The fall of the gig economy?

The fall of the gig economy?
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The Fall of The Gig Economy? Behavioral Science Explains Logic Behind Gig Workers

The state of California passed a bill yesterday that requires app-based companies like Uber and Lyft to treat their workers as employees rather than contractors.  Once signed, this controversial new law is expected to resonate with the rest of the country which will help lead initiatives and help other states sign-on.


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Recently the leading behavioral science website, published The Science of The Gig Economy. The article explores the rationale behind gig workers from both the contractor and the company’s point of view using behavioral science principles.

Editor-in-Chief of,  Jeff Kreisler discusses why companies and HR departments should consider the behavioral costs and burdens of a gig economy beyond just bottom-line savings.

The Science of The Gig Economy by Jacob Mohrmann, Research and Insights Manager, Maritz

  • This is not to say that “contract work” is always a negative experience. Some people do relish the freedom and flexibility that comes with contract work, particularly when those jobs come with better pay and good treatment by employers.
  • Important behavioral needs are addressed including salary (and enough salary to make up for the fact that benefits are not provided through the job), elements of status and respect, and the contractor has a flexible work schedule and a sense of autonomy. The one main difficulty many gig workers have is being remote all the time. People can live in a different city and relishes the ability to work with a cool company in another location, but it can feel a little removed from the action.
  • Many contract workers are hired for what are normal full-time 9-to-5 jobs, but they are hired via contract companies. These employees enter into the agreement hoping to eventually work their way into a position as a traditional full-time employee. The current position does not afford the benefits, flexibility or even the decent pay promised by the gig economy. There is frequently a negative element of comparison as well and a sense of unfairness when working side-by-side with employees that have benefits not afforded to the contract worker. Principles at play: social comparison and relativity.
  • This arrangement often leaves workers feeling as though they are not full members of the companies they work for, and “identity” is an important motivator (whether you’re working a job or voting). It also leaves them feeling unsupported, and perceived organizational support translates to a lot of important work outcomes like performance.
  • Employers hire contract workers instead of full-time employees because they can get away with paying them less or because it provides the opportunity to “try someone out” before offering full-time employment.

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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