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The Gig Economy Screws Over Everyone But the Bosses

It keeps wages down and the majority of gig workers would prefer the security of a full-time job, a recent report says.

by Anne Gaviola
Jul 24 2019, 6:42pm

Photos via Shutterstock

Alex Kurth has never worked a typical 9-to-5 job, and he says he’s mostly OK with the fact that he never will. The 36-year-old Toronto resident cobbles together a living made up of four different gigs: he bartends at a craft brewery, is a sound technician, delivers takeout for Foodora, and he’s a representative for his fellow bicycle couriers who are unionizing.

Between his four jobs, he usually works between 30 and 40 hours a week, which makes him about $30,000 CAD a year. Kurth said his hustles don’t give him much when it comes to job security and benefits like health, dental, paid vacation or sick days. “Companies have realized that they don’t need to have dedicated, salaried, 9-to-5 with benefits employees and just treat everything as gig work. They can get away with that and there seem to be no repercussions. Everybody is a temp, short-term contract, or freelancer,” he said.

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36-year-old Alex Kurth works four different jobs and makes around $30,000 a year. (Photo via Tess Siksay)

People like Kurth reflect a shift in the way millennials and Gen Z work—nearly 60 percent of 18-24 year-olds are part of the gig economy, according to a Bank of Canada report. A bunch of side hustles, contract work, and freelancing were part of previous generations’ entry into the workforce. But labour experts say this trend is growing and is less likely to be a stepping stone to stable, full-time employment at one company—rather, it’s going to be the norm throughout a person’s career. And this trend hurts everyone, other than the people doing the hiring.

Thanks to technology and a pool of cheaper, on-demand workers available for specific projects as they arise, employers haven’t felt the need to raise wages for gig workers or their staff alike. According to the Bank of Canada, roughly 1 in 3 people do informal, or gig, work—which mirrors the trend in the U.S., where an estimated 36 percent of the population participates in informal work. The central bank’s survey suggests that gig workers tend to make less than their full-time, salaried counterparts over an equivalent time period.

In a speech in January, the Canadian central bank’s senior deputy governor Carolyn Wilkins outlined the changing relationship between employers and workers. “Employers are making greater use of employment agencies and short-term contractors to replace salaried employees… The gig economy has also created a new set of jobs in Canada and elsewhere that reduces the bargaining power of workers as well.”

Based on estimates, all the gig work across Canada is the equivalent of 700,000 full-time, salaried jobs, or 3.5 percent of the total labour force. That’s a lot of “formal” positions that aren’t being filled and according to the Bank of Canada, that’s contributing to lower wages across the board.

Raises are harder to come by

There was a major change in how raises are handed out, starting in the mid 1990s. It’s a phenomenon that economist Linda Nazareth has written about, based on findings by the Bank of England, which suggests that the best way to get a pay increase is to switch jobs rather than stay put—which wasn’t always the case.

“The old model is that when companies saw people changing jobs, they’d say ‘oh, we better give raises to the people who are here because we don’t want to lose more people.’ That’s kind of gone,” she said. “It used to be that you stayed at your job for a long time and you got your raise but now it’s harder to do that. And it’s harder to keep the job for a long time. If you want a raise now, you have to be more aggressive.”

Nazareth is the author of Work Is Not a Place: Our Lives and Our Organizations in the Post-Jobs Economy and she says there’s a gap in social policy to reflect the lack of benefits and security for gig workers.

“You can only get parental leave if you’re an employee and that doesn’t sync with the reality that we have. If you’re an independent yoga teacher, and you have a child, you get nothing covered, even though you’re paying into various things. That doesn’t seem right to me; that’s something that needs to be fixed,” she said.

When it comes to retirement savings, which used to be built into full-time salaried jobs, gig workers are out of luck. Kurth says he just started putting some money aside for retirement this year. “Before that, I hadn’t saved a cent. I consider myself a millennial and I think that we’re screwed when it comes to things like retirement. I know very few people who are saving towards the future.”

For now, Nazareth says millennials can play the waiting game—and hang on in the realm of informal work until older employees leave the workforce. “Maybe when there are retirements, some of them get the permanent job. It might be that the economy picks up and their bargaining power picks up a little bit. Or it might be the opposite, that technology spirals and they, like everyone else, has to deal with whatever they can get.”

The truth about gig work

The tricky thing is that the term “gig worker” and the informal economy aren’t exactly defined. According to Nazareth, it’s an overly broad term and there has to be a better way to group them into categories that make it clear who is most vulnerable. After all, a tech worker going from one lucrative contract to another isn’t in the same situation as someone who is precariously employed.

Kurth and his four-job hustle, is obviously a gig worker. And even though he acknowledges the pitfalls, he says he wouldn’t have it any other way because he values the freedom and flexibility that gig work provides.

Although many share Kurth’s viewpoint, the Bank of Canada’s data shows that more than half (57 percent) of current gig workers said they would trade their current side hustles for a formal job, for no additional pay. The number of young workers who said they would swap was even higher, at 90 percent. This shows that although millennials and Gen Z are trying to make the best of their situation, the vast majority aren’t cobbling together side hustles by choice—they would swap freedom and flexibility for stability and job security in a heartbeat.

Follow Anne Gaviola on Twitter .

Tagged:
Millennials
gig economy
canadian news
job security
side hustle
Bank of Canada
Foodora
Food delivery
informal work
job benefits