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Gig work remains popular as drawbacks weigh, scrutiny grows

Gig work and nonstandard work are under attack in Washington and likely to face new obstacles in 2023. The Labor Dept. and Federal Trade Commission look to step up enforcement.

Gig work is expected to get increased federal regulatory attention next year due to concerns about the financial proposition for workers and society. Gig jobs are insecure, often without benefits, and people of color disproportionately make up the nonstandard workforce. But many gig workers seem pleased with the work, even if they have concerns about a lack of benefits.

A recent survey of more than 1,000 U.S. freelancers and self-employed workers found that fewer than 1 in 10 "expressed a desire or plan to leave the Gig Economy in favor of more traditional permanent employment." About 70% of respondents said they plan to continue gig work for the foreseeable future. The survey was conducted by Legal & General Group Plc., a London-based multinational financial services company with more than $1.4 trillion in assets.

Many gig workers are attracted to the flexibility, saying "they didn't think they would fit into the corporate world," said John Godfrey, director of Levelling Up at Legal & General, who is responsible for boosting growth and reducing imbalances.

But others turn to gig work because of "a changing life event," such as a need to take care of a child or another family member, Godfrey said.

U.S. gig workers earned a median pay of $4,000 a month, although the pay was higher for those with longer tenure, according to information about the survey provided by the company.

People didn't come to it as a first choice, but they seem to quite like it when they get there.
John GodfreyDirector of Levelling Up, Legal & General

But survey respondents also acknowledged issues with gig work. Some 67% said that not having access to retirement plans is a drawback. A nearly equal percentage expressed concern about job stability and predictability of income and did not like having to pay for health insurance.

"People didn't come to it as a first choice," Godfrey said of gig work. "But they seem to quite like it when they get there," even though "there are negatives about financial security."

Insecure work

Gig work falls under a different part of the labor market -- broadly called nonstandard work -- that includes contingent labor, freelancers and independents, where some workers face a harsh reality.

Many employed by this broad category of nonstandard work have short-term, insecure jobs with no benefits and few rights and protections, said Isabel Cuervo, senior research associate at the Barry Commoner Center for Health and the Environment at City University of New York's Queens College.

"People of color, but especially immigrants, are disproportionately in jobs such as construction, laborers, cleaning, child care, retail and food services," Cuervo said. She was speaking at a National Academies of Sciences, Engineering and Medicine forum Tuesday about precarious workers, the term used to describe many workers in this category.

Precarious workers have employment "which is uncertain, unpredictable and risky," said Jevay Grooms, assistant professor of economics at Howard University, who also spoke at the National Academies forum.

The precarious workers Cuervo and Grooms described aren't necessarily defined as gig workers, but they share similar problems.

Two regulatory changes facing gig workers in 2023.

Regulatory actions ahead

The U.S. Federal Trade Commission (FTC) recently described broader gig work -- people who use service apps to deliver items from restaurants or stores, for home repair work, and for other on-demand tasks -- as "precarious" in a policy paper released in September. Approximately 16% of Americans now earn money through a gig platform, either full- or part-time, it stated.

Gig workers are disproportionately people of color, according to the FTC paper, which broadly criticized employers for calling these jobs "flexible" while they "tightly prescribe and control" what these workers do. The FTC said it is making gig work an enforcement priority.

Gig workers can also be "saddled with inordinate risks," such as unstable pay and responsibility for business expenses, according to the FTC, which wants more scrutiny over how gig workers are paid.

The U.S. Department of Labor (DOL) is going further than the FTC. In October, it unveiled a new rule that might make it easier to reclassify independent contractors as employees under the Fair Labor Standards Act. The proposal has drawn about 49,000 comments, and those interested can continue to leave comments until Dec. 13.

Legal experts say the rule could have a significant effect on businesses that use independent contractors. "The proposed rule appears to give the DOL more flexibility in its enforcement and could bring new uncertainty to employers," law firm Holland & Knight stated in an analysis of the rule.

In a report last month, the U.S. Government Accountability Office (GAO) said it sampled 80 annual reports by companies listed in the S&P 500 to determine the extent to which independent contractors are used. It found that about 90% mentioned using contracted work arrangements, with the majority for IT support, human resources or maintenance services.

But nearly 85% of these companies cited the use of contractors as a risk in their annual reports, related to "poor performance, security breaches, or risks stemming from contract workers performing critical activities," such as IT support, according to the GAO.

Patrick Thibodeau covers HCM and ERP technologies for TechTarget Editorial. He's worked for more than two decades as an enterprise IT reporter.

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