What is a negative consequence of the gig economy as described?

• A. It increases government revenue
• B. Contractors are often independent with fewer employment rights, reducing revenue
• C. It standardizes employment rights
• D. It increases payroll taxes

Answer: (B)

In the gig economy, many workers are classified as independent contractors rather than employees. That status gives them fewer employment rights and protections, such as paid leave or minimum wage guarantees. Because payroll taxes and employer social contributions are tied to traditional employment, shifting workers to independent contractor status can reduce the government’s revenue base. So the described negative consequence is that contractors’ independence and limited rights can lead to lower revenue for the government. The other options don’t fit this dynamic: revenue isn’t increased by more independence, employment rights aren’t standardized by gig work, and payroll taxes don’t rise when workers are treated as self-employed.