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The Gig Economy: Was it wrong to believe the hype?

The future has the freelancer, they said.

Long careers would give way to ad-hoc employment with short-term appearances. Will this new "industrial revolution" come to an end prematurely if governments try to protect themselves against exploitation of workers and minimum wage requirements are introduced?

Not so long ago, our fate seemed to be sealed as future TaskRabbit craftsmen and Uber drivers.

We were told that the freelance work in the "gig economy" would change careers and even entire workforces in a way that resembles the days before the original industrial revolution.

This hype was at least partially due to the flexibility given to companies to recruit a worker with a specific qualification for short, discrete periods of time without incurring the financial burdens of a full - time employee - he had to pay a certain amount of minimum wage or overtime, to Example, or offer insurance.

This flexibility has contributed to the rapid growth of companies such as Uber, which had a value of around $ 72 billion before the IPO at the beginning of this year. Then, last month, California - home to Uber, TaskRabbit, Lyft and many other gig-economy players - threatened to ruin the party.

The state legislature passed AB5, a bill that forced companies to treat gig workers like conventional employees, and Governor Gavin Newsom signed the bill immediately. This followed a step from New York City to introduce a minimum wage for drivers in moving companies and creates the potential for other places to follow suit. Now nobody seems to be so sure about the golden prospects of the gig economy.


So what is the fate of one of the biggest trends affecting the future of work?

For more context, here are a number of links to deeper reading, courtesy of the Forum's Strategic Intelligence feeds: The new California law is similar to the New Deal law - and it has an enforcement mechanism that should sincerely inform companies like Uber. (The Wharton School)Do not fall asleep to California's ability to shape the law elsewhere.

From the country's first ban on catching fur animals to a crackdown on vaccination exceptions, the Golden State has had far-reaching effects - and that should also be the case for the gig economy. (Christian Science Monitor)Companies have already come across the possibility of circumventing California law - by not classifying employees as a "core component" of their business and financing a nomination that creates a new class of employees with only limited protection. (MIT Technology Review)Uber lawyers have argued that the company is just a "marketplace" between drivers and drivers.

So how can drivers become the core of their business?

If companies such as Uber push too much for such arguments to evade laws like California, they risk reinforcing Silicon Valley's image as a "font of cruelty" - and some backlash. (Wired)Laws like California can actually cause significant disadvantages for workers - companies may now be able to prevent gig employees from earning money on another platform, and they can better control their interaction with customers.

For example, Lyft has already told drivers that they could limit their time shifts and locations. (Harvard Business Review)Californian law is not the only threat to the traditional operation of the gig economy.Elizabeth Warren, who has a real chance to become a Democratic presidential candidate by 2020, has just published a work plan that will allow gig economy workers to join forces to form union organizations. (Mother Jones)There may be opportunities outside the law to redesign the gig economy for the workforce.

Some Uber drivers are pushing for better workplace protection by accessing corporate data that shows how they can be maltreated and undervalued by the ride-on platform. (CityLab)According to one theory, the gig economy will not die, it will simply become more automated and cast a spell over developing countries. (Richard Baldwin in the Policy Forum podcast)