The Gig Economy: How Independent Workers are Changing America

| September 13, 2015

in her officeA “gig” is the colloquial term for temporary work  — as when a musician books a performance, moving often (maybe even daily) “from gig to gig” to work in a different venue and for a different establishment.  Take that concept and expand it into other fields, and you have “the Gig Economy” where workers are independent and mobile, taking income and profit where they find it.

Gig workers are quickly spreading to every corner of the business world.  Freelancers are beginning to dominate in fields of advertising and graphic design.  Companies like Uber are maximizing the Gig Economy and revolutionizing the job market through independent contractors.

This Gig Economy is the product of the growing trend of flexibility in the American workplace. With the never universal use of cell phones and the Internet, the need for employees to be in one centralized location has decreased dramatically. According to the Freelancer’s Union, nearly one in three working Americans is now an independent agent.

Many Americans feel that the ability to set their own hours and work from home allows them the perfect mixture of productivity and relaxation. By working on multiple short term projects with no set hours, gig workers are able to control their workflow and experience life at their own pace. Gig workers who manage their time correctly experience higher job satisfaction, more free time, and increased pay when compared to the corporate equivalent.

Gig workers and the Gig Economy have both been around for years, but many companies are just starting to employ this ever growing workforce. Uber utilizes over 160,000 drivers, but the company only has 4,000 full-time employees. The drivers are paid a percentage of any fares that they take, which are sent and received through Uber’s smartphone app. While Uber performs background checks on all authorized drivers, approve drivers have full autonomy over their work schedule and operation area. Uber’s minimal oversight approach allows for low overhead costs while simultaneously providing widespread coverage.

The Gig Economy allows for entrepreneurship at the most basic level. Etsy has opened home businesses to customers around the world.  Airbnb makes every home a potential hotel.

While gig workers are drawn to the free time and higher pay, they also do not have a guaranteed income. In the corporate world, a day of work means a consistent flow of projects and a consistent paycheck.   Unfortunately, for the gig worker, when the contracts stop, so does the money.  Many gig workers have variable monthly incomes – living in relative luxury one month, and barely making rent the next.  The corporate workplace typically provides protections and benefits for employees, such as health insurance. Gig workers as independent agents do not receive any of these benefits from their employers. This is a boon to companies trying to cut costs, but something that gig workers have to factor into their own budgets.

Some companies will look to exploit gig workers and their independent contractor status. Fed-Ex recently settled a lawsuit for $228 million because they classified their drivers as independent contractors – but required them to work 10 hour days, wear company uniforms and drive trucks with the company logo.   By classifying the drivers as independent contractors, FedEx tried to deny them benefits that employees (which the drivers really were) would normally have access to. Governments are starting to pay more attention to whether companies who to hire outside contractors as the majority of their working staff are looking to avoid the laws and regulations that protect employee rights.

But the Gig Economy is here to stay and will continue to grow.  It has already left its mark on the American workplace. As a new generation of workers move away from the traditional corporate workspace, the employee-employer relationship will continue to evolve. Gigs allow driven workers significantly more flexibility in their daily routine and can potentially improve job and life satisfaction. Employers should carefully examine this new business model as, according to the Freelancer’s Union, independent workers will make up 50% of the workforce by 2020 – with new opportunities in a revolutionary system born of technology and the entrepreneur spirit.

Category: Technology