Most defenses of gigging stem from the fact that they are a way of defending against coercive unionism. That is a good and sufficient reason to support this type of labor contract. But the case in favor of this type of labor relationship goes deeper, far deeper.
First, what, exactly, is a gig relationship? A synonym for this might be sub-contractor. The main builder of a house hires a plumber, a carpenter, an electrician for a fixed, limited amount of work The main contractor is in overall charge of all these sub-contractors, or gigsters. He pays them out of his own pocket, with revenues garnered by the sale of the house to the resident. He coordinates their activities, so that they don’t step on each other’s toes, and makes sure that too many cooks don’t spoil the broth. None of them are permanent employees of his.
Perhaps the most famous of these arrangements are Lyft and Uber. They do not hire drivers. They own their own automobiles. The giggers link to these two corporations, are coordinated by them, receive a percentage of what they earn.
Yet another example are long distance truckers. Some of them, to be sure, are mere employees of transportation corporations. But, others own their own 18 wheelers and are free to make temporary arrangements with whoever wants to contract with them.
Why, then, is the gig movement so important to defend, apart from the fact that such workers are much harder to unionize, and thus organized labor gets a cock in the snook?
Simple. It is because they are a way station, a half way or part way point, on the road from single sellers to business firms. Most economists want more of the latter, since they falsely equate number of competitors with the presence of competition. But for whatever the reason, it makes no economic sense to reduce the number of firms competing for the consumer dollar.
Our friends on the left hate business firms, even more so, corporations, with a purple passion. They want fewer of them around so they will be easier to control. They think that business exploits workers. How do they think firms were started in the first place.
At one time back in our prehistory, there were none such. Each person, Robinson Crusoe-like, worked for himself. He might catch fish. Friday might have gathered coconuts. They might have traded with each other. Assume a whole bunch of fishermen and harvesters, all working on their own accounts. Let us posit that one fish equals one cocoanut in value; they all are equally productive and garner 10 units of food per week, whether of fish or fruit. All of them are independent.
Then, one day, Robinson gets up on his hind legs and makes a proposal to Friday. Robinson offers Friday a salary of 12 food units. The latter agrees, since this wage of 12 would be greater than his present haul of 10. How can Robinson afford to make any such offer?
First, he saves up food units; in that way, he can pay Friday a salary. Secondly, he relies on the economic phenomenon of economies of scale. While each laborer can only produce 10, on his own, Robinson predicates his business model on the fact that when he and Friday work together, they can then produce 30 per day.
Thus, the first business firm is born. The Robinson company earns a profit of 30-12=18 food units. Is this corporation “exploiting” its one employee? Well, no. True, Robinson now owns 18 foot units per time period; this is a gain of 8 for him, compared to when he worked alone for 10, like everyone else. But Friday, too, is better off, to the tune of 2 units. His salary of 12 is higher than what he, too, earned, in the bad old pre company days, merely 10.
This is how firms are born. There is nothing untoward about this, the Marxists to the contrary notwithstanding. Robinson, as entrepreneur, makes three contributions. First, he bears the risk. He is obligated to pay Friday 12 units per week, whether or not they gather that much. Secondly, he pays Friday up front. If mechanical equipment can increase the catch, it is he who will be putting up the capital to purchase it. And third he supplies leadership.
