The Rise and Uncertain Future of the Gig Economy

By Stefano Tromba
August 18, 2020

At the height of the coronavirus, home delivery grocery slots became the holy grail of online quests. In fact, it still is!  Home delivery services have been big business for supermarkets and big-box stores like Walmart and Costco. This is also true overseas. Last year the UK’s online-only supermarket delivery service Ocado, reported a $56m deficit and are now turning away customers due to high online ordering demand. Even now, months after lockdown restrictions have eased, the home delivery industry shows no signs of slowing down.

Online shopping is set to make up 6.4% of the global grocery sales by the end of 2021. That’s nearly 2% higher than the pre-coronavirus prediction of 4.6% of sales, according to Rabobank International’s forecasts. And yes, small businesses are taking note. Restaurants all over the country saw a curbside pick upsurge over 200% for retailers and restaurants.  Many small businesses saw spikes in sales using similar models.

The Rise of The Gig Economy

But behind the home delivery industry are the gig workers. And as anyone knows, the success of any company is directly linked to those who work behind the scenes. However, in this case, gig workers are front and center! Let’s face it, we all love gig workers! We rely on them to deliver food, packages, and even to take us places! The convenience they provide is immeasurable. They’re also a big part of the workforce and the economy.

The gig economy boomed within the past decade, thanks to smartphones and the billions of dollars of venture capital money that invested in companies within this space. Gig-related jobs have been exceptionally popular with anyone needing (or wanting) to make a few extra part-time bucks. The flexible schedules and the technology that gives its workers the ability to get paid fast have made it an attractive option for many.

The gig industry has become so popular and widespread that it even changed labor laws! For example, California lawmakers passed a bill last year, known as Assembly Bill 5 (AB5), requiring gig economy workers to be re-classified as employees instead of contractors.

Increased Competition

As COVID-19 hit, it was clear that gig workers were essential. However, the pandemic and the higher than expected unemployment rate increased competition dramatically. Gig-based companies and their workforce were never meant to accommodate this many people needing to do “gigs” on a full-time basis. Experts believe the influx of new gig workers have and will make it less likely for the highly rated and longer-tenured workers to find as much work. This will cause them to seek work elsewhere. As a result, losing these highly rated gig workers to the crop of newcomers may result in service issues for consumers.

Regardless, demand for gig workers and their services shows no end in sight. Even as bars and restaurants start to reopen (at limited capacity) in order to maintain social distancing), home delivery will continue to be attractive, if not preferred option to many. Given the boost delivery services are giving the food industry, it would be surprising if small businesses revert back to dine-in only again. However, it can be surmised, that as COVID-19 levels decrease, that the herd of newbie gig workers will likely and eventually thin out.

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