In today’s rapidly evolving economy, gig economy platforms have become a prominent feature, connecting freelance workers with local demand for services. These platforms, such as Uber and TaskRabbit, have sparked debates about their impact on traditional businesses and workers’ rights. Dr. Zhi (Aaron) Cheng, an Assistant Professor of Information Systems and Innovation at the London School of Economics, sheds light on a lesser-known aspect of these platforms – how they redistribute local labor.
Gig economy platforms have been viewed as both disruptive threats and innovative opportunities. Critics argue that they intensify competition among traditional businesses and erode workers’ rights, while proponents believe they create new job opportunities by connecting clients and workers. However, Dr. Cheng’s research, conducted in collaboration with colleagues from Georgia State University and the University of Miami, reveals a different perspective.
The study found that gig economy platforms are enabling middle-skilled workers, such as managers and supervisors, to transition into self-employment and start small-scale ventures. This shift is not necessarily tied to gig economy platforms but represents a broader rethinking of career paths and economic participation. For example, the emergence of TaskRabbit has encouraged many middle-skilled workers to launch their own home repairs and removals businesses, showcasing the transformative potential of the gig economy.
Analyzing employment data from the US Census Bureau, the research team observed that the entry of TaskRabbit into a metropolitan area led to a decrease in the overall wage-based housekeeping workforce. Middle managers and supervisors experienced the largest reduction in employment, while frontline service occupations remained stable. Surprisingly, the study found that TaskRabbit’s entry did not force workers out of housekeeping but instead encouraged them to transition to self-employment and small-scale entrepreneurship.
Policy-makers have approached the gig economy with caution, focusing on risks such as worker exploitation and unstable incomes. However, Dr. Cheng suggests that a more balanced approach is needed. Rather than over-regulating gig work, policy-makers could support the wave of small business creation catalyzed by the gig economy. This could involve providing resources, training, funding, and mentorship programs to support workers transitioning into self-employment and entrepreneurship.
In conclusion, Dr. Cheng’s research highlights the transformative potential of the gig economy beyond providing jobs on platforms. It inspires workers to reimagine their economic roles and transition into self-employment and entrepreneurship. By fostering an environment that supports entrepreneurial growth and innovation, policy-makers can harness the dual potential of the gig economy to protect workers and drive economic evolution.
