Free Market

Utah Will Reap the Benefits of Embracing the Gig Economy

Since the industrial revolution, the concept of work has been relatively consistent. Working a job for a set period of time in a specific location for a particular organization. The framework has held up nicely over time, but as we enter a new era that increasingly leverages digital technology, it is worth revisiting this model and seeing where and how it can be improved. When thinking about the future of work, it is important to consider how the shifting dynamics of the work environment will impact the way Utahns interact with one another. 

The concept of the future of work really made headway when peer-to-peer networks like Uber and Airbnb were first introduced. They were new visions of preexisting industries, a derivation of the traditional models used up to that point. Infamously in New York City, taxi cab medallions were worth over $1 million each, and the service was lacking. Hotels offered an experience but in a fairly rigid and expensive environment. 

The unique thing that Uber brought to the table was that it offered users the same opportunity to catch a ride from location to location, but for significantly less money, with far better service in the process. Rather than needing taxi medallions or jumping through many burdensome and questionable regulatory hoops, people could simply use their personal cars to transport people from place to place. The price of a taxi medallion in New York City has since plummeted to around $150,000. For Airbnb, it offered homeowners the unique opportunity to be able to rent out their home when they were not using it.

One of the largest benefits the gig economy offers is that it allows for people to have the much-needed flexibility in how and when and where they work. It is an extremely attractive offer for low-skill workers or individuals who may need flexible hours to work when it best suits their schedules. For workers who use the platforms well, the job is no longer a side gig but offers the possibility of becoming a primary means of earning money. For example, one Uber Eats driver was on pace to earn over $100,000 a year only using the one service. Even if a person chose to work five days a week, they would earn an estimated $72,540. To put that in perspective, the median household income in Utah in 2019 was $75,780. 

People who work in the gig economy are essentially contractual or freelance workers, rather than having a traditional structure of employment. It is gaining in popularity, too—the number of gig workers has significantly increased in recent years, growing 15% since 2010 in the U.S. The popularity increase is in part due to workers having the opportunity to quickly and easily be connected with jobs that are in high demand. Since workers don’t have to go through a normal hiring process, which can be costly and time-consuming, the gig economy shortens the timespan of matching workers with jobs.

Utah has not always been the most accommodating when it comes to dealing with some of these kinds of companies. State and local governments have had numerous run-ins with gig economy companies like Uber, Lyft, Airbnb, and most recently, Turo. But in order to ensure that the state is prepared for the future work economy, it must take measures to improve its receptiveness to the industry. The wrong approach to gig work could prove to have drastic impacts that disproportionately affect lower-income individuals. 

Look no further than the infamous Assembly Bill 5 in California, which compels gig economy platforms to treat people using their platform for flexible work as employees. This bill has caused all kinds of trouble, and the exemptions list is starting to pile up. If gig economy platforms cannot retain their unique models, then the country very well may go back to an era of higher prices along with lower quantity and quality, leaving both consumers and workers worse off in the process. 

In this upcoming session, the state legislature will consider a bill seeking to expand the scope of workers that could qualify as independent contractors. The measure will seek to address the increasing conflict that exists between gig economy platforms and the traditional model of employment. It is important for the state legislature to address this issue because other states are looking to implement policy in this sector that could prove disastrous. Embracing the future of work can empower Utah to be better prepared for a dynamic work environment, one which can enable workers to have more choices and flexibility than ever before.