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What Is a Gig Economy?
A gig economy is a labor market that relies heavily on temporary and part-time positions filled by independent contractors and freelancers rather than full-time permanent employees.
Gig workers gain flexibility and independence but little or no job security.Many employers save money by avoiding paying benefits such as health coverage and paid vacation time.Others pay for some benefits to gig workers but outsource the benefits programs and other management tasks to external agencies.
The term is borrowed from the music world, where performers book “gigs’ that are single or short-term engagements at various venues.
Key Takeaways
– The gig economy is based on flexible, temporary, or freelance jobs, often involving connecting with clients or customers through an online platform.
– The gig economy can benefit workers, businesses, and consumers by making work more adaptable to the needs of the moment and the demand for flexible lifestyles.
– At the same time, the gig economy can have downsides due to the erosion of traditional economic relationships between workers, businesses, and clients.
Understanding a Gig Economy
In a gig economy, large numbers of people work in part-time or temporary positions or as independent contractors.The result of a gig economy is cheaper, more efficient services, such as Uber or Airbnb, for those willing to use them.
People who don’t use technological services such as the Internet may be left behind by the benefits of the gig economy.
Cities tend to have the most highly developed services and are the most entrenched in the gig economy.
A wide variety of positions fall into the category of a gig.The work can range from driving for Uber or delivering food to writing code or freelance articles.Adjunct and part-time professors, for example, are contracted employees as opposed to tenure-track or tenured professors.Colleges and universities can cut costs and match professors to their academic needs by hiring more adjunct and part-time professors.
The Factors Behind a Gig Economy
America is well on its way to establishing a gig economy, and estimates show as much as a third of the working population is already in some gig capacity as of 2021.
Experts expect this working number to rise, as these types of positions facilitate independent contracting work, with many of them not requiring a freelancer to come into an office.Gig workers are much more likely to be part-time workers and to work from home.
Employers also have a wider range of applicants to choose from because they don’t have to hire someone based on their proximity.
Additionally, computers have developed to the point that they can either take the place of the jobs people previously had or allow people to work just as efficiently from home as they could in person.
In the modern digital world, it’s becoming increasingly common for people to work remotely or from home.This trend accelerated during the 2020 COVID-19 pandemic.
Economic reasons also factor into the development of a gig economy.
Employers who cannot afford to hire full-time employees to do all the work that needs to be done will often hire part-time or temporary employees to take care of busier times or specific projects.
On the employee’s side of the equation, people often find they need to move or take multiple positions to afford the lifestyle they want.It’s also common to change careers many times throughout a lifetime, so the gig economy can be viewed as a reflection of this occurring on a large scale.
In 2020, the gig economy experienced significant increases as gig workers delivered necessities to home-bound consumers, and those whose jobs had been eliminated turned to part-time and contract work for income.Employers will need to plan for changes to the world of work, including the gig economy, when the crisis has ended.
Criticisms of the Gig Economy
Despite its benefits, there are some downsides to the gig economy.While not all employers are inclined to hire contracted employees, the gig economy trend can make it harder for full-time employees to develop in their careers since temporary employees are often cheaper to hire and more flexible in their availability.
Workers who prefer a traditional career path and the stability and security that come with it are being crowded out in some industries.
For some workers, the flexibility of working gigs can actually disrupt the work-life balance , sleep patterns, and activities of daily life.Flexibility in a gig economy often means that workers have to make themselves available any time gigs come up, regardless of their other needs, and must always be on the hunt for the next gig.Competition for gigs has increased, too.And unemployment insurance usually doesn’t cover gig workers who can’t find employment (2020’s CARES Act made an exception).
In effect, workers in a gig economy are more like entrepreneurs than traditional workers.While this may mean greater freedom of choice for the individual worker, it also means that the security of a steady job with regular pay, benefits—including a retirement account —and a daily routine that has characterized work for generations are rapidly becoming a thing of the past.
Lastly, because of the fluid nature of gig economy transactions and relationships, long-term relationships between workers, employers, clients, and vendors can erode.
This can eliminate the benefits that flow from building long-term trust, customary practice, and familiarity with clients and employers.
It could also discourage investment in relationship-specific assets that would otherwise be profitable to pursue since no party has an incentive to invest significantly in a relationship that only lasts until the next gig comes along.
What Is an Example of a Gig Economy?
Examples of a gig economy are those jobs that individuals discover and access through online platforms that list such jobs.These jobs are often one-time or short-term contract jobs.These include driving for a ride-sharing service, painting someone’s house, freelance work, coaching, fitness training, and tutoring.The job is exchanged for cash and there are no other benefits, such as health insurance.
What Are the Benefits of the Gig Economy?
The gig economy has many benefits for both the employee and employer.
An employer has access to a wide range of talent that they can hire.If the talent proves to be less than acceptable, there is no contract to keep the employee on or issues of letting them go.In addition, in a time when it has become difficult to attract full-time workers, employers can hire from the gig economy.
In addition, hiring gig workers can be more affordable as companies don’t have to pay for health insurance or other benefits.For employees, the gig economy’s benefits include having the option to do multiple jobs, work from anywhere depending on the specific job, freedom, and flexibility in their daily routine.
Is the Gig Economy Worth It?
To the individuals working in the gig economy, it is worth it.Studies show that 79% of individuals who work in the gig economy are more satisfied than when they were working traditional jobs..
