Gig has a creative and artistic ring to it. Historically the word “gig” has been used by musicians to refer to live musical performance. Today, the word has earned a different meaning. The new buzzword, “gig economy,” has been causing major shifts in the workforce landscape. Gig economy refers to working based on temporary positions through contracts and short-term engagements.
Gig Economy by the Numbers
The gig economy has been experiencing a steady upward trend for the last 10 years. According to Upwork/Freelancers Union, as of 2016, 35% of America’s workforce is comprised of part-time and full-time freelancers. This segment has also recorded estimated earnings of $3 trillion for 2015 alone. The freedom and flexibility offered by short-term jobs have been attracting employees in various industries— from drivers to educators to IT professionals. In a study conducted by Intuit Investor Forecast, it is estimated that 7.6 million Americans will work in the gig economy by 2020.
Another study conducted by McKinsey Global Institute tried to categorize independent workers in the US and UK into four categories. The first group, called the Free Agents, are those actively choosing the gig economy as a career or professional framework. The second group is the Casual Earners. These are part-time freelancers who choose to accept side hustles in order to supplement their primary income. The Reluctants are the full-time freelancers that were either laid off or were having challenges getting traditional employment. And lastly, the Financially Strapped. This group accepts short-term jobs out of the necessity to augment their primary income.
What fuels the Gig Economy?
The segment of people in the contingent work arrangement has grown by 50% within the last decade due to a number of factors. The availability of technology that supports remote work is one main factor. The advent of the internet, global connectivity and digitization makes it easier for people to collaborate so work can now be done anywhere.
Additionally, freelancers are able to choose the number of hours they work. Upwork Global conducted a study about Freelancing in America in 2016. Respondents from this survey shared that the ideal number of work hours should be less than 40 hours. On an average, full-time freelancers are working around 36 hours a week. Also, being able to choose the jobs they want and when they want to work, is what makes the gig economy so attractive to freelancers. Moreover, many freelancers find stability in having a diverse portfolio rather than just having one employer.
To Gig or Not to Gig? That is the question.
A study conducted by Global Workplace Analytics, states that 50% of US jobs are compatible with remote work. In the same research, 80% of the workforce expressed that they would like to work remotely. However, only 11% of working adults in the US work primarily as independent contractors. A majority of the workforce is still holding back from the gig economy for three reasons: fear of not having a steady income, a lack of health insurance and retirement benefits, and the difficulty of obtaining a mortgage or other loans if one is not regularly employed.
While the gig economy offers freedom and flexibility, the trend is not immune to abuse and irregularities. Some companies change earning rates without prior notice, forcing freelancers to work longer hours or scramble for more work. Contractor positions do not currently have legal rights to demand pay for work-related expenses such as gas, maintenance, or insurance; so freelancers may end up having to deal with these added expenses. There is also the issue of some companies misclassifying employees as independent contractors which has an impact on tax obligations.
How to Win in the Gig Economy
If you still want to give the gig economy a go, here are some steps you can take to thrive.
- Make sure to diversify your portfolio. Getting projects from various companies allows you to compare gig experiences. This will help you classify buyers and avoid unfair ones.
- Consult an attorney and an accountant regarding legal and tax obligations. A freelancer is also an entrepreneur and running a business may involve securing licenses, obtaining permits and filing other paper work.
- Create a document detailing the scope of work, timelines and billing dates and rates. Get clients to agree and sign the document. This will help avoid misunderstandings and unfulfilled expectations.
- Designate a specific work time and create an office where you can do your work. Following a schedule has been the challenge of freelancers. A working office provides a setting that supports structured work (freelancers, like employees, need a productive environment).
- Reputation is crucial. A freelancer relies on the trust placed by buyers so make sure that you deliver on the promised service.
The gig economy is in an upswing trend and more employers are considering this type of engagement. This gives employees more options and freedom to create balance between their careers and life goals.
