Over the last few decades, the workplace has changed dramatically. Technological advancement and increased connectivity have reduced the barriers encountered while looking for employment locally and internationally.
Similarly, employers can hire on a need basis instead of keeping full-time in-house employees. This seamless interaction has given rise to a new wave in the job market called the gig economy.
What is the gig economy?
By definition, the gig economy is a free market system that allows organizations to contract temporary tasks to independent workers. In this arrangement, the term 'job' doesn't mean a permanent position anymore. It has evolved to 'gig' where clients and the service providers get into no-strings-attached engagements for specified periods. Neither the parties have to work with the other after the end of a project.
Why is it called the gig economy?
Traditionally, 'gig' was commonly used in the entertainment industry. It meant a job given for a predetermined period, like a one-time performance by a band in a bar.
Today, the term has become slang for a short-term job, typically going for a few hours or days. One example is delivering food for an eatery and getting paid for the service.
Typically, you get started by registering on a website or app dedicated to job people with offers and service providers. If you can provide a service, you may need to display your competencies on the platform for the system to match you with potential jobs. Employers also have to register and describe what they need for workers to find them.
When did the gig economy start?
When people hear the gig economy, they probably think about new companies like Uber, which have stirred industries with technology. However, the only new thing is the name. People have been working multiple jobs for decades to make ends meet.
Consider Edmund Harrold of Britain. He was a resident of Manchester in the 18th century when he trained and worked as a barber. In his small rented shop, Edmund shaved, bought and sold hair, and designed wigs.
When not at the shop, he worked as a bookseller. Eventually, he became an auctioneer, selling different items in Manchester and the nearby towns. He would also lend out his money and earn a 10 percent interest.
The life of Edmund proves that people have always worked gigs. However, most people refer to tech-based work when talking about the gig economy.
One of the oldest gig networks is Craigslist, which has offered short-term contracts since 1995. Elance came on board in 1998, followed by oDesk in 2004. The two companies merged in 2013 to form Upwork, one of the most prominent gig providers today.
Technology is the backbone of the gig economy. Affordable computers and mobile devices, coupled with high internet penetration, have steered the success and popularity of the gig economy.
Some studies suggest that there were almost 4.4 billion internet users worldwide at the beginning of 2019. Nowadays, most people search the web for jobs before looking elsewhere. Many prefer online gigs because there is less vetting and scrutiny as long as you can deliver what the client needs.
The rise of the gig economy
Although temporary staffing started as early as the 1940s, the term “gig economy” became popular around 2008-2009 during the financial crisis. Since then, more and more people have opted for work flexibility, independence, and the need for self-employment through freelancing. This, coupled with digitization of the work environment, has led to the start and growth of the gig economy.
This economy has rapidly grown over the past few years. According to a 2018 study by Upwork and Freelancers Union, “Freelancing in America”, approximately 56.7 million Americans freelance, which was an increase of 3.7 million from 2014. And this number is estimated to increase by 40% by 2020. In reality, contractual work has become a way of life for most people because of the independence it offers, unlike traditional jobs.
Part-time jobs are not new. Professionals like writers, designers, photographers, and artists are known to go for temporary projects. However, workers with different levels of expertise and from various industries are moving to gig economies in masses.
The internet has broken the barrier between organizations and professionals. Employers can advertise projects for willing contractors to pick. Some professionals can even work remotely for organizations abroad and get paid through online payment services.
The most attractive incentive to join the gig economy is perhaps the freedom associated with freelancing. You can pick the assignments you like and work when you want. You are free to organize your time without consulting a boss.
Adding to the appeal of the gig economy is, in many cases, the ability to bypass traditional higher education requirements. While obtaining a four-year degree or more still certainly has its advantages, the gig economy empowers individuals to get right to work with an associate's degree or less — and without digging a hole for themselves financially. In the age of the student loan debt crisis, this is paramount.
Gig economy statistics and trends
So, just how big is the gig economy? Is the gig economy actually working? Here are some notable insights about gig economy growth that should help answer these questions.
36% percent of Americans participate in the gig economy
According to Small Business Labs, more than one-third of Americans work gigs. Twenty-three percent of these are full-time workers.
Most millennials would consider independent contracting
Studies by the ManpowerGroup revealed that 90 percent of young Americans would go for freelancing as opposed to 8 to 5 jobs. In Mexico and India, 97 percent of the population is open to temporary contracts, freelancing, and independent contracting.
Work-life balance is the main reason for pursuing gigs
In a FlexJobs survey held in 2018, 70 percent of respondents said they venture into the gig market to enjoy work-life balance. The desire to work when one wants was the second reason, with 62 percent referring to it. Forty-nine percent cited the urge to be their own bosses, while 46 percent mentioned the ability to select projects.
More Americans are migrating to independent work
52 percent of the U.S. workforce will be in the gig economy or pursuing independent work by 2023, according to MBO Partners.
Freelancers injected $1.28 trillion into the U.S. economy in 2018
In 2018, as per findings by MBO Partners, full-time independent workers in America contributed 1.28 trillion to the country's economy.
40% of businesses anticipate hiring gig economy workers at an increasing rate
From reduced staffing costs to the benefits of an increased scalability potential of their workforce, companies feel that gig economy workers are worth investing in, according to Forbes. On the flip side, only 20 percent of gig economy workers would prefer a full-time job to a freelancing gig. This means that the demand and supply of work are quite high in the gig economy.
Pros and cons of the gig economy
Naturally, this shift to temporary work presents its advantages and disadvantages for all parties involved.
Pros for gig workers
The greatest appeal of gig economy jobs is the flexibility level that comes tied to it. Workers can work when they want, on whatever they want and from wherever. This ensures that they have control over their schedules, and they can craft their job into something that gives them the most happiness. If they value family time, they will build their work around this.
Cons for gig workers
On the flip side, gig economy work lacks the stability of conventional jobs. Workers aren't certain that they will always have a job every single day. Also, the total monthly earnings of such workers can fluctuate with regard to the number of gigs they manage to take up within the month. Lastly, gig work might lack common perks of working conventional jobs, such as corporate provided insurance and allowances.
Pros for gig companies
The gig economy is a mixed bag for employers, too. On one side, it is less costly to hire gig economy workers. Since competition rates are quite high, some workers might lower their rates to remain competitive. Even better, employers can steer away from the cost of having in-house staff members who are underworked but still paid a consistent salary.
As the organization grows, freelancers can provide extra work and support as long as the employers can onboard them quickly into the system. This offers employers access to a variety of professionals who have specialized in specific skills.
Cons for gig companies
The downside is that employers might fail to build a long term relationship with their team of freelancers since they are only temporary. For freelancers who are in different states or countries from that of the client, they may have to follow different rules with regard to tax and labor laws, leading to contract complications. Lastly, it takes time to hire freelancers- which is dependent on their schedule. If a client needs work done out of the blues, it would be easier to work with in-house staff.
Best gig economy jobs
Gig economy workers prioritize the flexibility of choosing the different jobs and working with a variety of clients to make ends meet. Some gigs that may immediately come to mind include:
- Food and grocery delivery services
- Ecommerce and drop shipping
- Traditional jobs, such as plumbing, roofing, electrical works and masonry
In turn, they can have a better work-life balance. In fact, some of the gigs tend to pay much higher than the average rate of an employed worker. Here are some of the most lucrative types of gig work available today.
Writers, designers, and developers
Freelancers are typically digital natives. They can work anywhere and source clients from almost anywhere in the world. Some of the best freelancing opportunities await people with writing, graphic design, translation, and web design skills. Given that it is easy to find work from anywhere around the world, the competition is quite high. Freelancers often have to choose a specific niche to develop a competitive advantage.
With AI becoming mainstream, AI developers are in high demand. AI systems are based on algorithms that allow machines to learn from data, and borderline mimic the power of the human brain. It can be used to predict outcomes in a variety of industries, program machines, and even make decisions in situations that involve a lot of factors. To get into this field, gig workers have to have skills in computer science and be proficient in C++ and Java.
In a world where data security is a concern among businesses, firms are looking for any means to eliminate the chances of a data breach affecting them. Ethical hackers present an opportunity for solving common security issues. They are responsible for legally hacking corporate systems and identifying security flaws. With a little bit of training and sitting for ethical hacking exams, anyone can become a certified ethical hacker and earn from it.
Social media influencers
Celebrities - and anyone else with a strong enough following on social media - have a voice in today's marketing scene. People are constantly looking for suggestions on the next vacation location, the type of makeup to use, and even the kind of clothes that are in fashion. Given that such people have gathered a following on social media, they can easily influence the attitudes of consumers within their audience. With companies approaching influencers to market their products and services, influencer marketing has become one of the highest paying gigs today.
Photography has a great role to play in today's society, from providing amazing social media photos to taking great pictures for magazines. Everyone from corporations, news outlets, celebrities, and even government agencies seems to be interested in it. Such a high demand for photography means that anyone with the right skills will always have a gig to work on. In fact, there are sites like Behance that allow photographers to market their work and find clients.
Best gig economy companies and apps
Now, let's take a closer look at the giants who have taken the gig economy by storm.
Ride-hailing and sharing apps
Uber and Lyft are perhaps the two most dominant players in the gig economy. They each contract drivers to give rides, while the companies take a commission out of it. The drivers can enjoy easy discoverability as potential customers can access them through the companies' applications. Customers also rest assured that the drivers driving them around have been vetted enough to make the driving experience safe. Drivers can work flexible hours and get rated by their customers.
Food delivery apps
Some gig economy companies look to eliminate the stress of having to get your food from your favorite restaurants and stores. You can simply order food from home and wait to have it delivered to you. Some of the major food delivery businesses include:
- Uber Eats
Some companies have made it their duty to link freelancers and clients. They help to control the supply and demand of high-demand skills. Some of these skills include content writing, web development, photography, graphic design, and even software development. Some of the most popular sites include:
Other companies to know
- TaskRabbit is a one-stop-shop for anyone looking for help with simple home tasks. The tasks can range from assembling furniture to cleaning a house. Workers simply need to download their app and list the skills they have to offer.
- Wag looks to take the stress of walking your dog away. The application allows dog owners to hire professionals in pet handling. Every dog walker is vetted on the basis of dog handling experience and rated. Dog owners also get to track the walking history of their valued pets.
Gig economy insurance
One major downside of working under a gig basis is the lack of conventional employee benefits, such as insurance. Unlike employed individuals, gig workers cannot always rely on the insurance provided by clients. Even worse, conventional insurance companies offer insurance based on historical loss information, complex organizational structures, and legacy systems, some of which gig workers might lack.
Sure, you might argue that the insurance for gig workers will lie under personal insurance, but this might not provide enough coverage for them. For instance, personal insurance might fail to cover accidents arising when transporting customers commercially using your own vehicle. In case the ride-sharing app you use offers insurance, it might not cover you enough, meaning that some of the liability of an accident will have to be covered by gig workers.
Luckily, new entrants into the insurtech industry have been crafting insurance coverage that fits right into the job description of gig work. For instance, Breeze offers online disability insurance (the first of its kind) to help you protect your source(s) of income in case you face a long term injury or illness.
The promise of flexibility in terms of earning potential, working schedules, and work-life balance are enough to disrupt the conventional working environment. Gig work is here to stay, and gig workers who know how to source or clients will be among the greatest winners. At the very least, it revolutionizes the supply and demand of highly sort after skills.
Bottom line: The gig economy is working — for now
Considering the significant economic impact and the countless companies, apps, and jobs on the rise, it’s clear that the gig economy is here to stay. Only time will tell how high it can go - and for how long.
Jack Wolstenholm is the head of content at Breeze.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.