The Gig Economy Stalls

I've only had the most tentative contact with the gig economy. I've never used Uber or Lyft, on general principle. I did try to join a service called Varsity Tutors, but maybe thankfully, they didn't seem to want me.

This article discusses the large number of service companies that are crashing and burning, mostly because they can't guarantee quality. Indeed, the gig economy appears only to thrive under two conditions:

1.) a huge venture-capital subsidy that is unlikely to last; and/or;
2.) a universal, portable safety net much more expensive and comprehensive than anything the American economy currently has to offer.

Thus, if the gig economy is going to take off anywhere, it's probably going to be in Europe. America is just too uninviting.

Great excerpt:

His company had charged customers $25 per hour (which later rose to $30) to hire one of their personal assistants, and the worker received 80 percent, or about $20 per hour. That seemed like a high wage to Kan, but much to his surprise he discovered that, when his errand runners made their own personal calculation, factoring in the unsteadiness of the work, the frequency of downtime, hustling from gig to gig, the on-call nature of the work as well as their own expenses, it wasn’t such a great deal. Wrote Kan, “It turns out that $20 per hour does not provide enough economic incentive to dictate when our errand runners had to be available, leading to large supply gaps at times of spiky demand . . . it was impossible to ensure that we had consistent availability.

Kan says the company also acquired a “false sense that the quality of service for our customers was better than it was” because the quality of the “average recruitable errand runner”—at the low pay and on-call demands that Exec wanted—did not result in hiring the self-motivated personality types like those that start Silicon Valley companies. (Surprise, surprise.) That in turn led to too many negative experiences for too many customers, especially since, like with TaskRabbit, a too-high percentage of its on-demand workers simply failed to show up to their gigs. (Surprise, surprise.) It turns out, he discovered, that “most competent people are not looking for part-time work.” (Surprise, surprise.)

Indeed, the reality that the sharing economy visionaries can’t seem to grasp is that not everyone is cut out to be a gig-preneur, or to “build out their own businesses,” as Leah Busque likes to say. Being an entrepreneur takes a uniquely wired brand of individual with a distinctive skill set, including being “psychotically optimistic,” as one business consultant put it. Simply being jobless is not a sufficient qualification. In addition, apparently nobody in Silicon Valley ever shared with Kan or Busque the old business secret that “you get what you pay for.” That’s a lesson that Uber’s Travis Kalanick seems determined to learn the hard way as well.