The Gig Economy: What it means and why you should participate

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The Gig Economy: What it means and why you should participate

You’ve probably heard the term “gig economy”. But what does it really mean?

For a growing number of workers, conventional full-time employment is simply not an option. Either by choice, or by necessity, they instead move from assignment to assignment, and view their relationship with their “client” as a project, or gig.

“Contract, flex, freelance, contingent, agile labor, 1099 worker, leased worker”...these terms all refer to gig workers and may be used interchangeably. 

If the term “gig worker” conjures up a Lyft or Uber driver, you’re only partly right. Gig workers actually span a remarkably wide range of fields, skills, and locations. Regardless of the role they fill, it’s important to realize that some gig workers are looking for enough projects to comprise full-time hours, some only want (or can) work part-time hours, and some are employed full-time in the conventional sense but also want (or need) to earn more on the side with gigs often referred to as “side hustles”.

One part of the gig economy is made up of freelance professionals who bring technical skill sets such as programming or graphic design. But many others also qualify as gig workers, including hairdressers, child- or elder-care providers, cleaners, retired workers who perform a service such as bookkeeping, and those who make handcrafted items to sell on Etsy.  The quality services offered by this economy are limitless! 

Many workers like the gig economy. Flexible work allows these workers to manage their schedule and, in some cases, their work location. Project work also provides workers with welcome variety:  they’re not performing the same tasks over and over. This variety is particularly important to younger workers. 

The dark sides of gig work, of course, include the income uncertainty associated with temporary assignments, and no guarantee of a continual stream of work. Some people experience social isolation because of the lack of coworkers. Positive feedback and thanks go a long way for these workers when a job is well done.

An additional burden for gig workers, since they are contractors and not employees, is that they must pay their own taxes, which can take some adjustment for people used to receiving W2 income. They must also cover their own insurance, equipment and working space, as well as provide for their own retirement savings. There is no “paid time off” for gig workers!

Generational influences on the gig economy. Millennials are the largest single generation at work and are more comfortable with the fluid nature of flex work. Recent studies estimate that 42% of self-employed individuals will likely be from the millennial generation by 2020. The millennial generation looks for the three “F’s” of work:  flexibility, fun, and freedom. Gig work often provides those qualities. 

How large is the gig economy? Recent estimates put the size of the contingent workforce at around 60 million workers. This number is projected to increase. According to UpWork, one of the largest freelance agencies, by 2027 the majority of US workers will be contract workers.

What does it mean for employers? Adding – and reducing – staff is almost frictionless for companies who utilize gig workers. If your labor needs are seasonal or project-based and you leverage contingent workers, you’ll be able to match payroll size to your busier periods. Your overall real estate needs may be lower as well if you no longer need to provide space for all of your workers. 

The thoughtful use of a contingent workforce allows companies to focus on the parts of business that create a distinctive competitive advantage. For example, if you’re known for design and manufacturing excellence, you may choose to concentrate your talent acquisition, career path planning, and retention efforts on employees who work in those areas. Using gig workers may make sense for other key parts of the business such as delivery or sales. 

Considerations as you leverage the gig economy. Our long experience in working with leading employers and media partners has given us a blueprint of how companies can best benefit from employing this project-oriented model. Here are some suggestions:

  • Flex work appeals to many workers, especially younger ones who will form the backbone of your future workforce. If it makes sense for your business, start to identify functions where a flexible workforce can help you. This will build your employer reputation as up-to-date and responsive to worker interests in today’s marketplace.
  • Cyclical and seasonal businesses probably already make use of a flexible talent pool. But if your work is project-based, and subject to demand variations, this is probably something you should consider as well.
  • Use contingent workers in non-”core” roles where they won’t build strategic knowledge. If institutional knowledge is important to your firm, and you rely too much on contingent workers, that knowledge will walk out the door at the end of the assignment.
  • For roles where contingent workers are NOT appropriate, you can still build some gig work appeal into your full-time positions by seeking opportunities to add flexible scheduling and the ability to work remotely.
  • Find ways that workers can learn, develop and bring creativity to their positions. If you do need staff to be on site, build in physical spaces for collaboration as well as quiet spots for individual work.

When the fit is right, the gig economy continues to prove itself as a tremendous asset for employers across a wide range of roles and industries. It is a rich pool of talent that brings fresh ideas, creativity, consistent commitment toward high quality work, and incredible workforce flexibility. Leverage this dynamic economy with a proactive management strategy where it makes the most sense for your business. No matter what, consider enhancing your employer brand with characteristics that many younger workers value, such as schedule flexibility and a great work culture, and make them available to flex and full time workers alike.

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