Trends Include Accelerating Premiumization, Continued Asset Sharing and Ratings Inflation

At a July panel hosted by the  Wharton Club of Southern California, moderator Angus Logan of Microsoft asked the audience to stand. Attendees were asked to sit down if they had not used the gig economy in the past week. No one sat. Such is the pervasiveness of the gig economy for both consumers and workers. Forbes estimates that 36% of U.S. workers are part of the gig economy, about 57 million people.

Executives at three firms participated in the panel, titled The Gig Economy’s Impact on Consumers: Qiana Patterson of HopSkipDrive, Carl Steeves of Wag! and Chris Munshaw of Tapcart.

3 Categories of Gig Workers, Based on Time Commitment

Gig workers fall into one of three categories, depending on their lifestyles and desired number of hours to work:

  1. Supplementers work 8 – 12 hours a week for supplementary income. They include full-time students and those pursuing a main occupation, like actors/musicians who need schedule flexibility.
    1. Mid-Rangers work 16 – 20 hours a week.  They are not able or willing to work closer to full time. Examples include retirees, primary caregivers, or those with disabilities preventing their working more hours.
    1. Fulltimers work 35+ hours/week at gigs. Gigs are their primary source of income.
Gig Economy 2020: Consumer Perspectives from 3 Experts

Gig Workers Provides Consumers Access to “Excess” Assets

A theme of the gig economy is earning income from your excess capital assets, like your car or house. Some gig workers provide access to consumers who want to temporarily use their capital assets, such as a HopSkipDrive driver or Airbnb host. Drivers for HopSkipDrive transport 600 LA county foster kids to their home schools each day. Airbnb hosts repurpose an extra bedroom or on-property guest suite. One source estimates that “for drivers who depend on Uber to make a living, their cars’ loss in value is serious.”

Gig Economy 2020: Consumer Perspectives from 3 Experts

A Trend towards Premiumization with the Popularity of Personalized Services Means Consumers Provide the Access

Panelists share that premium and concierge “gig” services are becoming increasingly successful and popular. Consumers are looking for personalization. Tiers of service are already common, as on Uber or Lyft, which offer both shared rides with longer wait and trip times or more luxurious private rides that can be available more quickly.  In many of these cases, consumers are providing gig workers access to their lives. For instance, Wag!’s business model of dog walking and pet sitting requires that workers have access to both the consumer’s home and pet.

Balance of Access and Safety

According to panelists, consumers have grown to trust “side-hustlers” based on a flurry of 5-star reviews and GPS tracking (which provides a sense of control).  Grade inflation and pressure for top ratings means that high ratings are common, and will become increasingly so, helping to create a false sense of security.  Panelists note that for jobs requiring state or national certifications, safety and customer service seem less of an issue. For instance, an Uber driver must meet the requirements to have a valid driver’s license. However, as an example, there is no certification required for handling animals. As such, in New York City, Wag! is facing litigation surrounding the deaths of 11 dogs since 2015. 

The gig economy will continue to grow in popularity and size. These expert panelists disagree over what shape that growth will take. One asserts that every job will be “giggified,” while another thinks certain careers will be insulated, such as teachers. Robots and AI might take the place of some gigs, but the HopSkipDrive panelists asserted that self-driving cars won’t be used to transport schoolchildren.  Convenience for many consumers outweighs the perceived risks, so it will be interesting which additional mechanisms will be used to feed trust and give a sense of security (e.g., validated ratings by purchasers on Amazon).