The Gig Economy – A Tectonic Shift in the World of Work

In 2004 Blockbuster Video had 85,000 employees. In 2019 Netflix has about 5,500 employees.

A few years ago, Diane Mulcahy, a lecturer in the MBA program at Babson College created a course called “Entrepreneurship and the Gig Economy.” The idea was to teach MBA students how to get contract work, line-up side-hustles, negotiate fees and market themselves in a new kind of labor market, where the flexibility afforded to freelancers, part-timers, and independent contractors was suddenly being embraced by a new generation of workers and employers. Babson was early to spot the gig trend. At that time, Uber was a 4-year-old startup.

Last year the University of Michigan’s Ross School of Business added an undergraduate senior capstone class, “Thriving in the New World of Work,” to teach students how to navigate the workplace and their careers by using assessments to figure out their strengths, values, and passions in the new work environment, how to be resourceful, and how to navigate uncertainty. Job Searchers are placing increasing importance on finding a job that fits their lifestyle.

Now students can get advice on gig work at the schools’ career services centers. Traditionally, these centers were designed to prepare students to land jobs at big corporations; if you wanted to work at a nonprofit or smaller startup, you were mostly on your own.  But now that gig work has reached other industries catalyzed by on-line technology, it’s far simpler for companies and contractors to find each other.

Actually working as a “Gig Employee” has more income security than most traditional jobs considering you work for multiple customers with multiple streams of income instead of one employer tied to one income.

Increasingly, the gig economy operates on technology platforms that aim to connect workers looking for flexible work arrangements with the companies who need them in a centralized location, such as an app or website. Some platforms are focused on certain niches, such as hospitality and warehouse workers, dog-walking services, or other specific services, while others are broader, connecting gig workers with companies and clients for tasks Ranging from housekeeping services to writing. In an independent contracting arrangement, workers are responsible for saving and paying their own taxes and aren’t eligible for the typical benefits of full-time employment such as access to group health insurance or retirement investments and savings accounts. But thanks to the rise of the independent workforce, benefits such as health insurance coverage, independent retirement accounts (IRAs), and liability and accident insurance are more accessible than ever before. Plus, workers operating as independent contractors get to take advantage of the tax benefits of operating their own business, including tax deductions for non-reimbursed operating expenses such as travel, supplies etc.

Studies estimate that in the next couple years, 43% of the American workforce will consist of independent contractors. With digitization and automation threatening some traditional jobs, the freelance economy can provide job security, but not in the traditional sense. While that may seem backwards (how can embracing temporary work possibly contribute to long-term job security?), it pays homage to the idea that you shouldn’t put all your eggs in one basket; in the independent workforce, having your position downsized doesn’t mean you’ve suddenly lost your entire income. 

Gigs can be full- or part-time, or even one-off projects. There are gigs to be found at the highest professional levels and in the minimum wage “service on-demand” sector. The essential qualifier is that workers are not employees with benefits but independent contractors.

How many in the workforce are doing gig work? According to the Gig Economy Data Hub, a joint project of Cornell University’s Institute of Labor Relations and the Aspen Institute, the percentage is around 30%. However, Ernst & Young points out that only about 10% of those are depending on gigs for their entire income.

More platforms connecting workers to businesses are going up all the time. Some are highly specialized, including those for lawyers and doctors, restaurant workers, and creatives.

As the numbers grow, employers are increasingly dipping into the marketplace of temps.

Best Practices for Leveraging the Gig Economy

  1. Find your niche. Utilize your existing skills and interests and leverage technology platforms. Once you’ve identified your focus (the type of work you’re interested in and qualified for), sign up for technology platforms that connect workers with your skills to the companies who need them. These platforms make it easy to secure temporary work without the time-consuming task of seeking out clients on your own and marketing your services.
  • Set Your Schedule. While one of the biggest benefits of the gig economy is flexibility, determining your availability ahead of time makes it easier to weed out gigs that work with your schedule and reduces the likelihood that you’ll need to make changes or bow out of a previously-accepted gig.
  • Manage your finances. As an independent worker, developing a budget and organizing your finances is key. Determine how much you’ll need to set aside for taxes and develop a system for documenting your income and expenses.
  • Treat Every Gig As If It’s An Audition. Give every job your all, even if you’re working a single shift for a company. Some on-demand staffing platforms have employer feedback loops, allowing companies to rate and review temporary workers, which can significantly impact your ability to secure future work. Even if there’s no formal review mechanism in place, your reputation is key to your success, and exceeding expectations can earn you referrals and recommendations.

The gig economy offers abundant opportunities for the workforce and employers alike. The rise of the independent workforce is here to stay, thanks to technology advancements that make it easier than ever for workers to find temporary jobs that afford them the freedom and flexibility they want.

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