The “gig economy,” defined by Princeton and Harvard’s 2015 joint study as any alternative work engagement involving “temporary help, agency workers, on-call workers, contract workers, and independent contractors or freelancers,” has grown by as much as 5% in the last 10 years. Today, freelance workers make up 34% of the U.S. workforce.
Some estimate that 50% of the workforce will be freelancing by 2020 and with the looming emergence of the gig economy, core changes have already begun to occur in how people work and businesses operate, causing some to compare it to the Industrial Revolution of our time.
Supporting the rise of freelancers, 95% of companies now believe that the freelance marketplace is necessary to their success in growing and developing their business. Yes, the gig economy is still in its infancy but it is growing fast, so what do businesses need to know in order to adapt to its impending blossom into a major aspect of the U.S. economy.
1. Businesses of Various Models Are Flourishing
From on-demand access to goods and services; commercialized sharing of products, space, or services; or open marketplaces for specific talent pools, the gig economy is home to a wide range of business types. In fact, according to the Bureau of Labor Statistics, every sector of the industry saw growth in gig employment. Every day new apps and websites are being created to meet burgeoning needs for companies and consumers. These apps and websites are often in need of workers with very specific skills or resources, giving more workers opportunity for work with businesses that fit their means.
2. Businesses of Any Size Can Benefit
When it comes to the companies using freelancers, size doesn’t matter – startups, small-to-medium size businesses, and even corporations are all participating in and being reshaped by the gig economy. For startups, freelancers often provide the best possible results for the lowest costs, help you dodge issues of employee benefits, and tend to require less administrative oversight. Small-to-medium businesses who can’t provide the same stability and opportunities as larger corporations can look to a growing talent pool of expert freelancers to fill in the gaps. Corporations seeking to innovate and experiment beyond their established partnerships can find out-of-house help via the gig economy as well.
3. Workers Desire the Gig Economy’s Benefits
Another attractive aspect of the gig economy for workers is the numerous, non-traditional benefits it offers. Workers in the freelance marketplace tend to have more flexibility – they can work where they want when they want – which allows many to better pursue fulfillment via passion projects or by spending time with family. It’s no wonder that an analysis of Uber drivers’ satisfaction showed that 73% of drivers prefer the flexibility of working for Uber over that of a traditional job. Furthermore, 46% of workers consider telecommuting second only to compensation as the best way to attract top talent and 33% consider it the foremost appealing aspect of any job offer. Workers have begun to want more freedom in their career, and the gig economy meets that need.
4. Insecure Workers Use Gig Economy for Safety Net and Career Exploration
Due to market volatility and industry disruption, workers are less secure in their jobs and understand that growth opportunities and greater peace of mind can be found by extending beyond a single employer or role. For many, this means exploring the gig economy as a safety measure. Through gigs, they gain experience in diverse industries, grow their networks, and, generally, insulate themselves from layoffs and the failure of an employer. Given the gig economy’s rise in every industry, there are more opportunities for workers to leave traditional work behind and further leverage their resources and talents. An extra room, a car, and skills like programming or grammar know-how can translate to another income stream.
5. Employers Benefit Greatly, But Must Beware Regulations
There are obvious benefits to a company hiring independent contractors for short-term projects. However, the use of independent contractors is becoming fraught with red tape. The U.S. government and regulators are beginning to catch up as major political players have begun to voice criticism of the gig economy’s loose, under-regulated relationship with freelancers. Firstly, it is easy to misclassify freelancers as 1099 employees – if workers are told when, where, and how to work, they are no longer legally “independent” and must be classified appropriately as full-time or companies can face costly audits and lawsuits. Employers should minimize their risk by working with a Freelance Management Service to ensure their freelance labor force is within the parameters of the law.
The gig economy is a new, yet contentious, arena with many moving parts where any kind of company can, if managed appropriately, benefit greatly. Know anything else about the gig economy that may be helpful? Leave your comments below!