What is The Gig Economy? The Definitive Guide

The term “gig economy” seems to be everywhere these days. You hear about Senators, professional basketball players, and actors driving for on-demand car services Uber or Lyft.

Ikea, one of the world’s largest furniture retailers, just bought TaskRabbit, a company that allows people to hire freelance workers, or “taskers” to assemble Ikea’s build-it-yourself furniture.

Airbnb has allowed homeowners around the world to cash in by renting out the extra space in their homes.

 

As the gig economy has grown, the movement has pushed us to reconsider the notion of a job in the changing world. During the last Presidential election, for example, Hillary Clinton warned that the gig economy is raising hard questions about workplace protections and what a good job will look like in the future.

What Is the Gig Economy?

The term defies easy definition. One recent study commissioned by the Freelancers Union defined freelancers as individuals who engage in supplemental, temporary, project, or contract-based work. This includes a wide range of workers.

For example, many are simply professionals that work as independent contractors rather than as employees. Many are moonlighters working for extra income outside the hours of their full-job.

Others are a mix, called “diversified workers,” meaning that they rely on both a traditional job and freelance work. Some are temporary workers that are freelancing between jobs, and the final category is small business owners that have a handful of employees but still identify as a freelancers.

It is hard to know the exact size of the gig, or “sharing,” economy. A survey by Time found that about 22% of Americans have used a ride-sharing app, while 10% have driven for one. Research shows that 9% of Americans have rented out their home through an online service, while 19% have rented someone’s home.

While gig work has yet to become the primary source of jobs in the workforce, it is rapidly growing in popularity.

The people offering gig services are majority young, male, often minorities, and they have overwhelmingly had a positive experience, 71% positive to just 2% negative. The Freelancer’s Union study put the total number of gig workers at 53 million, or more than the total combined population of the 25 smallest states.

Where Did the Gig Economy Come From?

Part-time or freelance work is obviously not a new invention. In many occupations it has long been common for workers to be independent contractors that moved between short-term gigs.

Examples include musicians, photographers, journalists, truck drivers, artists, and carpenters. Two main changes have driven the growth in recent years.

First, the internet made organizing gigs more easy. The second big change seems to have been the Great Recession following the housing collapse of 2008.

As the New York Times has discussed, part time work spiked in 2008 and almost all of the rise was attributed to workers that were taking on part-time work because they could not find an adequate full-time job.

Some have also pointed to changes in health-care regulations that may have encouraged companies to avoid hiring as many full-time workers.

As we get close to a decade removed from the heights of the recession, however, it seems that gig work may be trending away from an emergency option into something more desirable.

According to the U.S. Bureau of Labor Statistics, the number of people working part time for economic reasons has been slowly but surely declining since about 2010.

 

Meanwhile, the number of part-time workers by choice has steadily been increasing. Gig work is starting to be a lifestyle of choice.

Benefits of the Gig Economy

A recent survey by the Pew Research Center gives some context for what is drawing people to freelance work. A huge majority, 68% of those surveyed, said gig work was great for people that want flexible work schedules. Meanwhile, 54% said freelancing is good for older people that do not want to work full time.

Despite the popular myth that freelance work is all for millennials, the Pew survey found that only 37% of people think gig work is good for entry-level jobs and 21% said it is not good for entry level workers.

The ways in which this work is distributed often depends on the type of household.

For example, low-income and minority households are more likely to rely on gig work requiring manual labor, while wealthier families tend to be renting out their homes or selling handmade goods for extra income.

Many experts think the gig economy will radically transform the workplace. The Roosevelt Institute put out a study recently that predicted that online freelance work will drive a disaggregation and decentralization of organization and management within companies.

In other words, technology will improve the efficiency of remote work and allow smaller companies and individuals to compete more easily with bigger companies.

By 2040, the report says, workers will increasingly rely on a portfolio of short-term assignments rather than one job. This shift could boost overall productivity and the earnings for individuals, but those without entrepreneurial skills could get left behind.

How Can the Gig Economy Help You?

Freedom and opportunity are the hallmarks of the gig economy, but you can always look to others for inspiration on how it might help you.

First, you can use it to make more money. According to various data collected by CNBC, average monthly earnings on the most popular gig economy platforms are $924 on Airbnb, $504 on Wonolo, $380 on TaskRabbit, $377 on Lyft, $364 on Uber, and $364 on Doordash.

By combining different types of work or using applications like Wonolo, you can turn these smaller sums into more serious cash. Even if you choose not to live on the money you make, it can be a great bit of extra change to improve your financial situation or even just add some fun to your lifestyle.

Second, you can use this freedom to travel. If you are driving over the holidays, you may be able to pick up a passenger and offset your costs. More importantly, if you are doing freelance work from your laptop, you can do it almost anywhere in the world. You can work from a coffee shop on the beach just as easily as in your stuffy bedroom.

Finally, you can protect yourself in a downturn. As mentioned earlier, the gig economy really took off as people were desperate in the last recession. If tough times hit again, having a portfolio of gig work can help ensure you do not wind up in a bad situation. It can be a hedge against economic uncertainty.

The Final Word on the Gig Economy

If you’re going to start participating in gigs, now is the time to start. It’s a burgeoning part of the economy and has a great future ahead of it.

To make the most use of the gig economy, look to use it for extra money and to protect yourself with a diverse range of skills and incomes.

Make sure you’re using a qualified source for your jobs to ensure you don’t run into payment issues or unverified hirers. (Wonolo is built to take care of this for you.)

How will you use the gig economy?