Mercator Advisory Group recently published a report on the U.S. Gig Economy titled Payments for Work in the U.S. Gig Economy. It’s a topic that has received an incredible amount of press, but for all the attention, it is actually very hard to define and quantify the gig economy. It turns out our neighbors to the north are having similar issues as they look at the impact gig work has on overall employment, as covered in an article from The Canadian Press:
What makes measuring the size of the gig economy so difficult is that there are competing definitions of what it includes. ESDC officials leaned on an American definition that described gig workers as those who take short work or tasks through websites or mobile apps that arrange payment and connect them directly to consumers.
So, for instance, driving Ubers, making SkipTheDishes deliveries, or picking up odd work from TaskRabbit. Putting together multiple part-time jobs, soliciting work through a website such as Kijiji, or surviving on short-term contracts didn’t count.
Beyond solving payment issues and collecting taxes on gig work, getting the data correct can have an impact on government policy and legislation. Here are some of the issues the article points out are important to understanding and why:
Underlying concerns about the gig economy is a demographic shift firmly underway in Canada. Aging baby boomers will retire in droves over the coming years without enough young workers to replace them — which raises a potential problem. Unlike the Canada Pension Plan, old-age security payments are funded by tax dollars, and federal coffers might not be able to cover the cost of seniors’ benefits that are increasing faster than inflation.
Add to that populist concerns about immigrants, who have been the main drivers of population growth as birth rates have declined, and there is a potential potent mixture for the coming election campaign.
Armine Yalnizyan, an economist who has researched the gig economy in detail, said available data suggests a growth in the platforms could erode wages for engineers, accountants, programmers and lawyers as companies connect with cheaper overseas labour. Federal programs either provide workers with capped income supports — which for high-wage workers would be well below the earnings they’re used to — or retraining funding, she said.
“This isn’t the hollowing out of the middle, this is the hollowing out of the high-skill, high-wage class and we don’t have programs for that crowd,” Yalnizyan said.
We know there’s been growth and we know Canada is very reliant on this form of labour, both among employers and, oddly, amongst workers,” Yalnizyan said.
“Something’s happening, we just don’t know how to measure it properly.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
