Technology changes not only what tasks people do but how work is organized. Since the late 2000s, smartphone apps have matched millions of people with short jobs: a ride, a food delivery, a logo design. This "gig economy" raises old questions in new form: who is an employee, who has a boss, and who carries the risk when work dries up?

Two kinds of platform work

Researchers usually split platform work into two types. Location-based platform work is done in person in a particular place, such as ride-hailing, food delivery, cleaning and home repairs found through apps like Uber, Deliveroo or TaskRabbit. Online platform work is done remotely and can be done from anywhere, such as data labeling for distant clients, translation and programming on sites like Upwork or Amazon Mechanical Turk, which launched in 2005. Online platforms create a global labor market, where a worker in Kenya competes with one in Ohio.

Short-term hiring is not new. Dock workers in many ports were once hired each morning in a "shape-up," where a foreman picked who would work that day. What is new is the scale, the speed and the software that does the picking.

Employee or contractor?

The central legal fight is classification. Most labor protections, including minimum wage, overtime pay, unemployment insurance, sick pay and the right to bargain collectively, apply to employees. Independent contractors are treated as running their own businesses and usually lack minimum wage and unemployment insurance protections. Platforms say their workers are contractors who choose when, where and whether to work. Critics say the platforms set prices, assign jobs and discipline workers, which looks a lot like being a boss.

Courts and lawmakers have split. In February 2021 the UK Supreme Court ruled in Uber v Aslam that Uber drivers in the UK are "workers," a middle category entitled to minimum wage and paid holiday, because Uber controlled fares, contract terms and ratings. In California, a 2019 law known as AB5 made it harder to treat people as contractors. App companies then spent more than 200 million dollars backing Proposition 22, which voters approved in November 2020. Proposition 22 kept California app drivers as contractors while giving them some benefits, such as a minimum earnings guarantee for time spent on trips and a health care stipend. In 2024 the European Union adopted a Platform Work Directive. The EU directive creates a legal presumption that platform workers are employees when the platform controls their work, putting the burden on the platform to prove otherwise. Member states have until late 2026 to put it into national law, so its effects are still unknown.

Algorithmic management

On many platforms, software rather than a human supervisor assigns jobs, sets pay, tracks speed and ratings, and can cut a worker off. Algorithmic management means software assigns, monitors and evaluates work, often with little human review. It can be efficient and even fairer than a biased foreman. But workers often cannot see why they were offered less work or "deactivated," and appealing to a machine can be hard. The EU directive includes rights to human review of important automated decisions. Monitoring of this kind also raises serious privacy questions.

The case for flexibility

Platform work also has real defenders, including many of the workers. It lets people earn money between other jobs, around school or caregiving, or while looking for something else, with no interview and no fixed schedule. In a 2019 study using data on Uber drivers, M. Keith Chen, Judith Chevalier, Peter Rossi and Emily Oehlsen found that Uber drivers valued the ability to set their own hours highly, earning more than twice the surplus they would get from less flexible arrangements. Economists who favor the contractor model argue that full employee status would force platforms to set shifts and limit how many people can sign on, removing what many drivers like most.

How big is the gig economy? Estimates vary with definitions. In 2017 the US Bureau of Labor Statistics found that work found through apps and websites made up only about 1 percent of employment, though many people do it as a side job that surveys miss.

Worked example: a rider is deactivated

Amir delivers food by bike about 30 hours a week through an app. One morning the app shows his account is deactivated for "unusual activity." There is no phone number, only a form. Apply the ideas. Classification: if he is a contractor, he may have no right to notice, no unemployment insurance and no grievance process; if he is an employee or a UK-style worker, more protections apply. Algorithmic management: a pattern-detection system may have flagged his account, perhaps because he shared a phone with a cousin; without human review, an error is hard to fix. Flexibility: Amir chose this work because he studies in the afternoons, and a rigid shift job would not fit. A fair policy would try to keep his flexibility while giving him a clear reason for the decision, a human to appeal to, and a floor of income protection. Different countries are now testing different ways to strike that balance.