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The Growth of the Gig Economy: Negative Consequences

Today, there are some negative consequences of mass self-employment in the context of business uberization, which is rapidly gaining momentum. The situation is asymmetric – corporations are exempted from any guarantees to employees, and personnel, in turn, cannot normally defend their rights since they do not formally belong to the staff of organizations. Since the gig economy is largely unregulated, it should be seen as part of the low-paid, informal economy.

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Gig economy platforms shift the burden of risk to the workers they hire, which makes it a negative trend. They use a regulatory gray zone that allows them to pay little or no taxes, as well as avoid the costs of being a decent employer (Vallas & Schor, 2020). Gig economy platforms today are a manifestation of the informal labor relations of the 21st century. They are not much different from the conditions in which employees were in the 19th century, in particular, in countries with weak or no labor protection mechanisms.

Employers in the gig economy are destabilizing the labor market as super-flexible models are used by companies to take over the most productive workforce. The US government may intend to align the short-term employment market with the standards and regulations that other workers should meet (Vallas & Schor, 2020). However, gig economy platforms warn that tightening standards will undermine the overall economy and leave workers on the losing side. The proponents of the self-employment economy believe that modern workers have the flexibility to change jobs (Marmor, 2018). However, they ignore one important flaw in the gig economy, which is the social role that long-term employment plays in flattening the worker productivity ratio.

Global changes are brewing in the global labor market and the gig economy. The US government is scourging to end unfair labor practices associated with so-called zero contracts. However, inhibiting the growth of the gig economy or reducing self-employment may not be enough to restore a level playing field. Companies may continue to take on the highest-performing workers, embellishing the benefits of flexible working with short-term contracts. Providing additional tax incentives to companies that offer employees long-term employment contracts can be a great help in this situation. So far, this problem has not yet received such a wide response, but it is only a matter of time.

References

Marmor, T. R. (2018). Social insurance and American health care: Principles and paradoxes. Journal of Health Politics, Policy and Law, 43(6), 1013-1024.

Vallas, S., & Schor, J. B. (2020). What do platforms do? Understanding the gig economy. Annual Review of Sociology, 46, 273-294.

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StudyCorgi. "The Growth of the Gig Economy: Negative Consequences." July 21, 2022. https://studycorgi.com/the-growth-of-the-gig-economy-negative-consequences/.

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StudyCorgi. 2022. "The Growth of the Gig Economy: Negative Consequences." July 21, 2022. https://studycorgi.com/the-growth-of-the-gig-economy-negative-consequences/.

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StudyCorgi. (2022) 'The Growth of the Gig Economy: Negative Consequences'. 21 July.

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