What is the Gig Economy?

What is the Gig Economy?

If you recently used an app like DoorDash, Instacart, or Uber, then you’re probably familiar with how widespread the gig economy has grown to be. App-based companies have exploded in popularity in recent years, and especially after COVID-19 hit. They’ve now become some of the most recognizable names with millions of workers on the ground powering these on-demand services, creating a new wave for the modern workforce. In the past year alone, over one third of Americans – or 57 million people – have done gigs, accounting for over one trillion dollars of economic value!

Our guide will provide you everything you need to stay ahead of the curve and navigate the gig economy, as the future of work continues to evolve.

Gig Economy Definition

How do we define the gig economy? The gig economy includes all services utilizing temporary, flexible, short-term, or independent contractors. Simply put, the gig economy includes all jobs outside the traditional employee arrangement (like your typical 9 to 5 office job). This ranges from a freelance artist to an Uber driver. What’s exciting is these gigs are expected to grow five times the rate of traditional jobs, providing unique work arranges that won’t have existed just a decade earlier.

There are multiple coinciding factors that will accelerate the gig economy over the coming years:

• Consumer Behavior: Consumer behavior favors goods and services to be provisioned immediately
• New Technology: Technology has democratized access to gig work – with a smartphone you can perform gig work anywhere
• Flexible Work: Traditional employees are favoring more flexible work, as remote work driven by COVID-19 has become a gateway to broader acceptance of gig work
• Favorable Perception: Perceptions of gig work has shifted favorably and becoming a longer-term work arrangement for many people

Is Joining the Gig Economy Right for You?

Many people are joining the gig economy because it is considered more entrepreneurial than a traditional employment arrange – where one can become one’s own boss. In fact, according to Upwork, 3 in 10 freelancers quit a traditional employer to join the gig economy. And despite sacrificing job security and wage stability, the benefits of workplace autonomy and job flexibility are variables that workers are beginning to value more.

Through our survey of over 500 gig workers, over 80% believe the best day are ahead of them. The majority of new gig workers also feel they can make more money than the alternative of a traditional employment – without the negatives like career dissatisfaction, toxic workplace culture, and office burnout.

So is joining the gig economy right for you? We think this is a resounding yes. It comes to no surprise that the majority of workers joined the gig economy by choice. Additionally, over 50% of the young generation (ages 18-22) have participated in gig work over the last year.

To us, the answer isn’t choosing gig work over traditional employment. One of the primary benefits is that one can join the gig economy without sacrificing existing commitments. You can work as much or as little as you’d like and fit the work around your personal schedule. Furthermore, you can dip your toes into different work opportunities without any commitments and without needing to quit your current job if you are already employed. As such, there is minimal downside in joining the gig economy, yet could provide life changing opportunities and benefits.

10 Benefits to Joining the Gig Economy

1. Increased Earnings: Many people utilize the gig economy to find side hustles as a secondary income stream. These gigs can help improve financial outcomes and help people build up savings in an immediate way
2. Accessibility: With new technologies, the gig economy is more accessible than ever. Many gigs often require only a smartphone and may not need any requisite experience to be approved
3. Flexibility: Many gigs let people choose where and when to work, which is something a traditional employer might not provide
4. Work-life Balance: Gigs can let you work around your personal schedule as it relates to your family, friends, or other passions
5. Autonomy: Provides the opportunity to be your own boss to take more agency in your work, which can increase satisfaction and personal fulfillment
6. Meritocratic: Gig work can be considered more meritocratic where your earnings are tied to performance rather than more subjective factors (like office politics)
7. No Commitment: You are not locked into a specific job and there is no obligation to continue working a certain gig if it is not a good fit for you
8. Work Variety: Choose to work different types of gigs, which can break the monotony of a typical office job with a 9-5 grind
9. Build Clientele: Veterans of the gig economy often build their own clientele, which provides recurring customers and greater earnings stability over time
10. Working Multiple Gigs: This is also known as “multi-apping”. As an independent contractor, you can work for various opportunities and take advantage of the ebbs and flows of the various gig opportunities available.

Ultimately, the great thing about the gig economy is that it empowers workers the control over their work, You’re free to do as little or much as you like and diversity your income streams across various types of work.

Other Considerations

Despite the benefits of the gig economy, there are some notable challenges in gig work. As such, many people utilize the gig economy as a secondary income stream rather than their primary income stream. However, these challenges could be mitigated as the gig economy continues to evolve.

Income can be unpredictable or inconsistent: Gig workers often earn income based on the number of actions completed. This is different than traditional employment that is usually based on an hourly wage or annual salary amount. As a result, earnings can be tied directly to the longevity or health of the industry they are in. For instance, when the pandemic hit, many rideshare drivers saw demand for rides dry up, leaving workers to shift from rideshare to delivery.

Lack of employer-funded benefits: Gig workers are classified as independent contractors and therefore are not able to access employer-funded programs like health insurance, pensions, or retirement savings plans. As a result, gig workers may need to incur additional expenses to be covered or rely on a spouse or partner’s plan.

Nonbillable work: Gig workers often perform work outside their billable job, such as marketing, networking, and administrative tasks. For instance, a freelance artist will need to source clients or work opportunities in addition to creating art.

Rely on an established platform: Gig work is usually enabled by large corporations who have created a marketplace for a certain industry, such as Uber for rideshare and food delivery services. While platforms help streamline many things for gig workers, one consideration is that these companies can change their policies, which can adversely impact worker earnings.

Taxes: Taxes won’t be deducted automatically, so gig work means you’ll have to keep track of how much you owe in taxes manually. When it comes to the tax season, you could be finding yourself dealing with the expenses you incurred as a gig worker, such as deduction of things like gas, internet service, or other resources utilized to perform gig work.