What Is the Gig Economy

The pros and cons of the shifting job landscape

Independent or gig work consists of income-earning activities outside of traditional, long-term employer-employee relationships. Although the gig economy has existed long before it became a buzzword, the range of opportunities and services encompassed under the term has greatly expanded, especially with the rise of large tech platforms. What we now call “gigs” used to be referred to as part-time, freelance, or consulting.

The gig economy is made up of three main components: the independent workers paid by the gig (i.e., a task or a project) as opposed to those workers who receive a salary or hourly wage; the consumers who need a specific service, for example, a ride to their next destination, or a particular item delivered; and the companies that connect the worker to the consumer in a direct manner, including app-based technology platforms.

Companies such as Uber, Airbnb, Lyft, Etsy or TaskRabbit act as the medium through which the worker is connected to — and ultimately paid by — the consumer. These companies make it easier for workers to find a quick, temporary job, which can include any kind of work, from food delivery to assembling furniture ordered online.

One of the main differences between a gig and traditional work arrangements, however, is that a gig is a temporary work engagement, and the worker is paid only for that specific job.

There is a wide range of positions that fall into the category of a gig. For example, adjunct and part-time professors are contracted employees as opposed to tenured or tenure-track professors. Colleges and universities can cut costs and match professors to their academic needs by hiring more adjunct and part-time professors.

Last year, the Bureau of Labor Statistics reported that 55 million people in the U.S. are “gig workers,” which is more than 35% of the U.S. workforce. That number is projected to jump to 43% by 2020.

Advantages and Disadvantages of a Gig Economy

Advantages

  • Many freelance workers in the gig economy find that their status allows them great flexibility. From working the hours they desire, to working where they want, there are many options for gig economy workers. Often a task will be given to a worker with an end date, and how and when they accomplish that task is up to them. Often workers are able to work at hours that suit them and their needs, and on days that work for them. Some may find that early mornings on the weekends are the ideal time to get their work done, and that may not be an option with a traditional job.
  • As a freelancer, you no longer have to cater to a company culture or work schedule that might cause physical or emotional stress. Instead, you get to choose the type of work you do and who you work with.
  • A big pro in favor of working in the gig economy is the sheer number of new companies and industries that fall under the gig umbrella today. The ability to work for many different companies is a huge benefit to gig workers because it creates such a variety of work that today almost anyone can find something they like and are good at. In the early days of the gig economy, opportunities were much more limited. You had to either be willing to work for literally pennies an hour (Amazon Mechanical Turk) or you had to be willing to do something else, like drive your car for cash, which meant you needed to have a car that was available to you for this kind of work. But today if you enjoy painting, there’s a gig for you. If you have a background in supply chain logistics, there’s a gig for you. There are even gigs for doctors and nurses.
  • The gig economy is great for creatives. The gig economy allows creatives to pay the bills while also giving them time to pursue their passions. Visual artists can supplement freelance design work by driving for rideshare services. Aspiring novelists can freelance as copywriters to make their rent payments.
  • Pay for freelance workers is variable from company to company. Some companies pay gig workers less, while many pay their workers more because they aren’t having to pay benefits in addition to salary. Often they are able to charge hourly rates for their time. This means they are able to control their work hours, and get paid for extra hours on the clock. Things like meetings and phone calls in addition to regular work are billable.

Disadvantages

  • Traditional jobs often provide employees with a lot of protections — like health benefits and a 401k. Unfortunately for most gig economy jobs, benefits aren’t part of the package. Because you’re not a full-time employee of the organization, the laws regarding the benefits the company needs to give you are different. If you’re a freelancer, you need to figure out your own retirement plan and buy your own healthcare, both of which can be time-consuming and expensive. Going freelance also means you no longer have paid sick days or vacation time. Every day you don’t work is a day you won’t get paid.
  • Gig economy workers have to regularly be working to find their next “gig,” or be prepared for changes in their current one. This can lead to stress, as most people appreciate feeling secure and steady in their employment. Gig economy workers sometimes face unexpected changes in their jobs, from being let go, to a change in their salary.
  • Another important disadvantage to gig work is the lack of opportunity to move up within the organization. A real problem with gig companies is the fact that workers never meet their manager or supervisor. They never have any human contact with the company where a manager might spot some talent in you and decide to help you move up the corporate ladder. You can do an amazing job time and time again, keeping the company’s customers completely satisfied, and yet you’ll never be promoted to a higher position. Instead of having human bosses and managers, gig workers’ managers are algorithms. Pre-programmed computer code is your boss. It directs you and it assesses you — without any human intuition or insights.

Casey Botticello

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Casey Botticello is a partner at Black Edge Consulting. Black Edge Consulting is a strategic communications firm, specializing in online reputation management, digital marketing, and crisis management. Prior to founding Black Edge Consulting, he worked for BGR Group, a bipartisan lobbying and strategic communications firm.

Casey is the founder of the Cryptocurrency Alliance, a Super PAC dedicated to cryptocurrency and blockchain advocacy. He is a graduate of The University of Pennsylvania, where he received his B.A. in Urban Studies.

You can connect with him on LinkedIn, Twitter, Facebook, or by joining his newsletter, Personal Finance.

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