The Ethical Dilemma of the Gig Economy

Gabriele Grant '28

Photo by Erik Mclean

Work in the United States following the COVID-19 pandemic looks significantly different, mainly due to the widespread switch from in-person to online work. This change is the preferred reality for young and more experienced people alike, considering the many added benefits that being at home grants them. Extra time with family, increased work-life balance, and the option to stay home immediately put commuting to work daily in the “undue burden” category of tasks. As the contingent of people working from home grows exponentially in the years after 2020, the growing relevance of the “gig economy” becomes impossible to ignore. 

What is the Gig Economy?

The gig economy consists of people earning their living by doing freelance work or working on a short-term contractual basis. Gig work is an alternate way of making money that allows for increased flexibility and added autonomy over one’s career direction that might not be available as an employee. The gig economy consists of a plethora of job occupations, including, but not limited to, Uber drivers, online tutors, and consultants. The benefits of the gig economy aren’t confined only to those who choose to do gig work; it also poses a convenient way for employers to save money by not being compelled to provide perks like health insurance benefits or paid time off for vacations. Having mentioned this, however advantageous the gig economy is on both sides of the spectrum,  several aspects of this job market are not as favorable.

Gig Economy Cons for Employers

Although the pros of the gig economy greatly outweigh the cons for employers, fundamental challenges still come with hiring non-full-time workers. One of the most prevalent difficulties is the high worker turnover numbers. According to fintechnexus.com, gig worker turnover can be as high as 500%, with the cost of replacing those workers exceeding the cost of paying their wages. Because gig workers aren’t incentivized to be loyal to companies due to the short-term nature of their contracts, they are more likely to act opportunistically due to the prospect of benefits like pay increases. This decreases companies' control over their gig workers concerning worker output and improves retention rates.

Gig Economy Cons for Gig Workers

Though convenient, the added flexibility available to gig workers creates a work environment with less-than-desirable aspects from a long-term perspective. One of these difficulties is the lack of employee benefits that gig workers might receive. Due to the short-term nature of gig work, companies need to be more incentivized to provide benefits like health care, 401(k) plans, etc. This creates added stress for gig workers to find jobs that support their lifestyle, often resulting in the collection of multiple jobs to make ends meet. Although this is an adequate solution to the absent employee benefits, having numerous jobs makes achieving any kind of career progression significantly more burdensome. This is one of the main reasons for the lack of job security that gig workers experience. Constantly looking for a new position better than the previous gig proves to be a tall task when competing against employees with more years at a single company with the sole focus of climbing the corporate ladder. 

Overall Ethicality of the Gig Economy 

The gig economy has pros and cons, but without a doubt, the brunt of the cons falls on the gig workers. Why is this the case when gig work is the worker's choice and not the employer? Added flexibility is the main reason why people choose to do gig work, but from a career advancement perspective, does that increased flexibility warrant the amount of drawbacks there are? Taking a step back, the lack of job security is caused by the high turnover rates, furthered by gig workers’ desire to advance their careers. Because the luxury of receiving promotions is often reserved for employees, there is a higher risk of exploitation of gig workers. The prospect of renewing a contract at a company and earning increased pay might cause gig workers to work irregular hours with less work-life balance. 

What Might Improve the Gig Economy?

The grand resolution for the ethical problem within the gig economy would be switching from gig work to employment. Even though this seems like a simple fix, the increased convenience and use of virtual applications in corporate settings solidifies the permanence of the gig economy, however complicated it may be. Two fundamental changes can be made that will significantly improve the ethicality of the gig economy. The first is adding benefits attached to the worker, not the gig. If workers can own personal gig contracts that make their employment conditional on receiving benefits like healthcare, then the normalization of this would significantly improve the worker experience. The following change would be guaranteed to be scheduled in advance. With much of gig work being dependent on work hours, gig workers’ shifts are highly reliant on their ability to complete tasks during a time frame that is financially necessary for them. By determining work hours beforehand, gig workers would be much more likely to receive fair compensation because it allows employers to dictate a base-level expectation for output that gig workers can judge in advance. 

Implementing these improvements would allow gig workers to enjoy job security while companies experience less worker turnover. The fundamental differences between employees and gig workers will remain. Still, from a worker proficiency standpoint, it is essential to address the ethics of allowing varying levels of concern for workers’ welfare, whether they’re members of the gig economy or not.