Gig Work: Will Regulators Throttle A Fast-Growing Workforce Trend?

Employment in gig work, whether full or part-time, side hustle or new career, is the nation’s fastest-growing workforce trend, according to a new report from the free-market think tank Better Cities Project.

Local and state policy makers, including Michigan’s, need to recognize and accommodate that trend, it concludes.

A gig worker is defined by Merriam-Webster as “a person who works temporary jobs typically in the service sector as an independent contractor or freelancer.” An Uber driver is an example of a gig worker.

As defined in the study, gig workers earn at least $1,000 per year in taxable income from work not involving an employer. Between 2012-17, their numbers grew 17.2%, according to the report.

That growth has almost certainly increased during the COVID-19 pandemic, the report suggested, when many traditional forms of employment were curtailed.

Analyzing data from the nation’s 100 largest metropolitan statistical areas, the report found the gig economy to be most common in Miami, Florida, where 16.1% of workers participated. At the other end of the scale, only 5.3% of the workforce in Buffalo, New York, performed gig work. The average number for the 100 areas examined in the study was 7.6%. Michigan’s two metropolitan areas had a mixed record. At 7.9%, Detroit was slightly above average, and Grand Rapids was below it, at 7.1%.

Some of the growth in gig work is likely related to local regulatory policies that either encourage or diminish opportunities for individuals to pursue independent work, the report said.

That is especially true for the regulatory posture toward still-emerging and unpredictable trends in online entrepreneurship, said Patrick Tuohey, a co-founder of Better Cities Project and lead author of the report.

“Cities and states often react to what they perceive to be as problems,” Tuohey said. “But innovation is always looking forward. Legislation is backward looking. They can’t know what is coming.”

The report cited contrasting policies in Florida and California. Florida, one of the states with no personal income tax, is friendly to gig work. In 2017, lawmakers defined independent workers – such as Uber and Lyft drivers — as independent contractors, free to set their own hours and pursue other employment opportunities.

California has taking the opposite tack. In 2019 lawmakers there declared that individuals repeatedly engaging in work for one company were employees. As such, they are covered under the minimum wage law and entitled to sick leave, workers compensation and other benefits as a matter of state law. Ridesharing companies backed a 2020 referendum, which undid some provisions of the 2019 law.

According to the report, Florida’s gig economy is thriving, while many California cities have relatively anemic independent work sectors. Tuohey said this matters. Gig work, he said, provides regional economies with a significant economic stimulus as well as tax revenues.

Michigan has a mixed record for its regulatory treatment of the gig economy. After several local governments here attempted to throttle ridesharing services, the Michigan Legislature, in 2016, enacted a statewide standard that permits them to operate anywhere as long as they meet minimum requirements. Home sharing services like Airbnb and VRBO, however, remain in regulatory limbo here. Local municipalities — largely backed by state courts, so far — have enacted restrictions or outright bans on the practice.