The gig economy is a billion-dollar industry, with over 55 million gig workers in the US. With more and more companies springing up every day, there's no doubt that the gig economy has come to stay.
The term “gig economy” is a free market system where businesses or professionals hire skilled workers, contractors, freelancers, or influencers for short-term work, tasks, or gigs. This term originated from the world of art, where actors, musicians, and comedians are paid for their appearances, often called a “gig.”
Though this arrangement offers skilled workers flexibility and advantages such as freedom to work at their own pace and time. Nevertheless, they often encounter financial hurdles since they are independent and responsible for their income and benefits.
When the lockdown began due to the raging pandemic, the gig economy skyrocketed in growth, which compelled the EU Council to impose a new directive called DAC7.
How The Gig Economy Works
In a gig economy, contractors or gig workers earn almost all their income from performing short-term tasks that require a certain set of skills. A typical example is companies like Uber and Lyft, which have no vehicles but are the world's biggest taxi company in the world.
A gig worker can take on numerous tasks from different companies to realize a cumulative earning that is almost equal to or more than full-time jobs. A good example is a gig worker driving for both Uber and Lyft, while also renting out rooms in their homes through Airbnb.
Another aspect of the gig economy, which is currently revolutionizing the economy, is called the "Digital Earning Platforms", such as eBay, Fiverr, and even Etsy. These platforms allow giggers or gig workers to sell their services for a reasonable price.
Thanks to the internet, gig workers can now work for greater flexibility - working from anywhere and maintaining a healthy work-life balance to the envy of employees. They are rarely stuck at a job but changing several jobs in the course of their lifetime. If they want, they can work remotely from anywhere in the world.
Diving Into The Gig Economy
When it comes to entering the gig economy, it isn't particularly rosy, either as a company or skilled worker looking for a job. The first step, most times, is joining a reliable platform where you can offer your services, or perhaps recruit skilled workers.
If you're a professional or a skilled worker looking to earn more freedom and money, the gig economy might be an ideal route to take, and using reliable platforms like Field Engineer is never a bad call.
After registering on your favorite platform, you might discover that competition is the order of the day, which compels you to stand out and build an impressive portfolio that convinces your prospects.
For businesses, to entails ensuring that the right talent is hired for the right job.
The Pros and Cons of the Gig Economy
There are tons of pros and cons when it comes to working in the gig economy. For employers, the gig economy presents a win-win situation since they don't need to worry about costs like office space, training, and benefits such as insurance and pensions. For gig workers, on the other hand, it is a rollercoaster of pros and cons.
Pros of gig work
Unlike traditional employees, gig workers have more flexibility when it comes to the type of project they do, when, how, and where they do it. They could prefer to work from home, from a train, or a co-working space of their choice.
This flexibility allows them to maintain a healthy work-life balance, a luxury most employees can't afford. This flexibility makes gig workers an admirable species since they decide the approach they use to complete a specific task given.
Many times, gig workers can work at hours most suitable to them, and on days that work perfectly for them. Some gig workers prefer to work early in the morning, some, however, prefer to work either in the afternoon or at night.
Another commendable feature of the gig economy is the independence to complete their work on their terms and pace with nobody to look over their shoulder. Usually, gig workers are assigned a task and immediately left alone to complete it.
This sense of independence cannot be traded for anything, thereby giving gig workers the confidence to handle a task the way they deem fit.
3. Low commitment
When a gig worker happens to disagree with the work they're doing, or perhaps has a bad relationship with their chosen company, it is pretty easy to leave and take up employment elsewhere. Since most gig workers rarely depend on one client, but as many as they could handle, it makes leaving much easier since they have other companies or professionals they're working with.
4. No Monotony
Gig workers may have a variety of work to complete, making their work somewhat fun instead of a similar, monotonous task to be done each day. Every project or task they handle is different, making the work interesting.
Gig workers, in the long run, discover that they get better, more creative thanks to the variety of tasks they take on each day. They are always excited to take on more jobs daily since variety is the spice of life.
When it comes to pay, it varies from company to company, and the nature of work. Some gig workers earn less, while some are paid more since they aren't being paid benefits in addition to their salary.
They typically charge an hourly rate for their time, or a flat rate depending on the nature of the project they are assigned to. That means they have control over their hours and get paid more for working extra hours.
That includes meetings and phone calls, in addition to the regular tasks they were assigned. Working on a side hustle or obtaining a higher education as a gig worker is possible due to the flexibility the industry offers.
Cons of the gig economy
Though there are tons of pros associated with the gig economy, it is not without a few cons that make it difficult. The cons are no doubt some of the reasons many might shy away.
1. No Benefits
For the majority of gig economy work, there are no benefits since the gig worker is not a full-time employee. This is undoubtedly where employees have an upper hand when compared to giggers.
However, some businesses offer benefits to their long-term contractors as a form of motivation, but rarely. That compels gig workers to plan on budgeting for private insurance, plan retirement and decide how much of a paycheck to put forward each month.
There are numerous options for gig workers to save, from IRAs to 401(k) and other money-saving options. Since most companies will not cover this for their gig workers, they have to talk to a financial advisor to find the ideal path that is best to pursue.
Freelancers or independent contractors don't go to the office, and they tend to miss out on the social elements that they might find interesting. Unlike employees that might host a party during the end of the workweek, gig workers often find themselves alone and detached from the outside world.
Either they are working from their home office, bedroom, or from a coworking space. Many might argue that this is the flexibility that the gig economy promises. However, it can cause gig workers to feel left behind and isolated.
3. More Stress
Gig workers are always on their toes, working to find their next gig or prepare for changes in their current one. Since there is no job security, this could lead to stress, and even anxiety, unlike employees with their numerous benefits and job security.
There are times when gig workers face unexpected changes that could be unpleasant, such as being let go or a change in their salary. To battle this uncertainty, gig workers make sure they don't rely only on one company - putting all their eggs in one basket.
When the inevitable strikes, they can easily move on since they have other contracts to fall back on. However, it adds to the stress of being a gig worker, knowing that there is no job security.
4. Taxes and Expenses
Gig workers are not full-time employees, and thus their employers don't withhold income tax or Social Security taxes from their salary. But, they must make quarterly estimated taxes to the IRA based on how much they earned.
Also, they are responsible for buying their work-related equipment such as computers, smartphones, and cars. To stay afloat, gig workers find they need to work with an accountant or software tax preparation services.
Pros and Cons of the Gig Economy for Businesses
- Lower cost
- Able to scale quickly
- The diverse pool of flexible workers
- Less reliable workers
- Tight regulations on contractor status
The gig economy comes with an excellent slide to it, but not without a few volatile sides that make it somewhat unappealing. Some people are striving well in this system, while some still find it challenging to make ends meet.
The gig economy is ever-growing, and holds great potential for companies and professionals looking for skilled work that cannot be done in-house. To continually maintain a great relationship with your gig workers, paying them instantly and fast is the key.
That is why companies like Adrecord, Memmo, TaskRunner, and Woshapp use GigaPay to instantly pay their gig workers.
Instead of waiting days, they get paid in a matter of minutes. No doubt, this motivates them to bond with your company and keep delivering impeccable services that will help your service marketplace grow.
Go ahead and give us a call, or perhaps book a demo. We'd be excited to show you how our payment system works. It is unbelievably easy to use.