Photo: Peter Griffin. Source: Publicdomainpictures.net
A “gig” is the world sometimes used for temporary contract for a musician or other performer. I once heard a short-term Music Studies professor complain that he’d never find another gig as good as the one he had in Hanover.
The gig economy refers to our economy today where more and more people are independent contractors – about 10% of the workforce. Apps like Uber and Airbnb make it even easier to work for ourselves. With Uber, all we need are a set of wheels and some extra time to make money whenever we want to. There’s a US Senator who moonlights as an Uber driver in his home state, just to get out of his bubble. Airbnb allows anyone to rent out an extra room or basement for folks who need a cheap place to stay. Underutilized assets get monetized, and services become commodities.
Source: Brookings Institute, BLS
But as the working world becomes more flexible, our relationships with each other can break down. When we change jobs every few weeks, we don’t have as much incentive to be nice. The economy becomes depersonalized. It’s as if we all live in a big city, where we’re unlikely to run into the same folks again. Why invest the time and effort in developing a relationship of trust if the gig’s going to change every other week?
There’s no question that the gig economy is growing. And there are a lot of initiatives out there to help gig workers obtain benefits like health and disability insurance. But a bigger challenge may be what contract employment is doing to our relationships. As the economy becomes more efficient and more of our exchanges become one-shot interactions, investing in cooperative behavior becomes more and more expensive.
The same sort of concern was voiced over 100 years ago when assembly line manufacturing replaced artisanal production. Our cities grew, while small towns languished. Output increased, and society became richer, but at what cost? We all need long term relationships where we can trust and be trusted by other people. The gig economy may be rational, but it may not always be that healthy.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”