Guide to the gig economy [2021 update]
The gig economy is the rising labor market that hires temporary, contracted workers instead of traditional employees.
Companies are outsourcing tasks to already-trained, nonbenefited workers, and workers have a chance to work for multiple companies in temporary positions and quick gigs or to fulfill ongoing work.
There are a lot of mixed feelings about the gig economy.
One thing is clear, however: It’s continuing to grow; the gig economy is definitely here to stay and in a big way.
If you’re wondering what this means for you, we’ll take a look at what’s changing in the gig economy and what it means for both businesses and freelancers moving forward.
The Rise Of The Gig Economy
The gig economy has always been around, to some extent; there have always been temp agencies, or babysitters who worked off the record, or accountants who had their own firms (which technically we’re counting here).
It became even more popular when we got access to the internet, as people were able to start promoting their skill sets and connecting with audiences.
In some cases, this allowed people to turn side hustles into a full freelance business.
The defining moment, however, that caused a sharp upturn in the gig economy came around 2008 when the Great Recession hit.
As housing markets collapsed and unemployment rates started to climb a little too quickly, things changed within American society.
People started taking whatever jobs they could get, even if they were temporary.
The security of being able to balance multiple clients while the employers didn’t have to worry about actually employing anyone became more appealing for everyone involved.
The gig economy is becoming more diverse, with people of all ages and experience entering it.
Recent university students getting started in the workforce use the opportunities to gain job experience and pick up a side hustle.
Retirees are even getting in on it, taking on gigs to earn more cash.
The gig economy also offers millennial and Gen Z workers benefits and opportunities they’re actively looking for.
They can work while they travel, set their own schedule and even choose to work for companies they truly believe in because they have more flexibility.
What The Gig Economy Means For Businesses
The gig economy is great news for businesses.
They’re able to hire the freelancers from all over the world who are able to best meet their needs without geography being an issue.
And they can do so without worrying about training costs; in almost all cases, these workers are coming with specialized skills and ready to go.
Freelance are also more cost-effective for businesses, even if the workers have high hourly freelance rates.
Businesses don’t have to pay for training, benefits or any taxes on contracted workers, and they don’t have to worry about finding enough hours per month of work as they would for an employee.
There are a lot of wins here for businesses, which is why many are shifting towards hiring more external contractors instead of taking on full-time employees.
What The Gig Economy Means For Workers
The growing gig economy is also great news for those who are excited about being contracted workers and enjoying the freelance life (or business owner life), though it does come with some downsides for everyone else.
The increase in freelance work can mean a reduction in full-time or freelance jobs, which isn’t great news for people who want to find traditional employment.
Those roles are still there, though they may be rarer and more competitive.
Workers in the gig economy also have more freelance expenses.
They have to pay more taxes (taking on both the employer’s and the employee’s share themselves), they don’t get retirement or health benefits and perks like sick leave or paid vacation go out the window.
As for the benefits, there are plenty of them.
Freelancers, in many cases, have huge amounts of flexibility in terms of their hours, their location, and even the work they want to take on.
For some, freelance flexibility is life changing: For example, people with health conditions who might struggle to make it into an office five days a week can have meaningful jobs that work with their schedule instead of against it.
People are taking the opportunity to work while they travel the world, and some are even finding that as they become more prominent in their fields, there’s an opportunity to make more than they’d ever make in a full-time salaried role.
That’s a benefit of freelancing that’s difficult to overlook.
The Growing Gig Economy
The growing gig economy is great news for businesses and freelancers who are ready to take advantage of all that it has to offer.
In order to get the most out of these changes, though, make sure that you don’t get so focused on cutting costs that you lose sight of everything else.
Businesses need to treat freelancers well to support the gig economy and the people working in it in order for the gig economy to thrive.