Gig economy: everything you need to know about this labor market
Last updated on: December 16, 2021
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, the gig economy was worth as much as $4.2 trillion on a global level in 2020, with a growth trend that promises an even larger share in the future — as an increasing number of people become part of the gig economy day after day.
Whether they’re in it for the side income or due to the flexibility it offers, people from all over the world have embraced the gig economy as a natural addition to the ever-changing world of work.
To help you get a full grasp of the crucial labor market, we’ve covered 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.
Table of Contents
The gig economy basics
Perhaps you’re already part of the gig economy, but you use a different term to describe your work. Maybe you have been thinking about joining this work sphere, but you aren’t exactly familiar with all the facts and figures.
No matter which group you belong to, we’ve compiled all the gig economy basics to get you started. From the meaning of the concept to the examples and its future prospects, in this section, we’ll get to the bottom of all you need to know about the gig economy.
What is the gig economy? What does the gig economy look like?
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 requests 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 video 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 at 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 photograph 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.
- Delivery couriers – Hired to deliver various goods (food, packages, groceries, etc.).
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 master the tutored subject, or pass the exam.
What does “gig” mean in the gig economy? 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, to describe musical engagement.
Nowadays, the word “gig” mostly refers to temporary, side jobs.
The term “gig economy”, however, wasn’t used until the great recession of 2009, and it was first mentioned 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.
In the decades following the 2009 crisis, the gig economy brought forward an increased earning potential which attracted even college-educated Americans who, at the time, earned as much as $75,000, per year as gig workers.
However, the tables turned again after the pandemic outbreak in 2020. Millions of people jumped on the bandwagon of the gig economy – some of them because they have lost their nine-to-five jobs.
With an increased number of people switching their office cubicles for their living rooms, delivery services thrived, and the gig economy peaked yet again.
How many workers make the gig economy?
However, these are all rough numbers – considering that anyone from babysitters to ride-hailing drivers is considered to be a gig worker, 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.
💡 Want to take on some freelance gigs to complement your full-time daily job? Check out our guide on how to do it: How to start freelancing (even when working full-time).
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 much easier for freelancers to find gigs. Moreover, the variety of available gigs is rapidly growing, 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 crisis changed the way people work
Each time there’s a crisis, the gig economy grows.
Similar to the 2009 recession, the COVID-19 pandemic has demonstrated a trend of wage cuts and layoffs. As a result, people have been forced to turn to other means to make the income they need, directing their attention towards gigs.
Even before the pandemic, most gig workers had already been working from home, so the moment social distancing became standard, the gig economy rapidly grew.
4. Gig economy workers became essential to the changing society
Following the pandemic outbreak, any service that helped social distancing has proven greatly valuable. From delivering groceries and medicine to picking up restaurant orders, gig economy workers have had a great share in keeping society going.
On top of that, the number of gig workers hired in transportation-based services (TRNS) is estimated to reach 31 million by 2023. The growing numbers prove that the change we witnessed is here to stay, and the gig economy will continue to soar.
5. People’s work expectations and priorities changed
Even before the pandemic, 43% of the active workforce highlighted a flexible schedule with a better work-life balance as the No.1 expectation in their future work careers.
When the crisis took everyone by surprise, parents worldwide had to quit their full-time jobs because it became impossible to balance both 9-to-5 remote work and family. This is where the flexibility and autonomy that the gig economy brings to the table became a band-aid solution.
Why is the gig economy important?
The gig economy has proven its enormous importance in recent times: in 2020 alone, freelancers have contributed as much as $1.3 trillion to the US economy, and $4.2 trillion to the global economy.
Moreover, an MBO partners’ report shows that the overall number of Americans participating in the gig economy has increased from 38 million in 2020 to 51 million people in 2021.
Some reports even 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
If you’re having second thoughts on whether joining the gig economy is worthy of your time, we’ve compiled a list of the most popular gig economy companies and platforms to help you make up your mind.
We’ve also put together a list of the highest-paid gigs together with a landing a gig checklist to ensure you’re entirely ready to dive into the gig economy as soon as you finish reading this article.
What are gig economy companies and platforms? And what does it take to join?
As mentioned, 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, gig economy companies are a great solution for both the full-time employees looking for an extra income and the people searching for a new, primary job.
Gig economy platforms and companies worth checking out include giants such as Uber, Instacart, Airbnb, Etsy, TaskRabbit, PeoplePerHour, and Outschool
Uber is a taxi-like service that lets you become a private driver for destination driving or food delivery. According to their statements, in 2020, Uber had over 5 million drivers all over the globe.
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 be licensed to drive for at least 3 year
✅ If older than 23, you’ll need to be licensed to drive for at least 1 year
✅ Own a 4-door vehicle that meets Uber requirements
✅ Go through a background check
Lyft and Doordash are similar alternatives.
An online service that offers both purchasing and delivery services. By becoming an Instacart personal shopper, you can either shop and deliver items to the customers or be in charge of the shopping duty only. Both job types allow you to choose your own hours and don’t require any previous experience.
To become an Instacart Personal Shopper, you’ll need to:
✅ Be at least 18 years old
✅ Own a valid driver’s license
✅ Have access to a vehicle
✅ Be able to work in the US or Canada
✅ Have access to a smartphone
✅ Be able to lift 50 lbs
Similar popular alternatives are goPuff and Shipt.
An online marketplace that lets you offer or require lodgings around the world. As of December 2021, there are at least 5.6 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 cancelling 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 2,700+ freelance projects available on the PeoplePerHour job board.
To find gigs at PeoplePerHour, you’ll need to make the best bid and proposal for a job you’re interested in.
Upwork and Toptal offer a similar gig economy experience.
An online education platform that offers you a chance to market your classes to students from all over the world. To become a tutor, you don’t need any teaching credentials.
However, Oustschool advises its potential tutors to consider teaching the subjects they have experience tutoring or are interested in.
To become an Outschool teacher, you’ll need to:
✅ Be at least 18 years old
✅ Live in the US, Canada, Australia, New Zealand, or the United Kingdom
✅ Have a fast internet connection (over 3Mbps both upload and download)
✅ Be able to confirm your identity and go through a background check
Similar platforms are Varsity Tutors and Lessonface.
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 ($131.01/hour)
- Blockchain development jobs ($109.77/hour)
- Ethical hacking ($62.35/hour)
- Cryptocurrency ($52.00)
- Robotics ($44.01/hour)
1. Deep learning/Machine Learning jobs ($131.01/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 how 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 ($109.77/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. Ethical hacking ($62.35/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.
4. Cryptocurrency ($52.00)
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.
5. Robotics ($44.01/hour)
What’s it about: Robotics specialists are charged with creating concepts, crafting designs, and modelling both the mechanical and electrical 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 modelling
Places to find Robotics gigs: FlexJobs, LinkedIn, Upwork, SimplyHired, Indeed, 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 help you out when looking for ways to join the gig economy:
The advantages and disadvantages of the gig economy
Choosing your own work hours does seem like a dream come true, especially if a gig is your side job.
If you are an employer on the lookout for employees, the gig workforce pool seems to offer an easy solution.
However, with all the perks comes a list of challenges. Let’s get familiar with all the advantages and disadvantages of the gig economy so that you can decide if it’s time to become part of it.
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
If you’re having second thoughts about becoming part of the gig economy, maybe the advantages that come with being a gig worker could help you work your dilemma out.
- 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
Whether you’re considering hiring on-demand or you’ve been wondering if there’s any benefit in going over a large pool of freelancers, we’ve listed all the advantages the gig economy brings to companies to help you out.
- 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
Instead of leaping into the unknown, go over all the disadvantages that being part of the gig economy can bring forward.
- 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
- Landing a gig has become more difficult due to the gig economy market becoming significantly competitive in the more recent times
The gig economy cons for the companies
Before you rush into hiring in the gig economy, make sure to go over all the cons we’ve listed so that you can make an informed decision.
- 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
F.A.Q about the gig economy
If you’re in two minds about joining the gig economy, a bunch of questions might trouble you. We’ve covered some of the F.A.Q. to eliminate the confusion.
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). Dependent 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 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 does the gig economy hurt 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 faced enormous costs in the wake of California’s bill. They had to treat all their drivers as employees to which they needed to pay benefits— no matter whether they were 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.
The gig economy’s growth led to further changes and additions to gig worker classifications. For example, US ride-hailing services tried to undo Assembly Bill 5 by providing an alternative — Proposition 22. The primary purpose of the ballot initiative was for the drivers to remain independent contractors, with certain benefits (minimum wage, health insurance under certain conditions, etc.)
However, although California voters supported Prop 22, in August 2021, County Superior Court ruled it unconstitutional. Since the companies filed an appeal, the Proposition still remains in effect until the appeal process ends.
And how does the gig economy hurt 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.
Namely, during the pandemic year, the number of carjacking incidents and physical attacks on both Uber and Lyft drivers significantly increased in the US. For example, in Oakland, California, the police department has noticed a 38% increase in carjackings compared to 2019.
As all the evidence has shown, the gig economy could be worth your effort. Employers do not cease to look for quality candidates, and the gig labor market does not seem to lack experts.
However, with the continuous growth of the market, landing a gig may not be such a simple task anymore. Committing to constant skill development, regularly updating your portfolio, and creating profiles on freelance platforms could, potentially, do the trick.
But, bear in mind that with all the attempts to establish the proper classification of gig workers, followed by the efforts to undo the changes, the final status of gig workers still remains to be seen.
✉️ Have you already joined millions of gig workers? Are there more gig economy pros or cons worth mentioning? Let us know at email@example.com, and we might include your thoughts in this one or our future blog posts.