Nothing to fear.

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Who's Afraid of Uber?

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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There's a lot of worry around about the "gig economy," a fear that Uber-type jobs are "driving inequality" and could be bad for workers. Everywhere you look it seems that some columnist is fretting about what Uber means for the future of society, and its workforce. Not to mention those who are forced into such contingent jobs already.

Today's Wall Street Journal suggests just one small problem with this analysis: We don't have much data showing that the brave new "gig economy" is actually happening.

Don't get me wrong: There are contingent workers out there, from temps to freelancers. But there have always been contingent workers out there. I can't be the only person who spent a few summers working temp jobs -- and more than a few summers doing freelance journalism. Those jobs weren't the greatest back when I was young and carefree, and I imagine they aren't the greatest now. But they were not harbingers of the destruction of a once-great national economy. They were just jobs that some people had.

QuickTake The Sharing Economy

The Journal suggests that that's still basically the situation, despite Uber and all its imitators: "Far from turning into a nation of gig workers, Americans are becoming slightly less likely to be self-employed, and less prone to hold multiple jobs. Official government data shows around 95% of those who report having jobs are accounted for on the formal payroll of U.S. employers, little changed from a decade ago."

So why are we so worried that Uber is ushering a world where everyone is on an extended temporary contract, one bad review away from the dole? 

I suspect I know the answer, and it has less to do with the state of Uber than with the state of journalism.

What's most notable about these "gig" jobs like TaskRabbit and Uber? They tend to be concentrated in large urban areas. Not exclusively -- my husband recently took an Uber in Lexington, Kentucky, which is not traditionally thought of as one of our nation's most bustling metropolises. But places like San Francisco, New York, Boston and Washington, D.C., are the places where Uber has had the most impact, because they have large concentrations of people, and many of those people don't own cars or would prefer not to drive downtown.

Those places also happen to be where much of American journalism originates. And journalism is an industry with a lot of marginal young people trying to get jobs. This hasn't been easy for decades (if indeed it ever was), but it's harder than ever these days, because ad money is flowing out of my industry and toward competitors who don't even produce content. It used to be definitely possible -- perhaps not stellar, but possible -- to support yourself as a freelancer, selling articles here and there to cobble together something like a decent income. Freelance writing today increasingly looks like a form of advertising in which you give your work away for a pittance in the hopes that eventually, someone will offer you a staff position. That won't be very well paid either, but it will be better than trying to make your rent at $150 an article. This makes journalists notably more anxious about the disappearance of "good" jobs, the kind you can retire from in 20 years, than they were when I started.

Journalists may be tempted to over-identify with anxious workers when Uber pops up in their cities, noticeably disrupting an old-fashioned industry. So we get a spate of media attention on worker dissatisfaction with the "gig economy" from people who were never previously moved to write about taxi driver complaints about, say, the very high crime rate faced by cabbies or their problems with the taxi commission -- two problems that Uber has at least partially alleviated.

In other words, while Uber's disruption of an existing labor market is not particularly important to the national economy, it ends up looking important to a particular class of people. And that class of people happens to be the one that writes all the news articles. Which is why we keep reading about the gig economy, even though much of the country would hardly have noticed it without those reports.

Of course, it could be that the gig economy really is transforming the country, and we just don't have the data--the last comprehensive survey of the contingent workforce was done in 2005. Or it could be that Uber is just the beginning -- that we are now on the verge of a mass economic transformation that will turn us all into contractors.

And that may be. But before we start to panic, it seems worth asking a question: Why do companies employ anyone at all? Why not just rely on contingent labor for almost everything? After all, casual labor used to be pretty common, so it's not like no one ever thought of this. And yet now it's confined to things like small-scale construction, agriculture and the guy who shows up to ask whether you want your walk shoveled after a snowstorm.

The simplest answer is "transaction costs": companies need to know that they'll be able to find a worker when they need one. Searching for those workers is time consuming, and you run the risk that one may not be available at the crucial moment. So employers keep people on staff rather than going out to hunt up another worker every time they need someone to stand behind the checkout counter for an hour.

Uber's innovation is to reduce the transaction costs in finding a ride, potentially increasing both supply and demand in the marketplace. But is that really going to sweep every other industry?

I doubt it. Because one of the big components of search costs is skill matching. When you need someone to help you reconcile the books at the end of the quarter, you can't just grab a warm body. You need someone who knows accounting. That's why contingent labor shows up in the lowest-skilled sectors of the economy -- or in the case of Uber, in a sector where almost everyone in the nation has already acquired the demanded skill.

That doesn't actually describe a whole lot of jobs. Even an "unskilled" job like working the grill at McDonald's requires some time to train people to use the specific equipment in the store. No one is going to try to run their franchise by dialing up an app to see if there are some people around who'd like to man the fry-o-lator today.

We may well see more firms try to push people onto contracts, in order to get around various regulatory requirements for benefits and workers' comp insurance and so forth. (Though Obama's Labor Department takes a very dim view of this sort of thing, and will fight back hard.) But those contracts aren't really going to be part of the much vaunted "gig economy"; they're just jobs, under an alternate legal designation that somewhat lowers the tax and regulatory burden on the employer.

Gigs have always been with us, and probably always will be. The "gig economy," on the other hand, may well be a figment of our overheated imaginations.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Philip Gray at philipgray@bloomberg.net