Not all gigs are equal

Since Hillary Clinton used the term “gig economy” in July 2015 there have been as many reports as there are definitions to describe what we mean by the term. As our first report “In Search of the Gig Economy” noted, it is important to define what we mean if we are to fully understand the impact of these technology-platform-driven business models and how they impact on labour market participants. For me the most important understanding that we need to grasp is that those who accrue value from such platforms, differentiates them.  There is currently a polarised debate about the impact that these disruptive technologies have on those whose services are monetised through them.  Principally there is an active debate about whether service providers should be accorded employee status with its accompanying benefits and safeguards or whether, as the platform providers generally argue, that those offering services on their platforms have self-employed status and therefore have no such rights. This debate continues to rage with a variety of outcomes especially across different States in the US.

My focus here however is to build on our earlier report to say that definitions do matter and that not all “gigs” are equal in terms of the costs and benefits to those who use such platforms to market their services.  Comparing Uber and Airbnb for example begins to shine a light on the winners and losers in the platform-based on-demand economy.

While Uber tells us that they are helping generate income for those that are trading their driving skills on their platforms, the returns and efficiencies of this model principally accrue to the platform owners and to consumers. In this model, those who provide their driving skills and their depreciating assets (cars) may in the long-term have both a wasting asset and a less advantageous employment position if they are deemed to be self-employed. Short-term income gains may be offset in the longer-term by these costs to the service providers.

Airbnb presents a rather different proposition.  Although superficially it may be seen as part of the “gig economy” the asset ownership by those renting or “sharing” their home over this platform means that the service providers start and finish in a rather different position from those providing low-level “commoditised” services on an Uber -type platform.

It is true that Airbnb enables individuals to monetise their spare accommodation – using the platform to connect the owner of the asset with the consumer – creating an efficiency in the market place. However, those that are providing Airbnb are already asset-rich (home-owners) and are accumulating returns from what is in most circumstances an asset that is also appreciating over time.  Provision of the asset over the platform is clearly NOT impacting on the owner’s employment status.

While both platforms enable individual service providers to generate additional income, there the similarity seems to end.  At one end of the spectrum (Uber and similar platforms such as Deliveroo) are commoditising service provision in the “on-demand” economy and may be affecting the employment status of providers, while at the other extreme, platforms such as Airbnb are enabling leverage and return on what (in the UK at least) are likely to be appreciating assets with no impact on employment status.

The differential outcomes from provision over these platforms seems to me, to suggest that it is important to further clarify and refine this rather sweeping term – the “gig economy”.