The “gig economy” is an often-used term in the freelance work sphere meant to describe the altered way people view but also perform work today.
And, it was worth as much as $3.7 trillion on a global level in 2018, with a growth trend that promises an even larger share in the future.
To help you get a full grasp of this crucial labor market, here’s everything you need to know about the gig economy, from the basic definitions, its growth potential and importance, most lucrative gigs available, and the potential problems it brings to everyone involved in it:
- The gig economy basics
- What is the gig economy? What does “gig” mean in the gig economy?
- How does the gig economy work?
- Examples of gig economy workers
- When was the term gig economy coined? When did the gig economy begin?
- How many workers make a gig economy?
- Is the gig economy growing? Why is the gig economy growing?
- Why is the gig economy important?
- Joining the gig economy
- What are gig economy companies and platforms? And what does it take to join?
- What are the highest-paid gig economy jobs? And how do you land such gigs?
- How to join the gig economy – the checklist
- The problem with the gig economy
- The advantages and disadvantages of the gig economy
- Are gig economy workers employees?
- How the gig economy hurts the gig workers and the companies?
- And how the gig economy hurts workers and consumers?
The gig economy basics
What is the gig economy? What does “gig” mean in the gig economy?
The “gig economy”, by definition, is a work environment where the work provided or required revolves around temporary employment and contracts, as well as short term projects and services – i.e. “gigs”.
The “gig economy” involves three main components:
- The workers are paid by the “gig” – Gig workers are paid by one-time-only specific tasks, projects, or shifts – instead of receiving hourly or salaried compensation. That’s why the “gig economy” is also often referred to as the “freelancer economy”, “independent workforce”, “agile workforce”, and “on-demand economy”.
- The consumer request a specific service, and the gig workers provide it – This service may be a ride to a destination, a product or food delivered or any other similar service provided. That’s why the “gig economy” is also often referred to as the “sharing economy” or the “peer economy.
- Specific companies connect the workers with the consumers – Specialized gig economy platforms serve as mediators between workers and consumers. That’s why the “gig economy” is often referred to as the “platform economy.”
How does the gig economy work?
The gig economy includes all professionals who are freelancers, project-based workers, part-time hires, temporary hires, or independent contractors.
Usually, the person looking for the services of such professionals posts the general description and requirements of the job on an online job board, freelance website, or even in the local newspaper.
Then, the professionals interested apply for the job.
All interested job candidates go through a combination of CV scrutinization, face-to-face, phone, or Skype interviews, as well as skill tests meant to help determine who has the best qualifications, experience, and predispositions to perform the requested job as required.
As an alternative, the matter of who performs the job may be on a first-come-first-serve basis, if the clients contact several professionals from a freelance website themselves, without posting the job. Or, it may simply be a matter of proximity. For example, a passenger requests a ride from a ride-hailing service platform and the driver who is currently located closest to the passenger comes to pick them up.
In light of all that, 3 main participants of the gig economy emerge:
- The consumers 🧔👩🦰 – they request the services
- The gig workers 👨🦳👩 – they provide the services
- The gig work platforms 🧔👩🦰 🔄👨🦳👩 – they serve as a mediator between the consumers and the gig workers
Examples of gig economy workers
Many specific professions are a part of the gig economy:
🎵 Musicians – Hired to play at a wedding, birthday, or on a specific venue.
📰 Journalists – Hired to write a specific piece for a magazine.
🚚 Truck drivers – Hired to deliver a load from one location to another.
🖼️ Artists – Hired to paint murals, design brands, handle document layout for books or magazines.
👩🏫 Tutors/teachers – Hired to tutor kids or adults for a specific test, on a specific subject, or on an area of a specific subject.
👶 Babysitters – Hired to supervise and take care of children while the parents or legal guardians are away.
🏠 Care-takers – Hired to look after a building or house while the owner is absent.
📷 Photographers – Hired to photographs weddings, birthdays, or specific events.
🎥 Videographers – Hired to film weddings, birthdays, or specific events.
🏡 Landscapers – Hired to arrange a landscape or garden in an attractive manner.
🖥️ Tech repair professionals – Hired to repair a piece of tech equipment, like a printer or a laptop.
As evident, the listed professionals are usually, by definition, called to provide one-time services.
People only need a music band, photographer, and videographer for their weddings once.
When someone’s laptop breaks down, they’ll likely need just a one-time visit from the local tech repair person.
Of course, tutors and babysitters may be required once or multiple times. But, in either case, their services will still be requested for a limited time period only, considering that the children will outgrow their babysitters, or eventually master the tutored subject or pass the exam.
When was the term gig economy coined? When did the gig economy begin?
The mere concept of “gig economy” appeared as early as the 18th century – although it won’t be referred to as such for another two centuries.
Back in those days, the “gig economy” was a result of unpredictable employment patterns: many people had to work multiple jobs, and take every opportunity to help them earn a living.
The actual term “gig economy” originated from the name for live musical performances – in that sense, the term “gigs” was first used by jazz musicians in 1915, or even 1905.
In today’s sense, the term “gig economy” was first used and coined during the great recession of 2009, by journalist Tina Brown. As Brown described it, the recession urged people to pursue “a bunch of free-floating projects, consultancies, and part-time bits and pieces”, all in order to make ”the sum that allows them to hang on to the apartment, the health-care policy, the babysitter, and the school fees.”
Considering that it was the recession that drove people to take on part-time or temporary work, one could say that the post-2009 gig economy may have thrived for similar reasons to its unofficial counterparts from the 18th and 19th centuries.
However, with the growth and earning potential of today’s gig economy on the rise, there’s much less talk of taking on one-time projects just to earn a living. On the contrary, college-educated Americans who “dabble” with gigs may earn as much as $75,000, or more, per year.
How many workers make the gig economy?
However, these are all rough numbers – considering that anyone from babysitters to ride-hailing drivers are considered to be gig workers, as well as that many full-time professionals take on side gigs from time to time, the US government doesn’t have a full grasp of how large the US gig economy actually is. Some other estimates claim that there are as many as 75 million active gig workers.
Is the gig economy growing? Why is the gig economy growing?
In recent years, there were 5 elements that triggered the growth of the gig economy:
1. The internet has made finding and organizing gigs easier
Nowadays, with an ever-growing list of freelance websites, it’s now much easier for freelancers to find gigs. Moreover, the variety of available gigs is rapidly growing as well, and gig workers can take their pick between general and niche-specific freelance job boards, platforms, and bidding websites.
2. New technologies have made handling gigs easier
Nowadays, with new, efficient freelancer apps emerging every day to make sure freelancers track time spent on projects correctly, bill clients accurately, as well as communicate and collaborate with companies and clients remotely, the gig economy has every opportunity to thrive.
3. The number of educated professionals is decreasing
Estimates show that there will be 1.5 million educated professionals less than the US economy will need in 2020.
As a result, companies are likely to turn to a remote workforce to compensate for the skilled professionals they’ll lack locally.
This is also likely to mean an increase in the number of part-time workers, as companies will need to be more flexible in their expectations.
Moreover, a lack of official diplomas may also encourage more people to take on gigs that require no previous experience or skills, such as data entry.
4. Recessions help change the gig economy
Each time there’s a recession (most recently in 2009), the gig economy grows.
This is tied to the fact that recessions call for increased wage cuts and layoffs.
As a result, people are forced to turn to other, additional means to make the income they need, and they start taking on gigs.
On the other hand, recessions also may deflate the gig economy.
Namely, when recession strikes and wage cuts and layoffs start, the existent gig workers are the least likely to make the cut.
5. People’s work expectations and priorities are shifting
Security in terms of a predictable monthly paycheck is no longer a priority for the next generation of workers.
As a contrast, as much as 43% of the active workforce highlights a flexible schedule with a better work-life balance as the No.1 expectation in their future work careers.
And “flexibility” and “gig work” are practically synonymous.
Why is the gig economy important?
The gig economy has proven its enormous importance in recent times: in 2018. alone, freelancers have contributed as much as $1.28 trillion to the US economy, and $3.7 trillion to the global economy.
Moreover, some reports forecast that as much as 50% of the US population will be involved in the gig economy as early as 2027. So, the potential growth of the gig economy will only help it gain importance in the future.
Joining the gig economy
What are gig economy companies and platforms? And what does it take to join?
As mentioned, the gig economy companies serve as a mediator between workers and consumers. Some of the most popular ones don’t ask for special skill sets, or even active participation – you can be a driver or simply advertise your place for vacation rentals. In any case, they’re a great solution for
Such gig economy platforms and companies worth checking out include giants such as:
Uber is a taxi-like service that lets you become or ask for a private driver for destination driving or food delivery. According to their statements, Uber is creating as much as 20,000 jobs per month.
To become an Uber driver, you’ll need to:
- Be at least 21 years old and own a valid driver’s license
- if younger than 23, you’ll need to have at least 3 years of driving experience
- If older than 23, you’ll need to have at least 1 year of driving experience
- Own a 4-door vehicle that meets Uber requirements
- Go through a background check
Lyft and Doordash are similar alternatives.
An online marketplace that lets you offer or require lodgings around the world. As of November 2019, there are at least 4 million Airbnb listings across the globe.
To become an Airbnb host, you’ll need to:
- Be responsive to guest requests
- Accept quest requests when possible
- Avoid canceling on guests
- Keep a high overall rating as a result of previous requirements
Other popular choices include Vrbo and VayStays.
To become an Etsy seller, you’ll need to:
- Sell handmade items made by you
- Sell vintage items that are at least 20 years old
- Sell craft supplies that are handmade, vintage, or commercial
- Make sure the items you want to sell are not prohibited elsewhere or violate Etsy policies
Similar websites include Amazon Handmade and Aftcra.
An online marketplace that lets you offer or require freelance labor work locally. There are currently 27 different types of tasks available for taskers on TaskRabbit.
To become a TaskRabbit tasker, you’ll need to:
- Have a US Social Security Number
- Be over 18 years old
- Go through a background check
- Own a valid credit card
- Own a smartphone
Popular alternatives include Thumbtack and Fiverr.
An online marketplace where you can find hourly-paid projects that fit your current skills and qualifications. There are currently 5,400+ freelance projects available on the PeoplePerHour job board.
To find gigs at PeoplePerHour, you’ll need to make the best bid and proposal to a job you’re interested in.
Upwork and Toptal offer a similar gig economy experience.
What are the highest-paid gig economy jobs? And how do you land such gigs?
As evident, there are a lot of gig economy opportunities for the workers, but some pay much more than others – and, as expected, the higher-paying jobs and projects do require a special set of skills.
Here are the top 5 highest paying gig economy jobs you can currently find online:
- Deep learning/Machine Learning jobs ($115.06/hour)
- Blockchain development jobs ($87.05/hour)
- Robotics ($77.46/hour)
- Ethical hacking ($66.63/hour)
- Cryptocurrency ($65.37)
1. Deep learning/Machine Learning jobs ($115.06/hour)
What’s it about: Deep Learning is a specific Artificial Intelligence (AI) function aimed at imitating the way the human brain works – your job is to develop and maintain a system that processes data, creates, and follows specific patterns involved in decision making, all similar to the human brain handles these actions.
Qualifications and skills needed to get the gigs:
- The knowledge of the machine learning theory
- The knowledge to use statistical inferences and decide whether a deep learning model is working or not
Places to find Deep Learning/Machine Learning jobs: Upwork, Toptal, Stack Overflow, GitHub, Scalable Path, PowerToFly, LinkedIn, Indeed, etc.
2. Blockchain development jobs ($87.05/hour)
What’s it about: Blockchain developers carry out all work related to blockchain protocols, including research, analysis, design, as well as execution and maintenance.
Qualifications and skills needed to get the gigs:
- The knowledge of programming languages C++, Solidity, Python, and Ethereum
- Previous experience with cryptocurrency payments
- Strong analytical abilities
- The knowledge of blockchain protocols
Places to find Blockchain development jobs: Crypto. jobs, Blockchain Headhunters, Upwork, LinkedIn, Bitcoin.com, Crypti Careers, Blockew, Blockace.io, etc.
3. Robotics ($77.46/hour)
What’s it about: Robotics specialists are charged with creating concepts, crafting designs, and modeling both the mechanical and electricals components of robots.
Qualifications and skills needed to get the gigs:
- A degree in mechanical engineering, electrical engineering, or computer science
- Proven experience in 3D modeling
Places to find Robotics gigs: FlexJobs, LinkedIn, Upwork, SimplyHired, Indeed, etc.
4. Ethical hacking ($66.63/hour)
What’s it about: Ethical hackers are in charge of spotting vulnerabilities in systems in order to prevent potential malicious hackers from entering and taking advantage of the said system.
Qualifications and skills needed to get the gigs:
- Bachelor’s degree in computer programming, at the least
- Special certificate to become a Certified Ethical Hacker (CEH)
- Attention to detail
Places to find Ethical hacking gigs: Indeed, Upwork, FlexJobs, LinkedIn, etc.
5. Cryptocurrency ($65.37)
What’s it about: Build new payment tools, or integrate already-existing payment tools into apps and websites.
Qualifications and skills needed to get the gigs:
- The knowledge of programming languages C++, Solidity, Python, and Java
- The knowledge of the Solidity programming language, in order to help you handle Ethereum blockchain
- Proven experience with setting cryptocurrency payment systems
- Attend cryptocurrency/blockchain training
- Degree in mathematics, data science, or CS
Places to find Cryptocurrency gigs: Same as the places where you’d look for Blockchain development jobs. Also, Guru, FlexJobs, Toptal, Upwork, LinkedIn, etc.
How to join the gig economy – the checklist
No matter whether you’re pursuing gigs that require a special set of skills or not, you can let the following checklist to help you out when looking for ways to join the gig economy:
- Use your existing skills sets as a starting point
- Test the waters with a side hustle, before committing to the gig economy full-time
- Create profiles on various freelance platforms
- Tailor your pitches when contacting potential employers
The problems with the gig economy
The advantages and disadvantages of the gig economy
GIG ECONOMY PROS
According to gig work enthusiasts, here are the most common benefits of pursuing the gig economy – for both the gig workers and companies:
Gig economy pros for the gig workers
- Better flexibility
- You can choose your work hours
- You can choose where you work
- You can choose how you’ll work to get the desired effect
- Higher independence
- You can choose your jobs
- You don’t have to work in an office
- No one to look over your shoulder
- You make up your own schedule
- You choose your own priorities
- Larger job variety
- You don’t have to settle for one type of jobs
- You don’t have to settle for one type of projects
- Potential higher pay
- You can choose your own hourly rate
- You can choose your own amount of workload
- You can charge for your time as you need
The gig economy pros for the companies
- Lower costs
- You only pay for the work provided
- You don’t pay for employee benefits
- You usually don’t pay for their work equipment
- You don’t pay for their workspace
- You don’t have to cover onboarding costs
- Larger workforce pool to choose from
- Find the talent you need, no matter the geographic location
- Easier to find people to work late at night
- Easier to find people to work early in the morning
- Easier to find people to work during the weekends
- Quicker scaling
- It’s easier to hire new professionals when you need them
- It’s easier to hire people to help out on specific projects only
GIG ECONOMY CONS
In addition to the benefits, there are some disadvantages you might want to consider before embarking into the gig economy – for both the gig workers and companies:
The gig economy cons for the gig workers
- No employee benefits
- You’ll need to cover your own insurance
- You’ll need to make your own retirement plans
- You’ll get no PTO
- No worker safety & protection
- More expenses
- You’ll likely need to pay for your own workspace
- You’ll likely need to pay for your own work equipment
- You’ll need to handle your own taxes (about 25-30% of each paycheck)
- No colleagues to socialize with during break time
- No colleagues to go to lunch with
- No company culture to participate in
- More stress
- More worries about expenses
- More worries about having a steady amount of work
- A lot of the gig arrangements are based on “at-will” statements – the employer may terminate the contract unexpectedly
The gig economy cons for the companies
- Less reliability
- A higher chance that the gig workers will back out at the last minute
- Possible less devotion to work on the part of the gig workers
- The risk of working with people you don’t know
- Tricky contract regulations and practices
- Understanding all the state-based contract regulations may be demanding
- A lot of paperwork
- A lot of the gig arrangements are based on “at-will” statements – the gig worker may terminate the contract unexpectedly
Are gig economy workers employees? How are they classified?
The answer to the question of whether economy workers are independent contractors or employees is still an unclear one.
By the definition of their tasks, roles, and the length of time their services are needed, economy workers are closer to independent contractors(1).
As such, they are not entitled to company benefits.
However, countries like Canada and Spain have defined a new category of gig workers – dependent contractors (2).
Dependant contractors are gig workers who earn most of their income from a single source (at least 75%, in Spain, and at least 80%, in Canada).
These dependant workers get at least some company benefits – some of these benefits include minimum rest periods and collective bargaining.
However, one US state, California, has made the effort to classify economy workers as employees (3), officially.
Namely, the California Senate passed Assembly Bill 5 on September 10, 2019, in an effort to provide a reliable test that shows whether an employee is an independent contractor (liable to 1099 tax forms) or an employee (liable to W2 tax forms).
All gig workers who pass the test to be employees are entitled to receive company benefits.
How the gig economy hurts the gig workers and the companies?
We touched upon the problem of the gig economy in the previous subheading about the proper classification of gig workers.
Here’s the problem in more detail:
- Classifying all gig workers as independent contractors hurts the gig workers. It means they are not entitled to any company benefits, even if they contribute to one company as much as any other full-time employee.
- Classifying all gig workers as employees hurts the companies. For example, Uber is an unprofitable company that now faces enormous costs in the wake of California’s new bill, as they’ll have to treat all their drivers as employees they now need to pay benefits to. No matter whether the drivers are committed “full-time”, or involved sporadically.
The “dependent contractor” classification is currently valid only in Canada and Spain, but when compared to the current classifications, it seems worth the consideration on a more global scale.
In any case, the matter of gig worker classification is far from over. For example, Uber, Doordash, and Lyft are working on a way to bypass the new Californian classification –they are campaigning to undo Assembly Bill 5 bill in 2020. And, with the growth of the gig economy, more official law changes and additions are probable.
And how the gig economy hurts the gig workers and consumers?
Although it may not be apparent at first, the gig economy hurts consumers as well.
Experienced specialists for deep learning and robotics, as well as qualified truck drivers are one side of the gig economy medal.
But, there is another side to the same medal.
Namely, some gig workers may not be trained enough to successfully carry out the gigs they were hired to do.
What’s more, not all gig workers are worth the trust.
Some drivers may drive 15+ hours per day, as there are no official regulations that limit the number of hours they are allowed to drive – and, despite their best efforts, they may endanger themselves and their passengers.
Moreover, Lyft and Uber-related assaults around the globe are not uncommon – on both the side of the drivers and the passengers.
All the evidence shows that the gig economy will only gain traction in the future – luckily, landing a place in the gig economy is relatively easy.
But, further measures need to be made in order for it to be beneficial for all parties involved.
The main needed measure that emerges is the proper classification of gig workers – one that ensures that gig workers are properly secured, that the companies get value from their work, and that the consumers get what they paid for.
Luckily, the continuous growth of the gig economy also triggers a need for further legislation and improvements, so a better, more favorable arrangement for all is likely still in the cards for the future.