Editor’s note: This is the third in a four-part series on the gig economy.
While the gig economy has been spawned by technology such as Uber apps, the technology sector itself is a beneficiary as well.
“The tech sector has been one of the earliest adopters of any form of disruptive or nontraditional workforce model,” said Shervin Talieh, CEO of Partner Hero, which hires employees to provide temporary services to startups.
In the tech industry, gig work has two perspectives. First, there’s the hiring company itself, which could be anything from an established enterprise company to a startup, said Nick Crabbs, a partner with Vynyl, a seven-year-old Boise-based company with offices in several other locations, including Southern California. His company gets hired by other companies to work on specific projects.
“When you have something very specific you need to get done, sometimes it’s easier to pay the extra bucks and pay an expert, who isn’t an employee, to get it done the right way,” Crabbs said. “We’re seeing that a lot more, especially from big companies.”
It’s the same story with startups, Crabbs said. “If you have to hire an employee and have them on payroll, that’s a problem if you only need them to do one thing,” he said. “Startups have always been using freelancers or subject matter experts as consultants to solve specific projects.”
On the other side are the workers themselves, who may prefer the freedom and security of gig work, or who have a day job as well as side gigs. And as with the Uber and Lyft apps, technology platforms such as Upwork paved the way, Talieh said. Not only did that make it easier for companies and workers to find each other, but it legitimized the contracting profession, he said.
Gig work can also be more secure.
“Those people can sit in their house and make thousands of dollars without ever leaving their couch,” Crabbs said.
“A very good designer is more likely to strike out on their own and have multiple clients,” Talieh agreed. “Most startups are going to fail.”
Instead of earning a $100,000 salary, that designer could earn $150,000 in total from two or three clients, who save money because they don’t have to provide benefits or office space, he said. “You’re optimizing for de-risking outcomes.”
What is a technology gig employee?
A problem, both nationally and in Idaho, is figuring out the size of that component of the gig tech economy. While a plethora of statistics have been released in recent years, they encompass everything from contract programmers to Uber drivers, from people who have been full-time contractors for years to people who do it occasionally on the weekend.
For example, the size of the gig economy workforce ranges from 4%, according to the JPMorgan Chase Institute, to almost 40%, according to the Freelancers Union — and everywhere in between.
In Idaho, the number of gig workers depends on how you define the term, according to the Idaho Department of Labor. A 2018 study noted that 26% of workers between 16 and 64 worked part-time, about 8% of workers were independent contractors (compared with 6% nationwide) and about 4% of workers were small business owners. In particular, of those independent contractors, the share working in professional services grew from 15.8% in 2006 to 21.1% in 2016, the department noted.
Another way to categorize gig workers is as “nonemployers”: self-employed individuals with a business that has no paid employees. The department noted that they make up 73% of all businesses in Idaho, and 18% of paid employment. In addition, they grew 15% between 2005 and 2015. And as with independent contractors, professional services were the biggest growth area, with 3,400 new businesses in that 10-year period.
According to some surveys, participation in the gig economy has actually gone down because the market was inflated by workers who had to find jobs during the recession.
One caveat about the gig economy is employers can’t treat contract workers like employees without running afoul of the Internal Revenue Service.
“If I’m a freelancer, I should have multiple clients,” Talieh said. “If I have one client, and they’re deeply involved in telling me what I need to do and how and setting my schedule, I’m actually acting more like an employee.”