Will Gig Economy Workers Get a Share of the Company?
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UPDATED: Jul 16, 2021
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The so-called “gig” economy is big and growing. This summer, the US Bureau of Labor Statistics released the first official estimate of its size.
According to the Bureau, 3.8 percent of US workers — 5.9 million persons — held contingent jobs as of May, 2017. These are jobs that are temporary or seasonal or that they don’t expect to last.
In addition, there were people in “alternative” work arrangements:
- 10.6 million independent contractors (6.9% of total US employment),
- 2.6 million on-call workers,
- 1.4 million people who work for temporary help agencies, and
- just under a million people working for contract labor firms.
(Some workers are in both contingent and alternative jobs.)
This adds up to 16.5 million people who aren’t in conventional, salaried, 9 to 5, five-day-a-week jobs.
A report by the McKinsey consulting firm estimated that 162 million people in the US and Europe – 20-30% of the population – engage in some kind of independent work.
In addition, many people who do have regular day jobs also earn extra money via part-time gigs such as renting out their spare rooms on Airbnb.
JP Morgan estimated that 4% of the population has worked via an online platform at some point.
These unconventional jobs dwarf more established sectors. For example, as The Guardian reports, the coal industry employs about 80,000 people and the steel industry employs about 150,000.
Independent gigs offer flexibility, but they often pay less than “regular” jobs. According to The Guardian, independent contractors earn 20-30% less than employees doing similar work.
According to CNBC, nearly one in ten adults in California work in the gig economy, and half of them are struggling with poverty.
In addition, independent contractors don’t normally get benefits like health insurance and paid time off – let alone stock options.
As the New York Times notes, much of the wealth created by companies like Uber, Lyft, Airbnb, and TaskRabbit mostly benefits a small number of insiders who own stock.
In fact, federal securities law restrict companies from issuing stock to independent workers. However, change is afoot.
Earlier this year, the Securities and Exchange Commission (SEC), which regulates the stock market, requested public comments on a proposed rule change.
As the SEC noted,
Significant evolution has taken place both in the types of compensatory offerings issuers make and the composition of the workforce since the Commission last substantively amended these regulations.
Companies liker Airbnb, Postmates, and Uber said that they’d welcome a change allowing them to give stock to independent contractors.
Uber’s head of federal affairs wrote to the SEC:
Providing equity would allow partners to share in the growth of the company, which could lead to enhanced earning and saving opportunities for the partner and for the generations ahead.
Gig workers, naturally, were also enthusiastic about the concept.