Nicholas Ryan is a veteran and MBA student at NYU Stern.
When Clayton Christensen introduced his concept of “disruptive
innovation” in 1995, he couldn’t possibly have anticipated the
movement he had started.
In broad terms, he defined disruptive innovation as new entrants
in an industry capturing the lowest-end, least-profitable market
share and moving upwards to capture the mainstream.
An example he offered, quaint as it now sounds, was the
disruption – and eventual destruction – of integrated steel firms
by mini mills.
To the extent that you’re familiar with disruptive innovation
it’s because, in a meta turn of events, the term itself has been
From its inception as an esoteric economic model for Harvard
Business Review subscribers (i.e., the high end of the market),
“disruption” has now become a buzzword among bloggers and tech
wannabes (the low end of the market). Twenty years after its
coinage, the phrase is used in over 2,000 articles annually.
Christensen himself is less than pleased with this
meme-ification, having even gone as far as to pen a clarifying
rebuttal, “What is Disruptive Innovation?” Alas, it was
too late; he’d already opened up a conceptual Pandora’s box.
But the problem goes far beyond the bastardization of an academic
term. In our obsession with disrupting we accidentally created
the biggest disrupter of all: the gig economy. And now we’re
going to feel the consequences of having displaced traditional
Over the past 20 years, freelancing is up 27 percent compared to payroll employment
(think more 1099s and fewer W-2s). By 2020, it’s expected that
over 40 percent of the workforce will be
freelancers. The shift is due in large part to the rise of
digital platforms like Etsy, TaskRabbit, and Upwork.
The upshot is that as young people opt into the gig economy we’re
seeing fewer workers with 401(k)s, healthcare benefits, and
access to credit.
The current discussion is focused on what we might term the
“supply-side” of the issue.
For businesses, contractors are 20 to 30 percent cheaper than payroll
It’s easy to classify the gig economy as exploitative
capitalism’s newest iteration, largely devised by our Silicon
Valley overlords. But that’s not the whole picture.
Participants in the gig economy are hardly guileless dupes.
In the United States, 72 percent of participants actively choose
gigging over traditional employment, and most are not single moms
or struggling retirees.
A recent study found that giggers are young,
“disproportionately white-collar, and highly educated.”
Scratching your head? The reason for this seems to be
First, there’s a cultural shift towards prioritizing
“flexibility, freedom, and creativity,” three of the most
oft-cited reasons young people are opting into gig work. It’s
certainly a way to break away from the 9-to-5 cubicle lifestyle.
Most freelancers set their own schedules and many work remotely.
There’s another component as well. That’s the 66 percent of millennials – cheered on by
everyone from Paul Ryan to Peter Thiel – who aspire to start
their own business; independent work allows more time for
personal entrepreneurial pursuits. In gigging lingo, these people
are known as “hedgers.”
But whether driven by capitalism, creativity, or both, there’s a
distinct hunger to upturn the existing status quo. Understandably
so. It’s a script we’ve seen time and time again over the past
It’s tempting to dismiss opposition to the sacrosanct disruption
as staid or contrarian, until you consider the implications of
what we’re doing. In attempting to play by a new set of rules and
avoid joining the rat race, young people have simply settled for
a subtler, more insidious alternative.
In the short-term, giggers need to consider the barriers they’ll
face compared to their peers in traditional employment.
Licensing, training, and credentials, all of which might be
covered by a large employer (and are critical to career
advancement), will be harder to come by.
So will access to credit, a staple of the American middle class.
Without a standardized paystub, contractors will have difficulty
wooing creditors. Though often overlooked, this is a critically
damaging component of job insecurity.
What’s more, contractors work without benefits – an issue that
will soon be compounded with the imminent dismantling of
Obamacare. Many of the 31 million Americans who depend on gigs as
their main source of income will likely opt out of health
Whether you believe universal coverage is the answer or not,
there’s no model that can survive a substantial migration in the
workforce towards gig employment. Combined with the 42 percent of millennials who have no money
saved for retirement, the future looks bleak.
When we talk about dismantling the safety net, it’s usually in
terms of sweeping policy changes. But that hasn’t been the case.
Though this disruption has been enabled factors at the top (i.e.,
digital platforms) it’s fundamentally a culturally fueled,
We want young people to have financial security and future
prosperity, and that requires change through legislation and the
More stringent policy should set standards for benefits,
credentials, and retirement savings for contractors starting at a
certain size. Traditional employers should consider strategies
like remote work, delayering, and agile development to become
attractive to young people again.
We should hope that these measures and others will stem our
appetite for endless disruption. If not, the American middle
class may just go the way of the integrated steel manufacturer,
displaced by a cheaper alternative.
Follow Nicholas Ryan on Twitter @nick_s_ryan.
This column does not necessarily reflect the opinion of Business Insider.