Labor unions in the gig economy

When most people think about work, they might imagine commuting to an office, sitting in a cubicle or punching a timecard. Although that’s very much the reality for many Americans, more and more workers are embracing nontraditional jobs.

This phenomenon is what’s known as gig work, a labor market that contributed $1.35 trillion to the U.S. economy in 2022. Believe it or not, that’s a $50 billion increase from the previous year.

Okay, but what is the gig economy? Why is it on the rise? And, most important, how does it intersect with the U.S. labor movement?

What is the gig economy?

The gig economy refers to a free market where freelancers earn income from on-demand, short-term tasks or temporary jobs. The name derives from the world of performing arts, where individuals are paid for one-off performances — aka “gigs.”

This approach is much different than traditional jobs, where people obtain full- or part-time permanent employment. Gig workers, on the other hand, are employed on a contractual basis and may be hired by multiple clients simultaneously.

The gig economy features a wide range of professions. Freelancers may work in more conventional fields like marketing, programming and graphic design, but they also find gig work from platforms like Fiverr, Uber, Doordash and Twitch. These companies have ushered in a modern alternative to freelancing, allowing individuals to earn money doing odd jobs, running errands and completing other small tasks.

The rise of gig work

The U.S. has more than 73 million gig workers, the most of any country in the world. According to research from Credit Summit, freelancers make up roughly 46% of the American workforce, and this number is likely to grow over the coming years.

For the most part, people seem to love working in the gig economy. In fact, after 4.2 million people voluntarily left their jobs in December 2021, nearly half expressed little interest in returning to traditional employment. An impressive 79% of independent contractors prefer freelancing, compared to just 9% who would rather have a conventional job. Furthermore, 82% of gig workers actively choose to work in this model, rather than doing so because it’s a necessity.

Why do so many people favor short-term employment? Here are some of the main benefits:

• Independence: Gig workers are essentially self-employed, meaning they have the freedom to set their own hours and work on their own terms without the pressure of managerial oversight.
• Flexibility: Almost two-thirds of gig workers say the freedom to work flexibly is a key reason for choosing this type of employment. It is sometimes necessitated by childcare, health issues or family commitments that make traditional work schedules more complicated.
• Income potential: Gig and platform jobs have almost unlimited earning potential because people are free to work as much as they please. In fact, the gig worker’s average monthly salary is nearly $7,000, which is almost $2,000 more than a regular employee’s salary.

Why do gig workers need union representation?

Despite its advantages, the gig economy isn’t without its drawbacks. Many platform workers struggle with the following challenges:

• Pay inequality: Demographic pay gaps are a significant problem in the platform economy. Research shows that 58% of the lowest paid gig earners are women, compared to 64% of the highest paid, who are men.
• Lack of benefits: Gig workers are definitionally “independent contractors,” which means the IRS defines them as “people who offer their services to the general public.” This categorization absolves organizations of having to provide the same benefits and protections afforded to traditional employees.
• Unpredictability: Ordinary 9-to-5 employees can expect relatively the same salary at each payday, but platform worker pay is subject to demand. If it’s low, freelancers may see dips in their salary compared to peak seasons. This variability can result in significant financial instability.

These struggles aren’t uncommon in the United States. Unions have addressed similar issues for decades, often to great success. According to the Economic Policy Institute, union workers typically enjoy higher pay, lower wage gaps, better benefits and safer working conditions.

Unfortunately, gig workers don’t have unions advocating for their rights. Strictly speaking, it’s not illegal for freelancers to unionize, but it’s very complicated. For starters, platform workers aren’t in direct contact with one another, making it difficult to coordinate action. Moreover, they’re less willing to advocate for better conditions because they aren’t legally protected from employer retribution.

The good news? There’s still plenty of light at the end of the tunnel. As the gig economy continues its meteoric rise, freelancers will undoubtedly run parallel to the ongoing labor movement. Pending federal legislation, such as the Protecting the Right to Organize (PRO) Act, aims to ease the unionization process for all American workers — gig economy included.

If passed, the bill would fundamentally redefine many gig workers from independent contractors to employees, empowering them to collectively bargain for better working conditions from their employers.