Alternate names: sharing economy, access economy, freelance economy
Typically in the gig economy, freelancers and independent contractors get individual gigs using an online platform or mobile app to connect with businesses and customers. Companies like Airbnb, TaskRabbit, Uber, Lyft, PostMates, DoorDash, and Instacart have relied and thrived on this process, giving significant rise to the gig economy over the past decade. In fact, a 2020 study from the ADP Research Institute found that gig work in the U.S. grew by 15% from 2010 to 2019. And by 2023, the gig economy is projected to grow to $455 billion in gross volume transactions according to a MasterCard and Kaiser Associates report.
How Does the Gig Economy Work?
While the gig economy covers many industries, the concept is essentially the same: gig workers will complete small, on-demand assignments for pay. These assignments could include developing a website, delivering food, walking a dog, or transporting a family from their home to the airport. Once the project is completed, the gig worker moves on to the next assignment. Workers who are interested in participating in the gig economy typically need to sign up to their platform(s) of choice by completing an application. Once accepted, they can choose work shifts or projects to complete. For instance, a mother working with DoorDash might decide to work for two to three hours while her children are in school, which allows her to keep her nights and weekends free. In contrast, a virtual assistant may choose to perform a traditional 9-to-5 workday for a company to complete a specific project. When the project is completed, so is their eight-hour shift.
Types of Gig Economy Jobs
There are many types of gig economy jobs offered by companies whose primary goal is to provide a convenient service to their customer base. Here are some examples of the different types of gig work and the companies involved:
Pros and Cons of the Gig Economy
Pros of the Gig Economy Explained
Flexibility: With gig work, you essentially are your own boss, and can choose how you work, where you work, for how long, and sometimes even your client base and rates.
Independence: Without direct supervision or the need to be in an office, gig workers have the ability to complete tasks on their own, the way they want to and on their own timetable. Variety of work: Instead of working in one 9-to-5 job for one boss, the gig economy provides an opportunity to take on a variety of tasks and projects that can keep you on your toes and flex your creativity and problem-solving skills in the process. Inexpensive for businesses: Freelancers can be an inexpensive alternative to hiring full-time employees, and gives business owners the opportunity to find fresh talent and offer varying rates depending on their skills.
Cons of the Gig Economy Explained
Inconsistent income: A drawback of having a flexible work schedule is the inconsistent income that comes with it. Gig work income depends on the amount of work available and you only get paid when you’re doing gigs. Lack of benefits: In general, gig workers aren’t eligible for health insurance and retirement plans, and if you get hurt on the job, you typically won’t receive workers’ compensation or disability insurance. Stress and burnout: Having a variety of work can be financially beneficial, but can also lead to stress and burnout. If you’re a delivery driver, for example, taking on multiple gigs can wear on your energy, lifestyle, and even your vehicle. Taxes and expenses: Gig workers are responsible for paying self-employment taxes and also if you earn money for gig work as an independent contractor, you may have to pay quarterly estimated taxes. You can avoid a penalty by paying enough tax on time. Gig workers are also responsible for purchasing and maintaining their tools and equipment for work, including a smartphone, phone plans, computers, and vehicles.
