force. By the best estimates, these companies still make up a small fraction of US employment, but they’ve generated a disproportionate amount of hype and are receiving a disproportionate amount of attention. When nationwide protests and multibillion-dollar valuations are in play, that’s hardly surprising. Deals are being struck, regulations implemented, decades-old labor policies reconsidered in ways that could reach far beyond the Ubers of the world.

And for what? The truth is that we know startlingly little about on-demand work. Uber may turn out to be the greatest labor triumph of the 21st century, or its worst failure. But by the time those measures are taken, it may also be too late to turn back.

From “just-in-time” workers to “gig economy”

The Bureau of Labor Statistics first attempted to study flexible, on-call work in February 1995. The US economy had emerged from recession a few years earlier, but fears were growing about a new tendency among companies to hire temporary, replaceable workers. “Has the era of lifetime jobs in the United States vanished and, in its stead, a ‘just-in-time’ age of ‘disposable’ workers appeared?” an economist for the BLS wondered in a 1996 paper. “Reports of corporate downsizing, production streamlining, and increasing use of temporary workers have caused many to question employers’ commitment to long term, stable employment relationships.”

As the bureau soon learned, keeping tabs on temporary and on-demand workers was no easy task. Some were part time, others full time. Some were self-employed; others found gigs through staffing agencies. Most often, what these workers had in common was what they lacked: unemployment insurance, minimum wage protection, health benefits—any of the social safety nets built into more traditional jobs. The BLS’s first supplement to the Current Population Survey on the matter, “Contingent and Alternative Employment Arrangements,” gave three different definitions of “contingent workers”; each yielded a different employment estimate.

The BLS reran the contingent work survey four times over the next decade, but then its funding dried up. In 2005, the combined total of contingent and alternative workers topped 18 million people, or 13.6% of the labor force. The supplement hasn’t been conducted since, and only this January was approved for inclusion in the May 2017 CPS. “The concern is that it’s undermining the quality of the statistics and our ability to keep pace with changes that are occurring in the economy,” says Susan Houseman, an economist at the W.E. Upjohn Institute for Employment Research.

BLS history isn’t sexy, but it’s important to understand for two reasons. First, as Uber, Lyft, TaskRabbit, and other gig companies have grown into sizable platforms over the last five to 10 years, the government economists who usually keep the best data on this kind of stuff haven’t been doing so. Second, to realize that the gig economy, so often termed a revolutionary disruption of our labor market, isn’t actually that new. Quite the contrary, it’s a small, tech-enabled facet of an outsourcing trend that’s been underway since at least the 1990s, rebranded for the masses by Silicon Valley.

You might say that rebranding has been the industry’s biggest success to date. Two or three years ago, few had heard of the on-demand economy, and a gig was still something your friend’s band played at a bar. Today, the billion-dollar startup club is littered with on-demand companies, and gig might be the buzziest term in tech. Everyone wants to be the next Uber, and it’s no secret why. Signing up workers as independent contractors instead of traditional employees can save companies an estimated 30% on staffing costs. Assetlessness is the new asset, especially where labor is concerned.

Spreading the gig gospel

As gig has spread through Silicon Valley and beyond, so have the efforts to sell it. Take a panel on the “Future of Work” hosted earlier this month by Intuit, the financial services firm that owns TurboTax, at the Ivy Lounge of the five-star Gansevoort Park Avenue in New York. The swanky gathering included hors d’oeuvres, an open bar, and glossy packets with new Intuit data on the gig workforce. It also featured fliers on QuickBooks Self-Employed, a taxes- and expenses-tracking product that Intuit rolled out for gig economy workers in January 2015.

Intuit’s recent survey finds that gig workers are on the whole happy with their jobs. They like the independence and the flexibility. These are points often repeated by gig economy companies, and they contrast sharply with the narrative more often told in the media—of evil billion-dollar companies that exploit unsuspecting, disempowered workers. Speakers on the panel—mostly leaders of on-demand companies—were quick to point out this discrepancy. “When there’s a group of contractors who say, ‘I want a different model’ … they’re not asking for the model of full-time employment, they’re asking for the nice things that come with it,” said Arun Sundararajan, a professor at New York University’s Stern School of Business.

What was striking about the Intuit panel was that the only people missing were the ones we were all there to discuss; gig economy workers didn’t seem to have been invited. It’s another example of the ways in which gig workers can feel strangely isolated from the conversations taking place over their future, which lately have reached all the way to Washington. Hillary Clinton over last summer promised to “crack down” on the gig movement. Sen. Mark Warner, a Democrat from Virginia, is open to revamping labor law to accommodate it. “I think this is a fundamental transformation of work that goes beyond Uber,” Warner tells me. “There might be a chance to re-empower, to reimagine the social contract.”

That these discussions are happening across so many sectors—business, tech, politics—is a testament to how quickly and persuasively the gig gospel has spread. But it should also accentuate just how much even the most basic data isn’t keeping up. We still don’t really know who’s working in the gig economy, or why.

What research we do have is scattershot. Conservative estimates—such as one released by JPMorgan Chase last week—find that just 0.4% of adults make money from gig jobs in any given month. But numbers spun out of industry surveys are much more ambitious. Intuit predicts that 7.6 million Americans will be “regularly working” for on-demand platforms by 2020. A report released in January by Burson-Marsteller, Time, and the Aspen Institute, claimed that 45 million Americans, or 22% of the adult population, have offered services on gig platforms.

The unknowns

When fundamentals like that are still unknowns, it’s tough to even think about the overriding issue: whether gig work is good for the US economy writ large. “Individual workers who really value flexibility may be much better off” in the gig economy, says Lawrence Katz, an economics professor at Harvard who is studying gig work. But it could also be eroding standards for other workers. What if much bigger employers like Walmart pivoted to the Uber work model? There are always “effects on the equilibrium of the labor market,” Katz says.

These questions are complicated, and ones that even the best data won’t answer. But better facts would help inform the conversation. “The real danger is that we revamp our labor and employment laws in the interest of a handful of companies based on very little information, and that can spill over to affect millions of workers,” says Rebecca Smith, deputy director of the National Employment Law Project.

There are also legal factors to reckon with: Uber heads to trial this June for a class-action lawsuit in federal court in California over whether its drivers are employees or independent contractors. Lyft is attempting to settle on the same question, and suits are pending against many other gig companies. A final ruling could take years.

But technology moves faster than the courts or the Bureau of Labor Statistics, and the gig economy meanwhile is pushing forward. All indications are that the hype is working. Last year, 22 states passed laws that protect and legitimize Uber’s service. In three of those states, the legislation also included provisions that recognized drivers as independent contractors, effectively validating the gig model.

Against that, even the most vehement protests look like a sideshow.