Wednesday, December 09, 2015

The Gig Economy

There is more and more conversation around three big trends -- the sharing economy, the gig economy and disruptive business models. I have previously written here about the first trend (http://www.jeff-bell.net/2013/08/the-sharing-economy.html?m=1), and now wish to turn my attention to the 2nd.

As I previously argued, the sharing economy is based upon underutilized assets.  EBay, Craigslist and Amazon created markets to sell "old stuff you don't want anymore." Uber and AirBnB extended this trend by adding the abiltiy to rent underutilized assets; namely cars and apartments.  So what is the "gig economy" and how does it relate?

I had an epiphany this week, but now it seems self-evident.  The "gig economy" is the "sharing economy" where underutilized physical assets or capital are replaced in the model with underutilized human capital.

When you think about fiverr.com, you see a bunch of creative people earning money moonlighting outside their day jobs.  Looking further still across other skills, Etsy let's arts and crafts hobbyist monetize their wares.  Don't have a skill?  TaskRabbit simply offers people with free time and a strong back the chance to earn some extra money.  The interesting overlap between sharing and gig economies is when the automobile is involved. Uber and Lyft (taxis), Caviar (food delivery), Instacart (groceries), and Postmates (courier) all take idle labor and match it with a car to create value.

This fundamental understanding is important as policy makers consider what is an independent contractor (or 1099 status).  The sharing economy is about utilizing assets more efficiently through expanded markets and marketplaces.  The gig economy is about liberating talent and labor to be applied more productively for both the provider and the consumer.

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