Is the Gig Economy Right for You?

June 26, 2018

The gig economy. It’s a concept that has been working its way into our common vernacular for some time now, but if you’re still unfamiliar, it refers to the rise of independent contractors and workers that businesses (many of them online) usually hire for short-term arrangements. A recent survey from the Pew Research Center reports that 8% of American adults earned income from an online employment platform (think: Uber/Lyft, TaskRabbit, and the like) over the last year.  

According to Forbes, the gig economy has risen “in part due to the popularity of the internet (and with it, the capability for remote work), and in part due to the nature of new apps like Uber and Airbnb (which give more power to independent contractors, and open up new opportunities for gig-based work).”

If you’re wondering whether this alternative to the typical 9-to-5 is something to pursue, there are some considerations to keep in mind.  According to Alex Rosenblat from the Harvard Business Review, “The effects of the gig economy on the workforce are mixed. These platforms (i.e. Uber or Lyft) seem to benefit people earning supplementary income or those lacking other job opportunities the most, while they impose the most legal risk on full-time earners.” This risk to full-time earners—those who are reliant on gig work for their sole or primary income—stems from the fact that this type of work also attracts a large number of “casual” workers, or those who take on gig work to supplement their income but could live comfortably without it. In other words, gig work is a necessity for some and a luxury for others.

Because the supply of gig labor is liquid and comprised largely of part-time workers, gig economy employers have more flexibility to adjust wages and working conditions, and less pressure to create more sustainable earning opportunities.

Naturally, it’s the full-time workers who end up suffering most, but these limitations haven’t stopped the ever-increasing number of people who are turning to this kind of work. In fact, approximately 150 million workers in North America and Western Europe have left the relatively stable confines of organizational life–sometimes by choice, sometimes not–to work as independent contractors, says this article in The Washington Post

But these independent contractors aren’t just flocking to service-based/task-oriented jobs; they’re turning to gigs in the creative arts, such as freelance design and production. Those who switch to this kind of work note that they feel more productive, genuinely enjoy what they do, and thrive on being their own boss. However, their tradeoff is fluctuating finances and work, and no access to benefits packages such as subsidized healthcare or an employer-sponsored retirement plan. Still, those who swear by this kind of work claim that the pros far outweigh the cons.

While the gig economy’s popularity might be increasing among many workers, only 15.8% of Americans in December 2016 overall were engaged in it, according to one study.

Working a traditional full-time job is still the norm for many, and Berkshire Hathaway even reports that 55% of gig workers also maintain full-time or regular jobs (hence the large number of “casual” workers we noted earlier).

So is the gig economy right for you? As you can see, there are risks and benefits to consider that will vary depending on one’s preferred work style, priorities, and needs. While “traditional” work will still be the go-to for the foreseeable future, the gig economy likely won’t be going anywhere anytime soon.  Our suggestion: get a little introspective to figure out what the answer to that question is for your particular situation.