The Gig Economy: A Blameless Catalyst or a Casualty of Business Inefficiencies?

The gig economy has often been criticized as a mechanism for corporations to avoid creating decent, full-time employment opportunities. However, flipping this narrative, it can be argued that the vast majority of employers do not benefit from the gig economy directly, and in many cases, it harms them significantly.

The Gig Economy and Its Impact on Traditional Employment

The disruption caused by gig economy platforms like Uber and Lyft has been significant. These companies provide better service, in better vehicles, for lower overall prices. This disruption has not been driven by the gig economy itself, rather it is the result of companies that benefit immensely from traditional business models being challenged. The problem is not the gig economy, but the people who choose to work within it rather than starting businesses that could potentially employ many more people.

Starting a new business in the United States can be extremely expensive, especially in terms of regulatory and compliance costs. This high barrier to entry is a significant issue. Additionally, as businesses grow beyond a certain size, unemployment benefits mandated by government can increase operational costs, reducing the profit margin.

Small Businesses and the Gig Economy

According to the U.S. Small Business Administration, more than 49.2% of private sector employees in the U.S. are employed by small businesses. 99.7% of all employing organizations are small businesses. However, the current environment makes it increasingly difficult for these entrepreneurs to start and scale their businesses, leading many to settle for gig work instead.

The Factors Affecting Corporate Employment

Corporations are not creating more decent-paying full-time jobs in America for several reasons rooted in economic and market forces. Here are the six key factors:

Machines replacing people: Automation and technology can perform tasks more efficiently and at a lower cost than human labor. Emerging economies: Skilled workers in countries with lower living costs can perform the same work for significantly less money, reducing the competitive advantage of U.S. workers. Government labor market manipulation: Policies such as minimum wage increases and the Affordable Care Act’s employer-provided insurance mandate can artificially increase labor costs, making it less attractive for employers to hire full-time staff. Increased college graduates: A higher number of graduates can increase the supply of skilled workers, impacting job availability and wages. Reduced capacity for retirement: People are less able to afford retirement, leading to more individuals seeking employment opportunities. Economic forces: The natural meeting of demand and supply curves results in lower real prices for labor, leading to fewer decent-paying full-time jobs.

As a citizen concerned about these issues, I support measures that reduce the cost of living by enabling more business spaces and housing through zoning reforms. This can help balance the demand and supply curves, mitigating the negative effects of economic forces.

However, altering economic mechanics on a large scale would likely cripple the country's competitiveness in the global market, making it less attractive for investment and growth.