By: Noah Rue
The gig economy is no longer simply a phrase that individuals existing as professional outliers use to describe themselves. Instead, the gig economy describes a substantial, rapidly growing part of modern society. If you aren’t a part of it, the odds are you know someone who is.
The gig economy refers to the growing precedence of freelance and short-contract work over permanent positions. According to Gallup, 36 percent of the workers in the United States are gig workers. The report notes, “Gallup estimates that 29% of all workers in the U.S. have an alternative work arrangement as their primary job. This includes a quarter of all full-time workers (24%) and half of all part-time workers (49%). Including multiple job holders, 36% have a gig work arrangement in some capacity.”
While gig workers have always existed, the modern gig economy is marked by the fact that technology is making the work format more accessible than ever before. From executives tired of the traditional corporate world to freelance customer service reps, gig workers are becoming part of every type of industry under the sun. Experts predict that the numbers will only continue to increase. As Abdullahi Muhammedwrites for Forbes, “The workforce share of gig work rose from 10.1% in 2005 to 15.8% in 2015. By 2020, half of the U.S. workers will be freelancers.”
Why the Gig Economy Is Gaining Traction
It’s important to establish that one crucial reason the gig economy is growing is that many gig workers see it as an opportunity. While the challenges are worth noting, we can objectively understand them without also recognizing that for many the gig economy has afforded professional and financial growth.
Making Ends Meet
The recession and the economic downturn it resulted in had a significant impact on millennials who were finishing college or entering the job market for the first time. Hiring freezes and lower salaries meant that millennials either couldn’t find work, or they couldn’t find work that paid adequately.
Not only that, college tuition prices have skyrocketed, which left many with thousands to pay off and bleak full-time prospects that would enable them to do that. Thus, the gig economy afforded individuals the ability to pay their bills.
For those further along in their careers who are both established or currently unemployed, the gig economy is an alluring method of making ends meet. One study found that a whopping 63 percent of executives would switch to a contractor position if given the chance.
Thanks largely to the agency technology affords, the current workforce is able to prioritize things that prior generations couldn’t.
Academia has noted that recent graduates are drawn to the gig economy because it allows for greater flexibility, independence, and job variety. The 9-5, the traditional office, and all they have historically represented no longer have the hold they once did. Gig economy workers can work on projects they’re passionate about when they want to work on them.
Thus, one report demonstrates that independent workers are more satisfied with their jobs than those who hold jobs in the traditional sense.
The Gig Economy Works for Employers Too
The growth of the gig economy is not just a result of workforce interest: employers are creating the jobs that make it a viable option. Independent contractors are more cost effective for companies than full-time employees are.
They bring fresh perspective to projects, and often they save the company time. Independent contractors give employers more flexibility in their own staffing assignments. In some industries employers are drawn by the lowered risk of lawsuits.
Professionals at the highest levels of business are altering how they approach gig workers given these realities. Additionally, companies are not filling the lower ranks with gig workers, but are also using the gig economy to fill roles such as niche executive jobs. The rise in the gig economy is there because there’s been growth not only in those willing to take the jobs, but also in the companies who are creating jobs specifically with independent contractors in mind.
The Problems of the Gig Economy
As the gig economy has evolved, some distinct challenges have taken shape. In the midst of the potential and opportunity, there are some clearly negative components of the economy. In many ways, the very things that have allowed the gig economy to grow so quickly are also those that have made it problematic for both employers and workers.
Lack of Job Security
By nature, the gig economy affords no guarantees. Those who rely on gigs for the entirety of their income or as a crucial source of supplemental income are relying on a cash flow that will inevitably vary. Thus, while it affords freedom and flexibility, those qualities are paired with a lack of stability.
“The vision of a brave new world of portfolio, boundaryless, and protean careers was intended for professionals who could sell high-value parcels of work. It suits those with enough economic confidence to fly without the safety net of a regular income. These ideas were not dreamed up for the bicycle courier, the taxi driver or the peripatetic care worker, and certainly not for those trapped in a low-pay, no-pay cycle,” writes Pete Robertson of Edinburgh Napier University for the BBC.
There have always been fields where there were high numbers of workers with little job security, but technology is spreading that reality to more and more industries.
Lack of Benefits
Not only do companies rarely pay independent contractors what they pay full-time employees, they also do not afford benefits to contractors. This, again, has historically gone with the territory. Often, expectations for contractors are not as high as they are for employees. However, as the gig economy grows, more and more individuals find themselves and their families without insurance, paid or sick time off, paternal or maternal leave, etc.
Increasingly, stories are featured that demonstrate not only the lack of traditional benefits, but also the lack of any type of support from the companies they work for when things go terribly wrong.
Stories such as those of couriers killed and families receiving nothing, highlight just how problematic it is when peoples’ only jobs are those without any benefits.
Lack of Full-Time Jobs
An increase in gig economy jobs inevitably means that companies are not going to offer as many full time positions as contract positions. Thus, for those without a substantial amount of financial security, there are even fewer jobs available that offer it.
Additionally, gig workers rarely do exactly the same thing, repeatedly. Instead, they often work within an industry where different contracts and different employers require different things.
Lack of Community
Always working remotely and alone means that, for many within the gig economy, loneliness runs high and collaboration is virtually nonexistent. While the modern office routinely receives bad reviews from its inhabitants, the reality is that community and relationships are an important part of productivity and creativity.
While the appeal to working alone has obvious benefits, it’s also true that those who work completely alone are at a higher risk of anxiety and depression.
The Potential Solutions
The growth and jobs are there, and yet we’re just really beginning to spot patterns connected to the negative impact of the gig economy. Already, there are multiple problem-solving movements in the effort of making the gig economy less problematic and more sustainable.
The most substantial efforts are those related to passing new legislation that would afford gig workers rights more similarly aligned with those given to full time employees. For example, the CEO of Etsy — a business built on the efforts of gig workers — is advocating for congress to pass laws that would mean income protection, tax simplification, and benefits for those who work gig jobs.
Additionally, gig workers themselves have taken steps to combat the negative impact of the work environment. Co-ops and shared work spaces, where workers essentially work alone together, have gained traction and popularity.
It’s definitely possible that as the gig economy continues to take shape, it will move in a direction that places an increased emphasis on the rights of the workers who define it. Advances in technology and, to some degree, thinking have made the gig economy what it is today. Perhaps those same components will also be the foundational pieces of the gig economy of tomorrow, where workers do not have to choose between flexibility and job security.
In the words of economic historian Louis Hyman, “Whatever the path forward, we need to stop fixating on propping up a world of security that is tied to a job. In this way, the flexible economy can finally be true liberation: from bosses, from a cubicle, from monotony.”
The gig economy has flourished because it has solved problems for executives and low level workers alike. There’s potential that the same brand of innovation and out-of-the-box thinking that has allowed it to become such a substantial part of the modern economy, will also solve the problems inherent with the format.
By Noah Rue
About the author
Noah Rue is a writer, a digital nomad, an ESL teacher, and an all around good dude, if he doesn’t say so himself.