The gig economy is no longer about getting paid for small tasks on the weekend in addition to your full-time job. Aspiring entrepreneurs are getting creative by starting businesses from these side gigs, and freelancing and contract workers are the future of the economy.
By 2020, gig workers will comprise half of the workforce, and as much as 80 percent by 2030, according to Peter Miscovich, managing director of JLL Consulting in New York.
As for how this will impact small businesses and corporations is yet to be determined. As it stands now, both parties are benefiting from the gig economy. Here’s how.
The stats don’t lie
The unemployment rate is at a 17-year low, partially due to underemployed Americans signing up for side gigs and contract work online.
The Los Angeles Times reports that, “Nearly 1 in 4 Americans now earn money from the digital ‘platform economy,’ according to the Pew Research Center.”
The gig economy is hugely impacting jobs like bookkeeping, marketing and designing. Even in the tech industry, 85 percent of executives said they plan to increase their use of contract workers.
Both freelancers and companies themselves benefit from the gig economy. For companies, hiring becomes easier when you go about working with a contractor.
“Gig workers can be dispatched at a moment’s notice, receive notifications via mobile tech, and upload completed work. Simple as that,” Robin Smith, CEO of WeGoLook, said.
Freelancers, on the other hand, get to work on their own terms and charge as much as they want for their services. They also have the option to work for as many or as few companies as they have the time for.
Human resource departments have never seen this amount of paperwork in the gig economy. Or is it lack thereof?
Sanjay Sathe, CEO of RiseSmart, talked to Fast Company about how the gig economy is evolving beyond traditional roles:
“While 67 percent of companies do presently limit the number of these types of positions, according to 2016 Workforce for the Future Survey, having gig positions means they are able to onboard new talent and off-board unneeded skills without the burden of employment taxes and paperwork.”
The decrease in the amount paperwork is something all companies desire, especially bootstrapped startups. No longer having to worry about a complicated payroll, 401K, stock options, or healthcare costs is even better.
Where this type of hiring hurts the contract worker
With the gig economy, companies don’t have to worry about the costs of employee benefits, which puts freelancers in a tough position. The government recognizes the rise of the number of contract workers who do not have access to benefits and are working on a solution.
The Boston Review reports one option, suggested by Virginia Senator, Mark Warner:
“‘Portable benefits’ schemes would make platform companies contribute to worker accounts with funds set aside for Social Security, Medicare, injured workers’ compensation, health care and paid time off.”
If this comes to fruition, contractors no longer have to rely on government-funded programs intended for the unemployed.
Overall, the gig economy is a win-win model for both company and contract worker. The freelancer or aspiring entrepreneur gets to work on his or her own schedule, set his or her own rate, and work for as many companies as they wish. For the companies involved, they no longer have to pay someone full-time with the benefits that come along with it. It will be interesting to see how this new workforce will pan out over the course of the next decade or so.