This article was published by Micha Kaufman, Co-founder and CEO of Fiverr® on the Forbes blog.
Increasing the nation’s minimum wage is shaping up to be one of the most divisive election-year issues. On April 30, the President Obama-inspired proposal to raise minimum wage to $10.10 per hour failed in the Senate. On the flip side, D.C. plus five states and counting — Connecticut, Delaware, Maryland,Minnesota, West Virginia — have already enacted increases in 2014, adding up to a total of 21 states and D.C. that currently set the bar above the federal minimum wage of $7.25 per hour.
It’s not black and white (though it may be red and blue)
In February, the Congressional Budget Office released a report predicting that the minimum wage hike would raise wages for 16.5 million Americans but would lead to the loss of 500,000 jobs. No matter where you fall on the issue’s political spectrum, there’s no doubt that this is a weighty debate whose outcome will affect millions of Americans.
I’d like to examine the issue in a new light. The way that we measure the value of work is radically changing. One third of us are freelancing and that number is predicted to rise to 50% in six short years. Online marketplaces are springing up that enable freelancers to package their services not by time on the clock, but Gig® by Gig.
Specifically
Services are being marketed as products with set prices and clearly defined task parameters. Meaning that companies contract talent to perform a specific task like writing a business proposal or designing a website in the same way you would purchase a set of golf clubs on Amazon or eBay: scroll through user reviews and click on the one you want to buy.
The focus is squarely on the quality of the Gig and the payments are directly for each individual service performed rather than time-based.
This focus on performance instead of hours is sure to ultimately affect the minimum wage debate. In other words, if we’re increasingly measuring the value of work on a task-by-task basis, paying hour-by-hour doesn’t fit the rubric. So, what are the implications for both businesses and employees?
For companies paying minimum wage, this could be a way to get beyond the sticker shock of having to pay your workers more in a post-hike universe. If you assess your employees — and even your entire business model — on a per-task instead of per-hour basis, you are sure to come to some surprising conclusions.
You may find that certain workers are underpaid given how much they accomplish and others are overpaid. You may find that resources could be shifted in a way that saves money and enables you to avoid layoffs.
On the other side of the coin
People who are paid per Gig will inevitably want minimum wage protection to apply to their work as well. When people talk about groups exempt from the federal minimum wage law, they list tipped workers, disabled people, anyone working for a small business with less than $500k in yearly revenue, and teenage trainees. But this rundown leaves out the vast number of Americans being paid by task.
What will worker protections will look like in a world where many people are paid per Gig instead of per hour? Hard to say, but for 42 million of us and counting, it’s worth asking.
What are your views on the minimum wage issue in the new Gig Economy?
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