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Finlayson Op-Ed: Freelance job market booming, but there are real risks (Troy Media & Business in Vancouver)

The rise of the gig or sharing economy is one of the most visible trends shaping the contemporary labour market.

Gig jobs are an example of what economists describe as non­standard work. Such work can be contrasted with a traditional job, in which a person has a durable and structured relationship with a specific employer within a permanent workforce.

Today, more people than ever generate income via contracting, freelancing, temporary assignments and various kinds of on­call arrangements.

How prevalent is gig work?

Estimates vary, but there’s compelling evidence that it’s on the rise. American economists Larry Katz and Alan Krueger, in cooperation with the Rand Corp., recently undertook a survey to track non­standard work. Their principal finding: 16 per cent of the American labour force is made up of gig workers, up from less than 10 per cent a decade ago. Their research also suggests that most of the increase in U.S. employment since 2005 is due to the increase in non­traditional work.

Another American survey, by the Federal Reserve board, paints a similar picture. It reports that more than one­third of America’s adult population has done informal paid work, either as a substitute for or a complement to traditional employment. Unlike the Katz/Krueger study, this estimate includes individuals who hold a traditional job but earn extra income through gig work.

Canadian data also point to the significant role of non­standard employment – although there are definitional differences that complicate cross­border comparisons. Statistics Canada estimates that non­standard work accounts for more than one­third of total employment. However, unlike the U.S. numbers, this figure includes people who hold regular part­time jobs.

The advent of firms such as Uber, TaskRabbit and Lyft has helped to fuel the expansion of non­traditional employment. Not only are Internet­-based technology platforms changing the way many people find work, they also allow individuals to monetize their non-­labour assets (homes, cars) to produce income.

How is the spread of gig work affecting the economic well­-being of households? Start with earnings. The Katz/Krueger survey indicates that a surprisingly large number of those active in gig work are clustered in the upper 40 per cent of earnings distribution. This is especially true of independent contractors and self­employed consultants. On the other hand, gig work that involves on­call and temporary help assignments is associated with significantly lower levels of pay.  

For many people, gig work is a way to earn extra money to supplement regular employment or other sources (e.g., pensions). For example, a student or someone with a modest­-paying retail or production job may boost their income by doing yard work or selling items on an online platform.

The enhanced flexibility and real-­time connectivity afforded by technology-­based platforms yield substantial economic benefits for service providers and consumers alike. And by lowering the barriers to workforce entry, these innovative technologies could increase the labour force participation rate at a time when population aging will act to push it lower.

But some of those engaged in gig work do so because they can’t find a traditional job or because of requirements laid down by their employer. In other words, for some people, a gig job is a necessity, not a choice.

A key feature of the gig economy is the presence of non­-employer firms that contract for labour instead of developing a permanent, in-­house workforce. Uber is the best­-known example. The presence of such firms raises issues around the employment standards and working conditions that apply to people doing non-traditional work.

There is a public policy concern that the business models of non-employer firms shift costs and risks to individuals, even though the people supplying the labour may be under the control of the organizations that procure their services. In California, workers have filed class­-action lawsuits against Uber and other nonemployer firms, arguing that they should be classified as employees rather than contractors – and thus gain access to the benefits and legal protections that attach to the employer-employee relationship.

The Ontario government has been reviewing its employment standards legislation to determine what changes may be needed to account for the growth of non­standard work. Other provinces are likely to follow suit.

It’s too soon to know how government regulations and legal jurisprudence in this area will evolve. But the spread of gig jobs is sure to provoke more public debate and policy discussion in Canada in the years ahead.

Jock Finlayson is executive vice­-president of the Business Council of British Columbia.

As published by Troy Media and Business in Vancouver.