Gig Economy: Pros and Cons

In a time where traditional employment continues to evolve, the gig economy has gained momentum and continues to grow between employees and employers. The COVID-19 pandemic saw companies such as Fiverr and Uber grow as employees struggled with their finances. With unemployment at an all-time high and employees looking for “side hustles” to support themselves and their families, the gig economy workforce grew by nearly 51%. Today, the gig economy industry continues to grow and could replace millions of traditional jobs.

What is a Gig Economy?

A gig economy is a new and growing type of labor market that involves the use of short-term contracts. Many famous and large-scale companies known as Uber, DoorDash, Airbnb, and Bird have utilized the gig economy by offering employees short-term contracts that state that employees are solely self-employed and are contractors. Additionally, freelance work has become popular amongst employers who want to showcase their talents and abilities and tailor them to support others. Some great examples of this are Fiverr and Upwork which allow freelancers paid on a one-time basis to showcase their work. Gig economies have become popular amongst the working population because of their flexibility for workers and countries to be popular amongst high school and college students. However, their use in the overall economy and in keeping employees well-paid have been recently put into question.

Pros of a Gig-Economy:

Flexibility: Gig-economy jobs are vital for people for have busy schedules and want to make money to support their families or save up for college. The price of all goods has increased by 4.3%, requiring that families generate higher incomes across the United States. A gig economy allows for a quick income, rather than needing to wait until the end of every month for a check. Employees/contractors in a gig economy are paid immediately for their services which enables them to pay their bills and account for higher gasoline prices. A gig economy enables workers to work on their own time and accord, rather than being accountable for a traditional 9–5 job. A gig economy also helps people in impoverished and remote areas, in which many jobs are not available. A gig economy allows for many online opportunities and contracts in which people can work from home and balance their busy schedules. This allows for a greater amount of work opportunities in towns and in poorer locations as well.

Skill Development for Employees: In a time where every job market grows due to the number of people interested in one career, jobs have hundreds of applicants and can only for so many to be employed. Therefore, as the workforce grows, more people are left without work due to the lack of experience. High school and college students looking to grow their skills and experience for the future workplace they want to work in can use gig economy companies such as Fiverr to offer their services to others and gain real-world experience. This can enable students to have valuable experience before applying to companies and make them stand out from other college/high school graduates.

Cons of a Gig-Economy:

Lack of benefits: Workers in a gig economy do not have access to health insurance provided by their company and must find these resources on their own. The companies that they contract under solely pay the contractor for their services, rather than the traditional workplace that covers health benefits such as dental services. This can affect the well-being of workers in a gig economy and can affect their family’s health as well. In fact, Uber was recently found to have unpaid their employees and will increase their prices to consumers by 85% as a result. This not only shows that employees are placed under unfair conditions but that the general public also suffers from a gig economy and the prices that are charged. As more government policies come into play, we can expect that the cost of using the services provided by gig economy companies like Uber will only increase.

Underemployment:

As gig economy jobs are generally extremely short-term, many workers may suffer from not being able to receive enough hours to cover their economic needs. Less working hours leave less growth for income and this may affect families and their basic needs. Additionally, the growth and popularity of gig economy jobs also affect the level of traditional jobs available. The shortage of jobs available will lead to small businesses closing as a result of the growth of companies such as Uber. As more people make the switch to gig economy jobs, there is room for local small businesses to close down. These businesses rely on the traditional business structure and cannot succeed if the gig economy continues to grow rapidly, as it has been over the last few years.

Conclusion:

In recent years, the use of a gig economy has only rapidly increased and continued to grow. Only a few years ago, the gig economy was considered “taboo” and nearly unheard of, but today is used for thousands of large-scale businesses. While it had the potential to support employees and support workers during a time of rapid economic inflation across the United States, it also faced many potential downsides for small businesses and benefits.