From on-demand rideshare apps to online errand platforms and freelance marketplaces, the gig economy challenges us to rethink our notions of work. Diane Mulcahy teaches an MBA class on the gig economy at Babson College and wrote a book on the topic (read an excerpt on why the gig economy is the entrepreneurial dream).
We caught up with Mulcahy to find out why she’s bullish on the gig economy and how others can cash in on this mode of work. The following excerpts have been edited for clarity and brevity.
StartupNation: Some of your work mentions the difference between an employee mindset and an opportunity mindset. What’s the difference? Why is an opportunity mindset important?
Diane Mulcahy: If you think about the traditional full-time employee, they basically are in a mindset where they outsource their professional development, their sense of security and their financial stability to their employer. It’s more of a passive mindset, in that one is more reactive. Think of when an employee is shocked, surprised or devastated that they are getting laid off.
An opportunity mindset is completely the opposite. It’s proactive, it’s focused, it’s strategic.
The idea is that, with an opportunity mindset, you take control of your own professional development and your own financial security. You do that by making sure you keep your skills up to date, making sure that you understand what the market is for (your services) and making sure that you’re looking for the next opportunity.
StartupNation: Do you need to be a gig economy worker to have that opportunity mindset? Can employees have that opportunity mindset as well?
Mulcahy: I would advocate that you should have that mindset in this economy no matter how you work, whether it’s as an employee or whether you’re working independently. Even if you’re an employee, having an employee mindset is incredibly risky. There is absolutely no job security whatsoever anymore, unless you are a full-time tenured professor. But, if you are in any other position as a full-time employee, at any time your position can be eliminated, automated, outsourced, off-shored or contracted out. It’s beneficial to always have an opportunity mindset even if you are in a full-time job.
StartupNation: Some people criticize the gig economy: workers don’t get benefits, they sometimes have to work really long hours to earn a livable wage and on-demand startups can lower their rates or change the terms of the relationship, and workers don’t have a whole lot of recourse. How would you respond to these criticisms?
Mulcahy: I hear that all the time and I find it interesting, because that exact situation already exists in our traditional jobs economy. Go to McDonalds and talk to a cashier, or go to Walmart and talk to somebody who is stocking the shelves. Those problems are not particular to the gig economy. They are problems of our [general] economy — the gig economy doesn’t solve them, but neither does it create them.
StartupNation: What changes, regulatory or otherwise, do you think are needed to move the gig economy forward in the U.S.?
Mulcahy: I think we need to disaggregate benefits from a job. There need to be ways for workers to access benefits without having to hold a full-time job, and we have made progress on that. The Affordable Care Act went a long way in allowing people to access health insurance, even if they didn’t choose to or weren’t able to get a full-time job. It’s not a perfect system, but it’s better than having to have a full-time job in order to have health insurance.
But there are still huge gaps in the system. There is no real way to get reasonably priced, easily accessible disability insurance, and it’s impossible to get short-term disability insurance as an independent worker.
In the narrative of our country, we are supportive and congratulatory about entrepreneurship and small businesses, and yet in our tax system we penalize people, such as independent workers who go out on their own. You are immediately whacked with the self-employment tax, a much higher tax than what you would pay as an employee. That’s a real disincentive to go out on your own, and that makes no sense in this current environment. Access to benefits and eliminating the self-employment tax are the two really good places to start in terms of leveling the playing field between employees and independent workers.
StartupNation: Do you have any tips for people entering the gig economy for the first time?
Mulcahy: Always have a side gig. A side gig gives you so much information about entering the gig economy. Anything that you could think of doing, a side gig will give you information about the demand for your service or products, the price that people are willing to pay, whether you actually enjoy it, whether there is any traction in it and which areas, skills, expertise or knowledge you might need to develop. Always have a side gig. Always explore ideas that are interesting to you, passions and things that you care about. It’s always great information to have [while in] the comfort of a full-time job in advance of entering the gig economy.
There’s no great data on the gig economy because it is fairly new. But, all of the data that are available — whether it’s government data, industry data, surveys, or focus groups — show us that this way of working is only growing and only getting bigger. So even if you don’t think that you are interested in it, I would say give it a look, because this is the future of work. Better to be prepared than to be laid off and coping with it.