Column: High cost of living makes Hawaii fertile ground to grow gig economy

With Labor Day weekend recognizing the invaluable contributions made to our country by the labor movement, a new group of workers has recently swelled in number.

Since the Great Recession, the rising number of freelancers and independent contractors has evolved into the growing phenomenon known as the “gig economy.” Even for those who have never heard of the term, they may have already been part of it, or more likely have been benefiting from it. You probably have met a gig economy worker as your Uber driver, Airbnb host, or a handyman hired from TaskRabbit.

Characterized by temporary positions and independent workers, the gig economy is estimated to consist of 5.9 million — or 3.8 percent of — U.S. workers, according to the most recent survey released in June 2018 by the Bureau of Labor Statistics. When loosely defined, the estimated size of the gig economy could go all the way up to 32 percent.

Although there is no data to show how big the gig economy is in the state of Hawaii, the expected number is likely higher than the national level, given the fact that a large share of our employment comes from the service sector. For some people, being your own boss and not having to clock in and out sounds very appealing.

As the millennials and Generation Z gradually enter the labor force, the size of the gig economy is expected to increase as time goes on, as these new generations of employees are familiar with the internet and mobile technology and tend to give more emphasis on work-life balance.

Gig economy-related jobs help to reduce frictional unemployment, which happens when people are temporarily unemployed upon graduation or transitioning between jobs. However, most of these jobs offer limited opportunities for professional development or career advancement.

Speaking with some local Uber drivers I have encountered recently — a former escrow officer who lost his job, a college student driving at night and on weekends hoping to make up some school expenses, and a military wife new to the island — none of them consider driving Uber as their long-term career plans. Apart from a steady paycheck, they also realize that they are giving up possible health insurance and 401(k) benefits that come with more traditional jobs.

Although these summoned-by-task jobs help to maintain our current unemployment rate at a steady level, they do not protect these workers during economic downturns. In an economic recession, workers holding gig economy jobs will be among the first batch to feel the pinch. They are more likely to become “zombie” workers, where instead of being laid off and becoming officially unemployed, technically they will have a job but they do not make enough income, due to lack of tasks.

Furthermore, considering the high turnover rate in the contingent-worker pool, hiring companies or agencies should be required to conduct a thorough background check on their employees to ensure customers’ safety and user experience. Also, the growing popularity of the gig economy will push forward revisions of the current labor laws and employee benefits system down the road to better protect workers’ interest in the gig economy.

Due to continued advances in technology and the freedom to be one’s own boss, we can expect the gig economy to transform how we work for the foreseeable future. With Hawaii’s high cost of living and the growing availability of opportunities to work on one’s own time, the gig economy is projected to open up new doors for workers and allow them to make ends meet on their own terms.

Guanlin Gao is an assistant professor of economics at Chaminade University in Honolulu.