If you’ve never heard of the “gig economy,” today you’ll learn about an emerging trend that will be sure to garner your attention in the months ahead.

It’s one of the most powerful forces in today’s employment marketplace.  Decisions being made about how it functions will likely impact large swaths of the economy—including the real estate industry.

Some of the most important structures, regulations, and policies used by the real estate industry are being called into question, and it’s all happening in areas unrelated to real estate.

What can you do to counterbalance these forces?  The first step is to educate yourself and start to recognize developments taking place in various service industries.

A Quick Primer of the Gig Economy

Sarah Kessler, a technology reporter at Fast Company, recently wrote an outstanding article on the gig economy.  This lengthy piece is very informative and worth bookmarking for reading at a later time.

Kessler first points out some of the basics about the gig economy.

[The “gig economy” is the] much-hyped new class of the service industry where workers are expected to operate like mini-businesses. The influence of these companies is growing: according to an analysis by Greylock Partners, the value of transactions over platforms such as car services Lyft and Uber, grocery delivery service Instacart, courier service Postmates, and others could grow as large as $10 billion this year.

Certainly, you’ve heard of some of these companies.  Perhaps, you’ve even used some of their services.  What you may not know is how their business models impact workers.

Between 1995 and 2005, when the government kept data on what it calls “contingent workers,” about 30% of the labor force fell into this non-full-time-employment category. In 2009, employment law firm Littler Mendelson estimated that about half of the jobs added after the recession will be contingent, making the workforce 35% freelance, temp, and part-time workers. A year later, Intuit estimated that it will be more like 40%.

If we do some math on these percentages, between 2005 and 2010 an additional 13 million workers transitioned into the “contingent worker” category.   During a recession, you’d expect some of this type of movement.

Here’s what has changed:  After the recession, these workers are not heading back to full-time employment jobs.   Why? Full-time jobs are not available, and the “gig economy” has emerged to take advantage of their willingness and need to work.

Why the Real Estate Industry Should Care about the Gig Economy

Encouraging individuals to own microbusinesses where they work as independent contractors, under a brand and support system provided by a separate entity, is an idea pioneered by the real estate industry.

It’s also what Uber does.

The “support systems” are now mobile phone apps and payment systems, but the structure of the relationship between the host companies and the independent contractors have many similarities to the real estate industry.

In the next few years, some big policy decisions will likely emerge on how the government regulates the gig economy.  Even though the real estate industry has a long history of successfully defending their employment model, they could get swept into policy decisions pointed at the 13 million gig economy workers.

In the next WorkPuzzle, we’ll look at some additional factors causing this issue to move more quickly than previously expected.  Learning what’s happening in these other industries will help you navigate the upcoming changes more successfully.

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