Future of work: Gig work, 1099s, and I feel fine?

By Theodora Lau and Bradley Leimer of Unconventional Ventures

Is the future of work destined to be more transitory in nature? Will we all move from an average of twelve jobs in a lifetime to dozens upon dozens of gig work experiences, some lasting mere hours or weeks rather than years?

It’s not as unrealistic as you might think.

While flexible jobs are not new, the gig economy has taken off over the past few decades. With the proliferation of smartphones and apps, an entire subset of employment platforms have sprung up — from handyman services to ride sharing and delivery jobs. Such work arrangements have often been touted as the “future of work” due to their flexible nature. Whether a form of supplemental income or full time, how cool would it be to dictate your own terms and work only when you want? At least that was the premise.

But has gig work and the growing gig economy truly been good for workers? Or has it benefited the companies running these platforms, the VCs who invest in them, and the end users of these services that seek out convenience at the expense of supporting higher wage alternatives?

Are these platforms simply creating a new caste system and a greater divide within our working classes? Are there not broader economic implications that we must contend with? It seems to depend on who you ask, and on the framing of the tradeoffs between traditional work arrangements and gig work.

From a worker’s perspective, the trend toward greater job flexibility is critical for those who juggle between work and family responsibilities, such as taking care of children or aging loved ones. Or for those that work on gig platforms to ensure income to supplement existing jobs, during work transitions, after losing a job, or having their hours unexpectedly cut, as has happened this year to millions of workers around the globe.

This flexibility is also necessary while people attend school or engage in reskilling activities to increase their personal marketability. Businesses also gain with lower cost structure for their labor costs, increased access to a more geographically diverse pool of workers, and ability to scale up/down based on demand. On the surface, the gig economy appears to benefit a multi-sided marketplace with a multitude of stakeholders, including the consumers that leverage these services.

It is no wonder that the number of contingent workers continues to grow. According to a recent report by Upwork, ‘36% of the U.S. workforce freelanced during the pandemic’, representing a 22% increase since 2019. Nearly three quarters of hiring managers are continuing or increasing their usage of independent professionals.

While there are real benefits to the flexibility and variability of gig work, not everyone gains equally from the business models. Many gig workers are simply overworked and underpaid: Benefits such as healthcare, sick days, and retirement — which are often available to employees of companies both large and small — are not normally offered to independent contractors or gig workers in the U.S., where private health insurance tied to employment is the norm.

This takes on increased importance during the COVID-19 pandemic, when many gig workers have to choose between risking their own health (and be potentially exposed to the virus), or falling behind on bills.

And with the not so surprising defeat of Proposition 22 in California which would classify these gig workers as employees entitled to benefits and work protections — companies like Uber, Lyft, and Instacart spent over $200 million to defeat the bill — there won’t be benefits like medical insurance or paid time off any time soon.

The very characterization of this type of employment and the associated financial impact has a ripple effect across other industries, from healthcare to food services to transportation and much more.

This also has significant implications for the traditional banking business model and the consumers, businesses, and communities it serves. As more jobs become transitory, as more benefits disappear, and as larger swaths of once stable income becomes more tenuous, this creates sinkholes of economic opportunities where there was once stable land.

The hardship that gig workers face is paramount. According to the recent series of reports, The Digital Hustle, by Flourish Ventures, gig workers worldwide have been hard hit by COVID-19 and the economic crisis. In the U.S. alone, 68% have reported a decline in total income; nearly 3 out of 5 workers now earn less than $1000 per month compared to 1 in 5 prior. And their challenges extend beyond lack of income: ‘nearly 3 out of 5 workers could not cover household expenses for a month without borrowing money if they lost their main source of income’.

‘How can you save more, when you don’t earn enough in the first place?’ Hantz Févry

With challenges come opportunities. From helping to locate better paying jobs and optimizing income options, to building emergency savings and helping provide missing benefits, there is a role that forward thinking banks and fintechs can play in restoring financial stability for the millions of gig workers who lack that security today.

With the future of work and longevity equating to more multi-staged lives filled with dozens of employment experiences, it is not only critical to create expanded opportunities for the expanding class of workers, it is an imperative to work together to ensure we are not creating deeper levels of systemic economic inequality within our society.

An opportunity to do well by doing good is a strong opening gambit afterall.

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In this episode of One Vision, Theo and Bradley chat with Hantz Fevry, co-founder of Stoovo, on why the current class of neobank apps is not enough to meet the needs of this growing demographic of workers, and what more can be done. You can listen to this week’s episode on iTunes and Spotify. Please hit that like button and consider subscribing.

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Unconventional Ventures helps drive innovation to improve systematic financial wellness. We connect founders to funders, provide mentorship to entrepreneurs, strategic advisory services to a broad set of corporates, and broaden opportunities for diversity within the ecosystem. Our belief is that anyone with great ideas should have a chance to succeed and every voice should be heard. Visit unconventionalventures.com to learn how you can partner with us today.

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