A finding from a 2025 paper by Harvard Business School’s Christopher Stanton and Catherine Thomas surprised me enough that I went back and read the methodology twice.

Despite online labor platforms having many more job seekers than available jobs, the research found that workers capture a substantial share of the surplus from transactions, with demand estimates implying that workers wages include significant markups over costs. Golance

That contradicts almost every popular narrative about platform work, including ones I had repeated myself in conversations with freelancers building businesses on Upwork and Fiverr. The assumption is usually that an oversupplied labor market crushes wages toward zero. The data says something more specific and more interesting.

Why More Applicants Does Not Automatically Mean Lower Wages

Workers retain a significant share of surplus because demand-side search frictions and worker differentiation reduce direct competition, and applying traditional employment regulations to these platforms would actually lower job posting and hiring rates, reducing aggregate surplus for all market participants including workers. Golance

The mechanism here is worth sitting with. Clients searching a freelance platform face real costs in finding the right person, reading proposals, checking portfolios, running a first project to see if someone is reliable.

Online labor markets where buyers set a maximum budget and workers bid a price to deliver create exactly the kind of information frictions that limit how directly freelancers compete on price alone, since price is only one variable among several the client is weighing. Native Teams

I have watched this play out directly with clients I have advised. A business owner posting a project will receive forty proposals ranging from five dollars an hour to eighty. The cheapest proposals get ignored more often than picked, not because clients are charitable, but because price alone reads as a quality signal in the absence of other information, and a price that looks too low to be sustainable raises more doubt than it resolves.

The Other Side of the Ledger: Who the Platform Itself Captures Value From

Platforms can transform work previously done by traditional employees into tasks performed by contractors, consignors, or quid pro quo workers, or create entirely new categories of work entirely, and the central question for any platform participant is who captures the value and what the distribution of risks and rewards actually looks like. Some platforms tax all transactions directly, others monetize through advertising, and the mechanism chosen has direct implications for how gains get distributed among the parties involved. Xolo

This restructuring centralizes value capture under platform owners, and dominant platforms frequently use exclusivity agreements to lock in users and merchants, which increases profitability for the platform while limiting consumer choice and creating inefficiencies elsewhere in the system. Expert360

This is the part of the value capture story that the Stanton and Thomas research does not contradict so much as complicate. Workers on a given platform may retain meaningful surplus relative to what a frictionless, fully competitive market would predict, while the platform itself simultaneously captures a disproportionate share relative to the actual cost of running the matching infrastructure. Both things are true at once, and conflating them produces bad conclusions in either direction.

What This Looks Like in Real Numbers, Not Just Theory

As of late 2025, at least 653 active digital labor platforms operate globally across sectors including ride-hailing, delivery, freelance services, healthcare, and domestic work, and the number of global online gig workers ranges between 154 million and 435 million, representing 4.4% to 12.5% of the global labor force, with even these figures likely understating the true scale given persistent global measurement gaps. Self Employed

That range, 154 million to 435 million, is itself a data point worth pausing on. A nearly threefold uncertainty in how many people participate in something this large tells you how little visibility exists into platform labor at the level governments and researchers usually rely on for policy decisions.

Platforms are highly selective about what data they share and with whom, which directly limits the ability of governments and researchers to study digital labor platforms properly. Self Employed

For African markets specifically, this measurement gap is even sharper because the formal labor statistics infrastructure in many countries was not built with platform work in mind.

Brazil offers a useful comparison point: national data there indicate 1.6 million people now work as platform based drivers or delivery workers, nearly 2% of the country’s workforce, growing 25.4% between 2022 and 2024, with average earnings higher than those of non platform workers according to the Brazilian Institute of Geography and Statistics. Self Employed

That Brazilian data is significant because it is one of the few national statistical agencies that has actually built the capacity to measure this segment rigorously, and the finding, that platform workers out earn non platform workers on average, complicates the simple story that platform work is uniformly precarious work.

The Currency Arbitrage Most African Freelancers Have Already Discovered Empirically

A detail buried in the academic literature is one that will feel intuitively obvious to anyone who has actually worked across borders on these platforms, but is worth stating with the research behind it.

Workers offline wages are paid in their local currency, whereas they receive US dollars for their platform work, and frictions limiting exchange rate pass through to local wages mean offline opportunities adjust to exchange rates more slowly than online transactions, so applicants wage bids are predicted to increase when the local currency depreciates relative to the dollar. Native Teams

This is the formal economic description of something a developer in Lagos or a designer in Nairobi experiences directly: when the naira or the shilling weakens against the dollar, platform income becomes relatively more valuable almost immediately, while local salaries take far longer to adjust, if they adjust at all.

The platform, in this specific sense, functions as a currency hedge that local employment simply does not provide. This is one of the structural reasons platform participation has grown so quickly across African markets specifically, independent of any marketing the platforms themselves do.

Regulation Is Catching Up, Slowly and Unevenly

After years of sustained organizing and pressure by workers, unions, and allied movements across continents, the International Labour Organisation agreed to establish binding labor standards for the platform economy at the 113th International Labour Conference in Geneva in June 2025, with representatives from 187 member states finalizing crucial aspects shaping the standards including their form, scope, and key definitions, and a binding Convention expected to be adopted at the 2026 conference. Grey

This matters for anyone earning income through these platforms because the rules of the game are not static. The OECD is exploring regulation of platform work, while the European Commission has launched the Digital Services Act and Digital Markets Act specifically aimed at increasing accountability and competition in the platform economy, and the Fairwork Foundation has been working with platform owners, workers, unions, and governments to establish globally agreeable working conditions. Expert360

What the Stanton and Thomas finding adds to this regulatory conversation is genuinely important and somewhat inconvenient for advocacy groups pushing for the simplest version of worker protection.

Applying traditional employment regulations to online gig economy platforms would lower job posting and hiring rates, reducing aggregate surplus for all market participants, including workers themselves. Golance

This does not mean regulation is wrong. It means the specific form regulation takes matters enormously, and blunt instruments designed for traditional employment relationships can produce worse outcomes than more carefully targeted interventions designed for how platform markets actually function.

Where the Practical Risk Sits, Once You Understand the Value Flow

Understanding who captures value in a platform transaction clarifies something practical for anyone using these systems day to day: the platform’s commission is the visible cost, but it is rarely the largest source of value leakage for an individual freelancer or business.

Platforms can transform work previously done by traditional employees into tasks performed by contractors, which shifts risk onto the individual worker in ways that a standard employment relationship would not. Xolo That shifted risk shows up concretely in payment timing, dispute resolution, and what happens when a transaction goes wrong outside the platform’s enforcement reach.

This is precisely the gap that secure, independent payment infrastructure exists to close. When a freelancer and client transact through a platform, the platform’s escrow and dispute system captures part of the transaction value as the cost of that protection. When the same parties transact directly, outside a platform, that protective layer disappears entirely unless they build it back in deliberately.

Xcrow exists for exactly that scenario, holding funds in escrow for direct, off platform digital transactions so that the value captured by protection does not have to come bundled with a platform’s commission structure. Our breakdown of what escrow is and how it protects buyers and sellers online covers the mechanics of how that works in practice.

What This Means If You Are Deciding Where to Build Your Income

The research collectively suggests something more nuanced than either of the two popular narratives, that platforms exploit workers wholesale, or that platforms are a frictionless meritocracy where the best people simply rise.

The structure of work is shifting as digital platforms connect workers with opportunities in ways that resemble markets more than traditional employment, with research showing that employment alone does not define financial security, and platforms increasingly reshaping not just job mobility but the timing of pay itself through instant payouts and flexible shifts that change how households manage cash flow. Breaking AC

For freelancers reading this with an eye toward strategy rather than abstraction, the actionable insight is that differentiation, not price competition, is what protects your share of the surplus in a market structurally designed to have far more sellers than buyers.

Worker differentiation reduces direct competition Golance , which is the academic way of confirming what successful freelancers already know intuitively about specialization and niche positioning. Our guide on the best niches for freelancers to break into in 2026 addresses this directly.

It is also worth recognizing that the platform itself is one node in a longer value chain, and the fees it captures are not the only cost worth examining.

A freelancer who understands the full picture, what the platform captures, what currency dynamics provide, and what payment protection actually costs versus what it is worth, makes meaningfully better decisions about where and how to build income than one operating purely on the assumption that any platform with high commission is automatically a worse deal than direct client relationships with no protection at all.

For freelancers and businesses building those direct relationships specifically, our guide on how to safely pay freelancers internationally without getting scammed covers the practical side of replacing platform protection with something equally rigorous on your own terms.

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Related reads you might find useful:
How Digital Marketplaces Are Replacing Traditional Employment
What Is Escrow and How Does It Protect Buyers and Sellers Online?
Best Freelance Marketplaces for African Professionals in 2026