- Gig work is any type of income-earning activity a person does outside of their traditional long-term employer-employee relationship.
- Recent trends have seen businesses hire more gig workers, as well as many people who have full-time jobs supplementing their income with gig work.
- While many workers see gig work as a temporary arrangement, more are willing to work gig jobs on a permanent basis.
- This article is for employers and employees participating in the gig economy who want to better understand trends around the expansion of gig work.
The gig economy has grown exponentially in the past decade throughout the U.S., experiencing a recent surge following layoffs during the COVID-19 pandemic and voluntary departures amidst the “great resignation.” Although many workers in the gig economy view these roles as temporary, bridging the gap between jobs or serving as supplemental income on the side, there are more workers who accept gig work as a permanent source of their livelihood.
What is gig work?
Gig work includes any income-earning activities outside of a traditional long-term employer-employee relationship. In fact, touring bands were the inspiration for the term, booking gigs and traveling from place to place rather than signing a contract with one employer. The gig economy similarly includes these sorts of “transient” workers, such as freelancers, consultants, independent contractors, temporary hires and seasonal workers.
Freelancing is the most popular form of gig work. Upwork’s 2021 Freelance Forward survey found that 1 out of every 3 members of the American workforce is a freelancer. However, gig work also includes Uber and Lyft drivers, those who accept odd jobs, and seasonal fieldhands helping out during harvest season. The gig economy is wide-ranging in terms of the types of work and compensation it provides.
But just because gig work is temporary on the surface doesn’t mean there aren’t long-term arrangements between gig workers and employers, blurring the lines between employees and contractors. Increasingly, some workers are embracing the idea that gig work may be a permanent fixture for them, rather than a conventional career.
“I enjoy being able to plan my days as I see best. I enjoy building relationships with amazing business owners. I enjoy setting my own rates and getting better paid for work that demands better pay … It also allows me to change things up,” said sales consultant Jack Epner.
Misclassifying employees can land your business in costly trouble. If you’re treating a gig worker like a full-time employee, make sure you haven’t classified them incorrectly as a 1099 worker when they may be considered a full-time employee under the law.
What isn’t gig work?
Gig work does not include entrepreneurs who start their own business while working a full-time job. It also doesn’t include employees who manage multiple accounts for one company. In both cases, the employee is likely receiving one paycheck from one business. Similarly, volunteering is not considered gig work, despite how good it may look on a resume.
How is the gig economy different?
The gig economy is vast and diverse, so it can be difficult to assign any one experience to it. Gig workers are not a monolith; some may have relatively long-term clients and be well compensated, while others live gig to gig in order to make ends meet. Some gig workers may love their flexible arrangements, while others rely on gig work as a means to an end, looking for a more stable arrangement.
However, there is some evidence that a narrow majority of gig workers prefer their arrangements to more conventional employment.
“The post-pandemic American gig economy is mainly characterized by short-term contracts, remote working, hourly earnings and crowd-sourcing. Studies show that 53 percent of Americans in the gig economy do not intend to return to full-time working,” said Mark Stewart, a CPA for Step By Step Business, which provides education and support for individuals forming small businesses.
Interestingly, as more gig workers report preferring their gigs to full-time employment, many full-time employees are less engaged than ever. A Preply survey found that over a quarter of full-time employees (including managers) fake being active at work now that hybrid and remote work arrangements have become the norm. These employees will appear active on online apps like Slack while they’re actually attending to non-work-related tasks.
This disengagement comes in the wake of the “great resignation,” when an estimated 47 million employees voluntarily left their jobs for greener pastures. Some of these workers presumably opted for gig work instead, and many may not be interested in returning to full-time jobs.
Tips for gig workers and freelancers
As more Americans turn to the gig economy and decide to stay, it’s important to be aware that there are unique considerations for gig workers that don’t exist for full-time employees. If you’re looking to strike out on your own into the world of gig work, consider the following tips:
- Be sure to have any individual business that wants to hire you provide or sign an agreement. If the other party does not want to sign a contract, they do not want to pay you!
- Stay organized. Freelancing on your own schedule means you are responsible for how you decide your time.
- Overcommunicate your plans and deadlines. Gig employers do not know what you are working on or your planned deadlines, and they may perceive you to not be prioritizing their project. Always set clear expectations and stick to them.
- Read every word in any contract or agreement you sign. If you aren’t clear on the terms, consider working with an attorney.
For further reading on what gig workers and freelancers should know, check out the following Business News Daily articles:
- Freelancing 101: What Every Potential Freelancer Should Know
- 15 Companies Hiring Freelancers
- Freelance Taxes: What Every Freelancer Needs to Know
The future of the American workforce
As people have evolved from spending their entire career with one company and receiving a pension to job hopping and remote work in the gig economy, more workers are transitioning into the gig economy for at least part of their income.
Amidst inflation and a beleaguered economy, companies are also looking at how to reduce costs while maintaining productivity. Most companies start with letting at-will employers go and hiring freelancers. According to Upwork, the cost of a long-term at-will employee is usually 1.25 to 1.4 times higher than their salary.
As businesses face the prospect of a second recession in as many years, labor costs will be among the first to be cut. That could represent an opportunity for gig workers that have found their home in the gig economy.
Many CEOs plan layoffs and budget cuts in anticipation of a coming recession, which many expect to last throughout 2023.
Could the gig economy work for you?
Gig work is not for everyone, as it is less stable and reliable than traditional employment. However, some gig workers may find the flexibility enticing, and those with the right skills and network may even find it more lucrative. But before you consider ditching your full-time job for gig work, be sure you understand what it means to be an independent contractor and the many considerations that go into it, from finding work to setting money aside for taxes. If you enter the gig economy the right way, though, you might find it preferable to a full-time job.