Why workers in the gig economy are likely to earn less economic rents than traditional employees

Economic Principles
Why workers in the gig economy are likely to earn less economic rents than traditional
employees
The gig economy has moved significantly from the traditional labour market. Mainly, the
change is because it links consumers with workers and contractors through online platform
businesses to perform their tasks. One perfect example is the Uber business. It is imperative to
note that this innovation has allowed many individuals to obtain employment opportunities that
would otherwise been unavailable under the contemporary labour market model (Bajwa,
Gastaldo, Di Ruggiero and Knorr, 2018). However, the likelihood that workers under the gig
economy earn less wages and salaries than their counterparts in the traditional labor market.
To begin with, one can attribute the differences in earnings to the fact that gig economy is
characterized of short-term jobs. As such, these jobs are on-demand, making them contingent in
nature, thereby a significant reduction on the amounts earned by the individuals. Thus, when the
demand for their services is high they earn more, but when the market conditions are bad and
their earnings go down (Kearns, 2019). When compared to the workers in the traditional market,
they have a consistent flow of work and earn a constant amount throughout the month, thereby
increasing their earnings in a big way.
In addition, the traditional workers are protected by the minimum wage rate legislations
implemented by the government. As a result, they are able to earn a much higher amount
compared to workers in the gig economy who are not protected by such laws and regulations
(Barbosa, 2019). As such, they have to accept the pay rates offered by businesses and consumers
requiring their services. In turn, this significantly reduces their possible earnings at the end of the