Labor's New Gig

By 2027, more than half of the US workforce—80 million people—will be part of the gig economy. This inexorable rise means that the labor force will never go back to the previous normal.

Both traditional employers and labor unions will face challenges adjusting to a new unbundled style of working. The most forward-thinking large employers will build their own gig-like apps so they can maintain access to an available workforce while providing employees the flexibility they desire. Imagine a trained barista for Starbucks who in 2032 can travel anywhere in the world picking up shifts at local franchises as needed. On the other side of that equation is a staffing manager who will make sure shifts are covered—as easily as she summons an Uber today. Unions will want to have a say in the creation of these internal work apps to protect seniority, pay rates and other benefits for their membership.

The remarkable rise of the gig economy has pulled workers away from entry-level jobs in the hospitality industry—and it is a key reason they are not returning. App platforms that didn’t exist 10 years ago have an enormous— and increasing—influence on the labor market. By the end of this decade, the collective power of these platforms will rival that of unions. Even though gig jobs may not supply predictable income, they provide other benefits like flexible working hours and a wider variety of work. The good news is that while the gig economy is currently a big problem for legacy hospitality businesses, in the long run it will also be a solution.

The maturation of the gig economy won’t be without conflict. Gig workers are increasingly using social media to engage in “decentralized collective action”—i.e., informal unionization—to lobby app platforms for better wages and conditions and to expose unfair management practices, poor wages or outright abuses by the companies behind the apps. Legislative battles and legal challenges to the categorization of gig workers as independent contractors will continue for years. However, as gig-worker networks bring unprecedented levels of transparency to an ever-greater number of industries, conditions will improve for labor everywhere.

2021:

55 MILLION GIG WORKERS

35% of US Workforce

2027:
80 MILLION GIG WORKERS
50% of US Workforce

“I expect organizations to become more marketized in the future, with younger generations not holding six jobs in their lifetime anymore but six jobs at the same time, as workers offer their skills to different companies in different projects.”

—Anthony Klotz, professor of Management at Texas A&M

AFTER PLATFORMS

Gig platforms are taking over huge swaths of the economy. What’s next in this evolution? Decentralized Autonomous Organizations, aka DAOs. Run by blockchain-fortified smart contracts (software) rather than bad-boy entrepreneurs, DAOs create a mechanism for makers and workers to coordinate activities and engage with clients and customers without the need for intermediating (and profit-taking) firms. Ownership and decision-making power in a DAO can remain with the participants rather than management teams or Wall Street. In contrast to today’s regulation-bending, worker-squeezing Ubers, et al., gig DAOs will provide shares of ownership and the ability to vote on strategy and policy to those who use them. Today’s early gig DAOs are mainly geared toward software developers and designers. But by 2025, we will see significant numbers of gig workers buying into ride-hailing and food delivery DAOs that give them a say in how the organization is run—not to mention a piece of the profits.

SEGMENTS OF THE GIG ECONOMY

Gig work is steadily moving up the income ladder to include high-paying white-collar jobs—witness such gig platforms as Docketly (for lawyers) and flipMD (for doctors). The number of US independent workers grew by 34 percent in 2021 and they are not all driving for Uber or DoorDash. Fully 55 million people in the United States are gig workers—over one-third of the workforce. We expect gig workers to exceed 50 percent of the workforce by 2027.

Gig-platform developers are increasingly seeing the hospitality industry as a prime target for their services. Startups working to supply employees (both permanent and temporary) for a variety of functions in hospitality include Need a Barista and Seasoned.

SHORT-TERM LABOR

APPS: TASKRABBIT, GIGWALK, LUGG 

GENERALLY LOWER-SKILLED, SUCH AS MOVING, ERRANDS, LAWN CARE

TRANSPORTATION AND DELIVERY

APPS: UBER, DOORDASH

GIG WORKERS USE THEIR OWN VEHICLES AND GET PAID PER RIDE OR DELIVERY

CRAFTY/CREATIVE ENTREPRENEURS

APPS: ETSY 

MOSTLY GEN Y AND GEN Z, WOMEN USUALLY WITH ANOTHER JOB, LOOKING TO MAKE MONEY FROM CREATIVE ACTIVITIES THEY ENJOY ON THE SIDE

“Business leaders feel anxious as they struggle to marshal and mobilize the workforce of tomorrow. The workers, however, don’t share that sense of anxiety. Instead, they focused more on the opportunities and benefits that the future holds for them, and they revealed themselves to be much more eager to embrace change and learn new skills.”

—Harvard Business Review, “Your Workforce Is More Adaptable Than You Think”

WHY HIRING HAS BROKEN DOWN

By 2027, artificial intelligence hiring tools will finally prove their worth. Rather than simply scanning resumes for keywords, as most recruitment apps currently do, AI algorithms will begin to predict more ephemeral qualities like character, intelligence and leadership. Current AI isn’t yet smart enough to judge intangibles that come through in human-to-human interactions. Managers might never see a promising applicant because they haven’t broadened their screening parameters. Relying on today’s recruiting software, travel and hospitality companies are unwittingly letting the perfect be the enemy of the good.

MEANING STILL MATTERS

While employers reevaluate incentives and consider raises, employees seek meaning and belonging. This is where traditional employers still have an advantage. Having a sense of group membership and shared purpose remains a deeply held human need. Companies that can recognize initiative and show that career progression is possible are more likely to create long-term loyalty.

“A lot of what we’re seeing is that people are really reassessing their priorities as it involves work. It’s not just around, ‘Do I want to work or not?’ The pandemic allowed people to step back and say, ‘Is it really worth it for me to work now?”

—Jeff Waddoups, University of Nevada, Las Vegas labor economist

TIME TO WIDESPREAD ADOPTION OF LABOR-REDUCING AUTOMATION IN FOOD SERVICE

BY 2025

Waiter-free ordering

Already employed at major chains and becoming adopted by standalone restaurants and smaller chains through cell phone menu apps and QR codes.

BY 2027

Driverless restaurant delivery

Already in the experimental stage at various places around the country. We have a high degree of certainty about the adoption of this technology.

Table delivery robots in restaurants

Several startups are already offering this technology but the labor advantages for adoption are limited. For the time being this is more of a gimmick than a potential widespread trend.

BY 2028

End-to-end robotic cooking for takeout and fast food

Labor-intensive kitchen practices are ripe for disruption. Mixed-drink vending machines and sophisticated robotic coffee baristas have already arrived at stadiums and malls. Robotically prepared food has a foothold, and end-to-end robotic food-service systems will become increasingly common, especially for preparing pizzas, burgers and other quick-service meals. All major fast-food restaurants are investing in ways to automate their operations.

BY 2030
Fully automated dine-in restaurants
Small, staffless grocery retail outlets like AiFi NanoStores are being tested out in dozens of cities. Autonomous restaurants that produce cooked food will not be far behind. Piestro, a robotic pizzeria startup, just announced a partnership with 800 Degrees Pizza to create a fully automated kiosk that can deliver a pizza in about three minutes.

"Over the last few decades, as technological innovation has swept across other industries and sectors at an increasingly rapid pace, hospitality has found itself lagging, needlessly anchored by a reliance on legacy systems. . . . Finally, it seems, an era of innovation is upon us."

—Alan Young, chief strategist, Hospitality Net

AUTOMATION (NOT JUST ROBOTS) CAN SAVE THE DAY

While “automation” evokes robots, self-driving vehicles and other flashy hardware, advances in software will dramatically reduce the labor demands of running restaurants, venues, hotels and other hospitality-related businesses. Easy-to-use management and logistics software makes it increasingly simple to hire, onboard and train new staff. Checking someone into a hotel or punching in a food order needn’t require weeks of training—or even a human. As hotel and restaurant operating systems become more user-friendly for both managers and staff, new hires will need less training. This, in turn, allows for easier use of short-term and gig employees. This technology will also reduce the need for staff, as customers will order their own meals and check into hotel rooms with no human assistance.

With easy-to-use integrated operating systems, training time and onboarding paperwork is reduced. This opens the opportunity to use recruiting apps like Jobble, Instawork, Qwick, FlexJobs and Clevergig to employ workers from the gig economy as needed. In this way, the hospitality industry can benefit from the gig economy and changing work patterns instead of being the victim of them.

“The restaurant industry is very hot right now in terms of technology and ripe for disruption. There’s an acute staff shortage. So I think we do need to embrace technology in certain places where it’s going to make life easier.”

—Barry McNerney, CEO and cofounder of Unify Ordering