The gig economy refers to a variety of freelance or independent contract jobs.
What is the gig economy?
The gig economy, as defined by the IRS, is “activity where people earn income providing on-demand work, services, or goods,” generally through an app or website. This segment of the work market includes temporary, contract, and freelance positions.
The term “gig economy” is most commonly used in reference to jobs such as working for a rideshare firm like Uber or Lyft, doing deliveries, or walking dogs. However, the gig economy employs a considerable proportion of the workforce and spans almost every industry. For example, a 2022 poll commissioned by Upwork of 3,000 professionals discovered that 60 million Americans had freelanced within the preceding year.
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What is gig work?
Gig jobs vary greatly, making it difficult to pinpoint. Common examples include renting out a room on a short-term rental website, selling goods online, driving for a rideshare company, and doing deliveries for Amazon Flex or another service. It also includes jobs such as freelance writing, tutoring, design, caring, and many others. If you want to work from home, gig labor could be the perfect solution, especially if you already have money-making hobbies.
A “gig” (also known as a “side hustle”) is a short-term assignment, project, or employment that someone takes on to earn extra money. However, many people work gigs on a long-term basis or as their primary source of income. Some gig workers are compensated for each task or assignment. Others earn an hourly rate.
Why is Gig Work Trending?
The gig economy’s widespread appeal stems in part from its benefits to both employees and businesses. According to Forbes, gigs provide millennials with the desired work-life balance, but Boomers see gigging as a way to gain freedom while earning a living.
Employers who use non-traditional recruits in their workforce can easily add new personnel or scale back to meet the market’s changing demands. This is especially crucial for specific businesses, including:
- Retailers and hospitality – Retailers and hotels, accounting for 20% of U.S. jobs, are ideal for the gig economy due to industry fluctuations. Additional staffing during holidays and/or peak seasons can make or break a firm.
- Event management companies – The ability to employ people for one-time or recurring high-profile events allows for the easy arrangement of duties such as setup, serving, and clean-up. This is especially crucial when events take place on a national or international scale. Hiring local employees can save companies money on travel charges compared to sending permanent workers globally.
- Construction industry – Labor expenditures are typically the most expensive line item in a project’s budget. Having the ability to hire people only when necessary can dramatically reduce expenses while keeping project managers on track and within budget.
What is a gig worker?
A gig worker is a self-employed individual or freelancer who works in the gig economy. Gig workers are often treated as self-employed rather than employees for tax purposes. As a result, they do not receive traditional employment benefits like health insurance, retirement plans, or paid time off.
How Does the Gig Economy Benefit Workers?
There are many benefits for employers when hiring contingent workers, including:
Saving money – Temporary workers save firms money by eliminating expenses such as unemployment, benefits, and worker’s compensation. This helps firms to save a significant amount of money, which can help them develop economically.
Creating a more engaged workforce – The gig economy changes the relationship between employees and employers, leading to a more engaged workforce. Project-based employment allows workers to select when and what they want to work on, making them happier and more adaptable.
Avoiding bad hires – Finding qualified freelancers or independent contractors might help companies avoid hiring mistakes. This allows management to part ways without financial ramifications if the contractor fails to meet expectations.
Gigging offers a flexible option for everyone: Gen Zers, Millennials, Gen Xers, and Baby Boomers can achieve their ultimate objective of earning extra money. As a business owner, it might be your ticket to finding the ideal applicant for the job without the headache of high pay, expensive benefits, or scheduling.
What to know about working in the gig economy
Working in the gig economy might provide you with flexible hours, quick income, or the flexibility to establish your own salary, depending on the work. However, it can also refer to irregular income, a lack of perks, and complex taxes. If you’re considering gig work, bear the following in mind:
Research the pay
Rates can vary according to geography, experience, and demand. Furthermore, the platform through which you receive gig employment may deduct a portion of your earnings. It’s also a good idea to figure out how frequently you’re paid so you know when to expect each payday. For more information, see the company’s website, reviews, and the Better Business Bureau page.
Be aware of potential costs
Some gigs ask you to pay for job-related expenses. If you transport goods or people, you may be responsible for the cost of insurance, gas, and car maintenance. (Learn how gas expenditures affect a Nerd’s earnings when determining how much DoorDash pays.)
Budget for taxes
Traditionally, employees automatically get payroll taxes withheld by their employers. Most gig workers, on the other hand, are responsible for doing the math themselves. Build self-employment tax into your budget so you don’t face a surprise bill when it’s time to file.
Watch for scams
Gig employment is in high demand, and scammers know it. Watch for red flags. If you are requested to pay money up front, or if a position claims to pay more than your talents and expertise deserve, it is most likely a fraud. Learn more about how to identify a fraudulent job.
If you’re interested in starting a remote gig, you can learn about more tips and opportunities.
Watch out for burnout symptoms
The uncertain income and work schedule associated with many types of gig labor can be stressful, resulting in ill health, depression, anxiety, sleep problems, and other issues.
High stress levels may also contribute to job burnout, which the Mayo Clinic defines as “a state of physical or emotional exhaustion that also involves a sense of reduced accomplishment and loss of personal identity.”
Keep an eye out for burnout symptoms, especially if you are working more than one gig. Symptoms include:
- Difficulty concentrating.
- Lack of energy.
- Changes in sleep habits.
- Irritability and impatience.
Consider reviewing your living expenditures to determine if there are any that may be reduced or eliminated. That may allow you to work less or better hours.
If you’re having trouble making ends meet, there’s no shame in looking for resources to assist you pay your bills.
