The so-called “gig” economy is the replacement of permanent, full-time jobs with short-term freelance and contract work. The gig economy is estimated to constitute 34% of the workforce and it is growing. These jobs can range anywhere from driving for ride-sharing services like Uber to lawn care, house-sitting, dog-walking, home health care, catering and even professional services like proofreading, editing, software development, legal work, and adjunct college instructors. There is wide variation in the quality of gig jobs, in terms of both pay and worker control.

Gig work is not the same as temporary employment. In temporary employment, the worker is still considered an employee (paid on a W-2, with taxes and FICA withheld). In temporary work, the legal employer is the temporary agency, even though the work is performed at and controlled by an employer client at another location. Temporary assignments can be for as little as one day, as long as a year or two, or even indefinite, although pay rate and hours are generally predictable for the duration of the assignment.

A “gig” worker is not considered an employee, but an independent contractor. Gig work is facilitated by online platforms that broker work between employers and workers. There is great variability in pay rates. Most of the pay rates are offered on a take-it-or-leave-it basis, while others allow the worker to either bid for the job or negotiate pay. The upside to gig work (which is always touted by gig “employers”) is flexibility. In some gig jobs, the worker can decide when and where to work, thus having the ability to do other things (like raise children, go back to school, plant a garden.)  Indeed, some more fortunate gig workers can do better than at a regular job, and a few can turn gig work into a full-time business.

Many people (particularly younger people without kids and mortgages) like doing gig work because it gives them a feeling of freedom and working for themselves. However, there is a dark side to the gig economy. The down side to gig work is primarily twofold: The first is that the gig worker is not covered by workplace rights protections laws (minimum wage or overtime) or social safety net provisions (unemployment insurance). Gig workers must usually find their own health insurance on the expensive individual marketplace and lack access to other pooled benefits of regular employment such as retirement plans.

The second down side is the increase in complexity. The gig worker now has to pay their own income and FICA taxes. Because income is usually unpredictable, the worker has to spend a lot of (unpaid) time managing cash flow and documenting income and expenses for tax purposes. There is often a lot of (more unpaid) time and effort involved in attempting to secure the next paying gig. Often both the hours and pay are unpredictable, which means the worker has to constantly juggle both time and money. Some gig workers can find free time to be elusive—as they constantly have to work, be looking for work, or managing cash flow—in order to meet basic expenses.

Gig workers are not always so by free choice—sometimes gig work is needed to supplement inadequate income from a regular job, and sometimes it is taken as a stopgap to unemployment. One study of gig work by a market research company found that 67% of workers earning greater than 40% of their income from gig work identified as racial minorities. One possible “good” reason for this is that, because gig work is remote, employers do not have the same opportunity to discriminate, so workers are judged solely on the basis of their ability to do the work. The “bad” side to this is that gig work represents inferior job quality, and minorities must take these jobs because they have fewer opportunities in the “regular” job market.

Although the gig economy is touted as the brave new world of work, it is designed to expropriate efficiency gains for its organizers and externalize inefficiencies and costs onto everyone else. Gig workers have many of the same downside risk as business owners without the corresponding ability to build a customer base and grow capital. Because many gig workers need money, like most employees, they lack negotiating leverage for pay and other terms of employment. The fragmented nature of gig work also prevents workers from forming meaningful social connections with customers and co-workers, which further de-leverages their ability to build secure incomes.