Important Lessons From the Slower-Growing Gig Economy

“Retail arbitrage” is how Juston and Kristen Herbert are saving $50,000 to adopt a child. They scour big box stores such as Target for clearance deals on products like water bottles, which they then buy for $5 and sell on Amazon for $19.95. Chris Green, a former sales representative for Bosch Power Tools, penned a book that teaches people to use Fulfilment By Amazon to make money through this type of gig.

Why does this matter to HR and organization leaders? Because, undoubtedly, folks like the Herberts are working regular jobs for companies like yours and retail arbitrage is their side hustle. But, some of them, like Green, left jobs at companies like yours to do this full-time.

Still, most work systems in organizations, most social debate and regulations, and most leaders and workers, think of work as a job, and workers as regular full-time employees. That perspective will cause you to miss things like retail arbitrage, which may hold important insights for your workforce planning. We need to break this way of thinking and one important way to accomplish this is to improve how we “count” work in society.

Was the Gig Economy Just A Fluke?

Is the “gig economy” growing much slower than we thought? Is it irrelevant to the lives and choices of workers in large organizations?

Recently, Harvard economists Katz and Krueger walked back their attention-grabbing conclusion from 2015, that “growth in the share of workers classified as self-employed freelancers or working for a contract firm…the percent of workers in alternative jobs rose from 10.5% in 2005 to 15.8% in 2015.” They recently repeated their analysis using more recent data and found the actual increase was just one or two percent.

The more interesting finding may be just how difficult it is to actually capture this kind of work using traditional methods. The authors report an interesting experiment in which 61% of those replying to a typical survey question said they did not hold multiple jobs, but actually mistakenly failed to report working a gig, including writers, editors, teachers, and dog sitters.

As the authors note, “if these workers are added to [those who correctly reported being] multiple job holders, the percent of workers who are multiple job holders would almost double from 39 percent to 77 percent.”

A 2018 New York Times story in June of 2018 noted: “The government’s numbers, by design, do not include people who do gig or freelance work in addition to traditional jobs, and they may not fully capture income-generating activities that people might not consider ‘work,’ like renting out a home on Airbnb.”

Stand outside the departure gates at any major airport, and you get the feeling that everyone is an Uber or Lyft driver. Search the Airbnb app for any major city and it will seem that almost everyone is renting out a room or a guest house. Regulators and communities from New York to Seattle to Paris wrestle with the dilemmas of the sharing economy.

John Younger recently noted that “Upwork estimates the total U.S. freelance population at over 50 million individuals. McKinsey sized the freelance population at over 150 million individuals worldwide. Deloitte and PwC both predict that organizations in the future will have large contingents of freelancers supporting them and Accenture asserts that future organizations may have only a small minority of full-time employees.”

How big is the gig economy? That’s not the right question. Yes, we need better measurement systems, but it’s already clear that regular employees with side hustles are much more common than traditional statistics suggest.  That’s just a hint that the hidden fluid workforce offers your organization important work alternatives and that they may be the reason you lose or can’t hire regular employees. Organization leaders and the HR profession need to understand and optimize the mix of regular employees and alternative workers.

Ignore the Lessons of the Fluid Workforce at Your Peril

Regardless of the exact size of the “gig” economy, the fluid workforce is real so organizations must learn to “lead the work”–not just regular full-time employees. Organizations and society must learn to better measure and plan for work achieved through many different types of arrangements, including employment, contracts, gigs, alliances, volunteers, etc. This is even more important when you add work automation to the mix. That means heeding lessons like:

Deconstruct the job

Trapping work in a job description or considering only “people in jobs” will cause you to miss the key patterns. To see why your employees may be leaving to do retail arbitrage or where you can tap freelance platforms to alleviate work shortages, you need to deconstruct the job into its tasks. Freelancers may not fit precisely into a whole job just like your sales associates aren’t substituting their whole job for retail arbitrage. However, these alternatives are clearer when you can see what work tasks inside the job are in play.

Make your employment system more fluid

Your organization may not be ready yet to throw open its labor market to include all kinds of workers, but you can adopt elements of the fluid workforce for your own employees. New work and technology models include on-demand artificial intelligence, extreme personalization, and secure and accessible cloud-based work repositories. These repositories can provide a searchable location where work and workers can be identified and matched using a common lexicon.

IBM’s Open Talent Marketplace allows managers to deconstruct work into short-cycle events, publicize those events to an internal and external population of players (such as those who use the platform to bid for and form communities to complete the work), and track work history and capabilities–and this is all supported by common work language that constantly evolves through a partnership between Watson-like artificial intelligence and human judgment.

Embrace flexibility

One attractive feature of side gigs like retail arbitrage or moonlighting on freelance platforms is that they offer more flexibility and control than regular jobs. One study found that German workers with more control over their work hours actually worked more, not less. Your employees may use their flexibility for side hustles, but that may help them to keep their regular job instead of leaving it.

The Fluid Workforce Remains an Untapped Opportunity

The folks doing retail arbitrage have been described as “flesh and blood robots for Amazon” because using Fulfilment by Amazon means they add their own products to Amazon’s online catalog, ship their products to Amazon’s warehouses, and let Amazon handle it from there. One retail arbitrager said that Amazon “needs people like me to fill all the holes in the marketplace.”

Many organizations already fill holes in their labor market with freelancers doing tasks like market research, product testing, and consumer research. HR and talent planning systems shouldn’t miss such opportunities by restricting themselves only to “jobs.”

Author Photo
John Boudreau |
John Boudreau is professor and research director at the University of Southern California’s Marshall School of Business and Center for Effective Organizations, and Boudreau is the author of two forthcoming books, “Human Resource Excellence” with Edward E. Lawler III and “Reinventing Jobs” with Ravin Jesuthasan.