In ‘Gig Economy’ Future, Employees Don’t Exist

The “gig economy” is the term for corporations embracing the “on demand economy,” “collaborative consumption” and “sharing economy” bandwagons to restructure “work” into small projects of limited duration so that big business can justify legally dumping employees and hiring contractors. With employee benefit costs exceeding 46 percent of wages and workplace litigation spiking, “employees” don’t exist in the future of work.

A start-up companies like ride-sharing Uber has 160,000 contractors, but only 2,000–about 1 percent–are employees. The rest do what was traditionally known as “contract work.” The 1099 society has also arrived at more traditional companies, such as Microsoft, that has nearly two-thirds as many contractors as full-time employees. Even small business sole proprietorships have increased their use of contract workers nearly two-fold since 2003, according to TechCrunch.

The U.S. Bureau of Labor Statistics’s latest employer compensation costs estimates that the wages and salary of a full-time worker averaged $22.88 per hour in March. But the cost of benefits adds an additional $10.61, or 46 percent, more for a total of $31.65 an hour.

By turning employees into “gig” workers, corporations save 30 percent by eliminating the 7.65 percent employer portion of Social Security and Medicare taxes, state unemployment compensation insurance, workers’ compensation insurance, Obamacare burdens, company’s 401K and any profit sharing contribution.

“Going gig” also slashes lawsuit exposure to the breadth of employees’ legal “rights” that ballooned under the Obama Administration. Gig workers lack the myriad of new “employee protections” against discrimination and wrongful termination, along with enhanced rights to unionize, be paid overtime, and take numerous family leaves.

Staffing agency employment has been among the fastest-growing sectors of the U.S. economy for the last several years. Since the recession’s official end in June 2009, the industry has added 1.24 million new jobs, or about 12.3 percent of all new private sector jobs. Staffing of temporary and contract workers rose 5.4 percent in 2014, but accelerated by 4.2 percent from the third to fourth quarter–a 16.8 percent annualized rate. G. Palmer and Associates predicts that temp employment will grow 10.5 percent in 2015.

As the financial and legal costs of the “employee” have spiked, 24 hour “digital connectedness” has been evolving from the social realm to the workforce as the preferred means to “interact and transact digitally.” Most Americans and soon most people on earth will have their “digital profiles” stored in digital devices and digital clouds. Those profiles are increasingly “owned” by corporations like a LinkedIn, a Gild, or Entelo.

CVs and résumés are rapidly becoming things of the past for long term work engagements (as in “permanent jobs”) or short-term ones (ranging from projects to micro-tasks). The digitally-capable and digitally-enmeshed population of workers in the gig economy of the future will increasingly be hired and fired through some digital “intermediated” processes, referred to by Andrew Sharpie, analyst/consultant at The Research Platform, as the “New-Net-Work-Force.”

This brave new world has been romantically evangelized by success stories from entrepreneurial contractors that get referrals, early customers, and a stream of repeat business from 1099 gigs through apps like Handy, Eaze, Luxe, and Upwork.

There has not been a good count of “independent workers,” since the U.S. Census estimated there were 42 million in 2006. The Census found that about one-third of the workforce was self-employed or paid as contract workers. But the “Third Annual Independent Workforce Report,” compiled last year by management-services firm MBO Partners, suggests that by 2020 about 50 percent of the U.S. workforce will work independently as freelancers, contractors or small business owners.

The future is not just about the growth of contract jobs in the U.S., but as Breitbart News reported in February there is an huge “transition effort” to dump American tech employees with cheap H-1B visa contract workers from abroad.

Despite the uproar, the Department of Homeland Security refused Senate requests for an investigation of the activity as “premature.” But similar employee dumping actions by Disney and Fossil Group have since forced the Department of Labor to investigate India contractors Infosys and Tata.