In 2024, buy-now-pay-later company Klarna announced it would cut hundreds of customer service roles and deploy an AI chatbot instead, expecting to save millions. However, after customer complaints about degraded service, Klarna quietly rehired human agents—but not as full-time employees. Instead, it adopted an "Uber type of set-up," as CEO Sebastian Siemiatkowski described, where gig workers handle advanced queries while the AI chatbot manages basic ones. This scenario offers a glimpse into how artificial intelligence is transforming work.
AI's Impact on Employment
Labor economists are divided on whether AI will replace jobs entirely, but they largely agree that AI will replace parts of most jobs. Optimists see AI taking over menial tasks, freeing workers for higher-level work. Cynics foresee companies using AI to hire fewer full-time employees, shifting toward a fragmented workforce resembling the gig economy.
Gig work—flexible, short-term, on-demand—originated in the music industry but now describes platforms like Uber, DoorDash, and Taskrabbit. These jobs offer autonomy but lack benefits such as paid time off, health insurance, workers' compensation, overtime, or minimum wage. Sociologist Alexandrea Ravenelle of the University of North Carolina at Chapel Hill notes a shift "from the career to the job to the gig," with AI accelerating this trend. Over the past decade, gig work was mainly for rideshare drivers and couriers, but now industries are outsourcing tasks to technology and hiring contractors instead of full-time employees.
This transformation hits white-collar workers hardest as companies seek efficiency gains from AI. Mary Gray, senior principal researcher at Microsoft Research, states, "There's no evidence that jobs go away, but there is a lot of evidence that as soon as you can dismantle full-time employment, companies will do that." She emphasizes that technology enables cost-saving measures. Ravenelle adds, "We are going to see it in every industry. I don't believe there's any industry that's safe from this."
The Reality of Gig Work
Fifteen years ago, gig companies promised freedom and flexibility, but the reality has been precarious arrangements with unstable pay, unpredictable hours, and few protections. A Human Rights Watch report details global consequences, noting how gig work strips basic protections while returning record profits to businesses. Algorithms exert immense control over tasks, pay, and performance evaluation. Delivery workers described accidents leading to unpaid medical bills, and many reported unpaid waiting time.
Lena Simet, senior adviser on economic justice at Human Rights Watch, warns that gig work is "the first indication of something broader." She sees it as a foreshadowing for many parts of the labor market. A recent Upwork survey found that about 60 million Americans (39% of the workforce) already perform freelance or gig work, with Statista projecting 86 million (about half) by 2027. The fastest-growing segment is knowledge workers: customer service agents, copywriters, financial analysts, paralegals, writers, and coders.
When workers are classified as contractors, "you have the rolling back of generations of hard-won workplace protections," says Ravenelle. "Literally stuff that our great-grandparents died for, all of those protections are gone."
When Gig Work Is the Only Option
Ravenelle's study on creative workers found many forced into gig roles, including training AI systems. One musician worked as an "algorithmic composer" creating loops to train AI that could replace human musicians. A writer evaluated AI-generated writing for a tech company, acknowledging the irony but stating, "This is the best opportunity right now for me." An actor took a gig with a streaming giant that would reduce need for background actors, feeling morally conflicted but saying, "Not only is AI taking over the world, but I'm also dirt poor, so I may as well just go along with it."
Workers often join the gig economy because it's the best option in a precarious labor market. Mercor, an AI training startup, hired over 30,000 contractors in 2025, including doctors, lawyers, and bankers. Nurses face increased "gigification" through platforms like ShiftMed, CareRev, and Clipboard Health, described as "Uber for nursing." These platforms offer flexibility but result in lower wages, competition for shifts, and workers bringing their own equipment. One nurse said, "I have no choice." At least 17 states recognize these platforms as "healthcare worker platforms" rather than staffing agencies, exempting them from regulations and leaving less pay and fewer protections. Many have reached billion-dollar valuations.
Pushback and Policy
Some workers have unionized in response. In March, healthcare workers in California struck against Kaiser Permanente's use of AI. In May, IT workers at the University of California voted to unionize, citing layoffs and AI concerns. Max Belasco, a business systems analyst at UCLA, said AI concerns were "a major component of why we decided to organize." He emphasized wanting strategic implementation, not cost-cutting.
Comprehensive policy at state, federal, and international levels is needed. Gray suggests universal benefits like healthcare or basic income. A global treaty from the UN's International Labour Organization is under discussion to establish standards on wages and safety. Simet believes now is the time for greater protections, cautioning that governments have been too cautious. "It's still a very lucrative labor model even if you have to comply with some regulations," she says. "And if this business model can only persist when exploiting workers, then maybe it shouldn't exist."
