What happens to workers when jobs becomes gigs?

Two online freelance employment agencies -- oDesk and Elance -- have agreed to merge. The former, based in Redwood City, Calif., claims a million business customers and 5 million freelancers with nearly $47 million in funding. Elance, down the road in Mountain View, has 800,000 business customers, 3 million freelancers, and $95 million in funding. 

The growth of these firms -- which may accelerate as they combine investment -- may not mean much to most workers in the world. But their business model could have an impact on the millions of workers -- engineers, designers, programmers, marketers, personal assistants, and others -- as more corporations use the services to replace full-time positions. 

Already, more individuals are looking at such services -- TaskRabbit and Gigwalk are two other examples more focused on workers located in the U.S. and with a greater range of unskilled work available -- to help them piece together enough income from part-time jobs to support themselves and their families.

Services such as these are often touted as creating "new" jobs or offering individuals ways to supplement their income. Users sign up and get paid anywhere from a few dollars to well more than $100 an hour, depending on the expertise they can provide and the skill with which they can sell themselves.

But they are actually designed primarily to benefit corporations by reducing the need for full-time staff. As Robert Kuttner explains in The American Prospect, the use of temporary, outsourced workers shatters the traditional, informal agreement between employers and employees. 

"That contract included a regularized workweek and paycheck and the expectation of continued employment assuming satisfactory job performance," he writes. 

But contract employment has eroded that contract. Concludes Kuttner: "The move to insecure, irregular jobs represents the most profound economic change of the past four decades."

Opportunities, but for whom?

As fast food workers have learned, the combination of lower wages and short work weeks is crippling. Employers typically don't offer them either full-time hours not predictable schedules because the employers want the advantage of flexible scheduling. The latter makes sustaining additional jobs far more difficult.

Although some of the contract employment services claim to create new job opportunities from companies that would not necessarily hire full-time people to perform many types of tasks they might want done, the claim is questionable. A large company that wanted to check on promotional displays -- an example given by Gigwalk CTO Matt Crampton -- wasn't able to do that. It would hire a company that would perform the service for it and others, providing job opportunities. But when the large company goes directly to a freelancing site, there is no continuous work for the people who might do the task.

Instead, they find themselves effectively self-employed, racing about to string together enough tasks and finding themselves responsible for their own benefits, extra taxes, and expenses.

No safety for the skilled and trained

The numbers that the job boards toss about are anything but encouraging for most people. For example, Elance and oDesk billed $750 million in 2013. Presumably that includes their fees. But even if not, that money was split among 10 million workers for an average of $75 per person for the year. Gigwalk has estimated that its workers would make $5 million over the next year. However, with 300,000 workers, that is about $17 each. It isn't surprising, given that many of the sites have workers bid against each other, driving down the price of the work. It may be that many of the workers claimed by these sites have registered at one point but don't use them. Many people may sign up and only do one job and drift away, so these services more likely create a piece work, not career opportunities.

Not all people are cut out to be self-employed. But as corporations increasingly realize that they could rid themselves of full-time staff and instead use freelance help, they could push many more people into the need to completely fend for themselves.

And don't expect that the trend stops with low-skilled jobs. There are gig sites for programming, design, engineering, and other occupations that require some amount of training and expertise. According to The Conference Board, 2013 has been a poor year for labor demand, particularly in such "skilled" areas as computers, math, engineering, architecture, and management. Most of the growth has been in low-wage service occupations. So much for advanced education and training ensuring an economic future.

Not only will workers face problems, but so will the country. There are already estimates that 25 percent of American workers receive public assistance. As the world moves to global competition and free agent workers, that percentage could continue to climb. The question is, what percentage of the populace will be left to pay the taxes that keep a safety net stitched together?

  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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