Greater work-life balance and the exposure to new trades are a couple of the reasons fueling the popularity of part-time gigs. Here's the full story.
More and more people are opting for temporary jobs over full-time positions, but are the tradeoffs worth it?
The promise of greater work-life balance, the opportunity to meet more people, and the exposure to new trades are just a few of the reasons why workers of all ages are increasingly opting for non-permanent positions over traditional 9-to-5 schedules. The gig economy is certainly up, but there are some pitfalls that workers should know about before joining the masses.
What is the gig economy?
The gig economy is an environment created by the significant workforce shift toward flexible schedules, part-time positions, and temporary work. Commonly referred to as “gigs,” these short-term jobs are gaining popularity in the U.S. as more and more people move away from traditional job schedules.
Examples of gigs:
- Renting your house on Airbnb
- Driving a car for an app such as Uber and Lyft
- Handyman work through websites such as TaskRabbit
How big is the gig economy?
There were 3.8 million on-demand workers in the U.S., as of 2016. According to an article published on Recode, which pulled data from Intuit and Emergent Research, the gig economy workforce will double in the next four years. In numbers, that means approximately 9.2 million Americans will rely on gigs for income by 2021.
Number of Americans working in the gig economy (in millions)
Image source: Recode
What’s in it for companies?
Companies with temporary needs, uncertain revenue streams, pending investments, etc., often favor pools of labor that are available on an on-demand basis, commonly referred to as a casual or “contingent workforce.” This approach mitigates the risk of hiring full-time employees that would also require associated costs.
Some believe that another benefit is the regular stream of employee feedback that customers leave on Apps such as Uber. Unlike standard offices, workers who offer their services through apps are typically subject to rating systems. Each interaction provides the opportunity for feedback, often affecting the worker’s chances of getting the next gig (Uber drivers must maintain certain ratings to remain eligible). This helps companies in maintaining high-quality service without the need for extensive in-person feedback.
Quick Stat: Demand for Gig Workers in the U.S.
According to the results of a 2016 Pew study, 72% of Americans have used some type of shared or on-demand online service.
Source: Pew Research Center
Despite these benefits, many companies find that contractors don’t embrace their employers’ missions and core values to the same extent of full-time employees. Since research shows that CEOs and CFOs rate company culture as “very important,” this is often a reason in not embracing the gig economy.
What are the drawbacks for contractors?
Because this environment is relatively new, contractors must figure out how to manage their financials in a much more hands-on way. As TechCrunch points out:
“Taxes are a growing gap between gig economy workers and traditional employees. W-2 workers are automatically part of the government withholding program that automates their tax savings so they are not left owing sizable annual sums. Many 1099ers want this option too. In a 2016 survey, 47 percent of 1099 workers said they want a way to save a little money from every paycheck for taxes.”
This also raises the larger question of the role and importance of people management. Without the structure of a traditional work environment, and the benefit of consistent, professional feedback, contractors must maintain an extremely high level of personal accountability.
One of the largest drawbacks of choosing the gig lifestyle is the absence of employer-sponsored health benefits. This absence of employee benefits means that contractors will have to seek out options on their own, adding to the list of tasks that are typically taken care of by employers.
A final point of contention for many critics of the gig economy is the low visibility to the actual payment per hour for workers. Wired magazine points this out in writing, “Workers aren’t paid benefits such as holiday or sick pay, and reports suggest some aren’t making minimum wage…That’s legally possible because gig workers aren’t seen by the companies they work for as employees but contractors — though a court ruling against Uber disagreed with that claim last year.”
What’s ahead for businesses?
Businesses should respond to larger shifts in employee behavior, so it’s likely that companies will provide more options in terms of trying new roles within their organizations. This exposure will mean more collaboration and cross-training for seasoned employees. Similar to offering flexible work schedules, this collaborative and open approach means creating and promoting a culture that puts the employee first.