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Why did not the gig economy kill the traditional work? : Planet Money: NPR



  At the first of Uber & # 39; Work On Demand & # 39; Recruiting event will be logged on to persons as Uber driver.

MARK RALSTON / AFP / Getty Images

  People sign up to Uber drivers at the first recruiting events of Uber & # 39; Work On Demand & # 39; to become.

MARK RALSTON / AFP / Getty Images

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In recent months, a series of studies have exposed the predictions that we are witnessing the beginning of a new "gig economy". The US Bureau of Labor Statistics (BLS) noted that between 1945 and 2017 there was indeed a decline in the categories of jobs associated with the gig economy. Larry Katz and the late Alan Krueger then reworked their influential study that had originally figured out that gig work was exploding. Instead, they found that it had grown modest. Other economists found the same – and the authors explain that the gig economy is "a great non-citizen".

The True Faith of the Gig Revolution

Arun Sundararajan, an economist at NYU and author of The Sharing Economy: The End of Employment and the Rise of Mass Capitalism is still a true one Believe in the gig revolution. Sundararajan has pushed ahead with the idea that the gig economy – and in particular working with digital platforms such as Uber and Airbnb – will conquer traditional employment. Instead of a large-scale economy, it is dominated by "a crowd" of self-employed entrepreneurs and workers doing business through digital platforms with customers. "We are in the beginning of a fundamental restructuring of the economy," Sundararajan said as he drove to the airport in an Uber.

When asked about the attack on data that contradicted his thesis, Sundararajan told the Bureau of Labor Statistics "continues to underestimate the size of the gig economy and, in particular, the platform-based gig economy." The best BLS estimate for the number of Gig employees working on digital platforms, whether full-time, part-time or occasional, is one percent of the total US workforce by mid-2017, or about 1.6 million. Sundararajan argues that the survey the BLS used to collect this data was cumbersome and did not capture current events.

While Sundararajan rejects estimates about the size of the gig industry, he agrees that most people who make a new gig work either Uber and Lyft riders or Airbnb hosts. It is no coincidence that housing and transport were two main growth areas. Homes and cars are the most valuable things that many people own, and the internet and smartphones have made using them much easier. Sundararajan argues that there is also growth in areas such as healthcare and accounting. However, there is little evidence that we are witnessing "the end of employment".

The resilience of traditional employment

Employment We know that it is a relatively new development. By the turn of the century, almost half of Americans were still self-employed as farmers, ranchers and artisans. But in the background started a powerful organization called "Company". By 1960, around 85% of Americans were employees of companies.

While Sundararajan believes that our economy is again dominated by the self-employed, he admits that full-time employment has "tons of benefits". It offers stability, a stable paycheck and benefits. Together, we have developed much of our social safety net to participate in this system. All of this means, says Sundararajan, "we will see that full-time employment remains stable, even though there are more efficient ways to organize economic activity." He believes that working on gig platforms can be more efficient than working in a traditional company – and that will mean the demise of the company.

The mysterious advantages of the company

Economists were long confused by the existence of companies. They celebrated prices and competition – and, of course, the most efficient way to do business seemed to be individuals doing business within the open market. Do you need an advertiser? Rent one for a few weeks. Do you want design work? Work for the highest bidder until the project is completed.

From this traditional viewpoint, it seemed odd that we would organize ourselves as full-time employees in bureaucratic top-down organizations that were isolated from the market. Then came Ronald Coase, who received a Nobel Prize in 1991, in large part because of his 1937 newspaper "The Nature of the Firm". Coase argued that there are companies that make it expensive for individuals to trade in the marketplace. You have to look for trustworthy people with quality goods or services and then haggle with them, and doing so over and over again is inefficient. Within a company, Coase says, these "transaction costs" are minimized. You can quickly go to your colleague's desk and exchange ideas without having to figure out if they are dodgy. You can share resources, tools and machines. You can work in a team and specialize in different tasks. And you can do it all without constantly having to negotiate the price of everything.

The beginning of a new gig economy seemed plausible, as the Internet drastically reduced transaction costs. Search engines have made it incredibly cheap to find goods and services, compare prices, and make bargains. Social media and peer reviews have made it easier to determine if people are trustworthy. E-commerce has made it easier to process payments. You can click on a button on a mobile phone and immediately guide GPS drivers directly to you. As great as these gains in efficiency were, a new economy based on crowds performing gigs on digital platforms – as exciting or frightening as it sounds – still can not be compared to a cost-effectiveness based on the efficiency and stability of the good ancients Companies.

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