A study from Intuit predicts that by 2020, 40 percent of U.S. workers will be independent contractors. Everything from digitization to millennials craving flexibility and work-life balance contributes to this fast-growing sector of the economy. In short, it’s a big deal.
However, new research from the American Staffing Association found that 75 percent of U.S. adults have never even heard of the term “gig economy” and 29 percent don’t know how to define the term. We’re digging into the new phenomenon shaping the future of work.
Check it out:
What is the gig economy anyway?
A quick search on Google defines the gig economy as, “a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.” This hip sector of the economy is filled with buzzworthy companies like Uber, Lyft, Airbnb and Instacart. Members of the gig economy aren’t in traditional full-time jobs, they’re contractors, freelancers, consultants and side hustlers.
Why is it so popular?
With unrivaled flexibility and digital technology that allows workers to work anytime and anywhere, it’s easy to understand the appeal of the gig economy. And this flexibility makes it easier for workers to adopt a second, part-time job more ever before. A survey from CareerBuilder found that 29 percent of workers have a side hustle.
Perhaps more surprising is why employers are moving away from full-time workers. Companies not only pay the highest taxes for full-time employees, but also face the costs of providing certain benefits and protections. Hiring a full-time employee costs about 30 to 40 percent more than an equivalent independent worker. Some argue full-time employees are now viewed as less desirable — one lecturer at Babson College even tells her MBA students to stop looking for a job and join the gig economy instead.
What does the gig economy mean for the future of work?
There are many opinions out there on how the gig economy will change how we work — we rounded up some of the most popular.
Some feel that the gig economy, founded on flexibility, is actually glorifying the overworked.
Many identify that instead of creating jobs, companies are disaggregating work from a job. In fact, startup businesses used to create about 3 million jobs a year in the U.S. but that has declined to just over 2 million per year. As one Harvard Business Review article describes, “Where there were once jobs, in the gig economy there is now just work.”
Fast Company notes that for employers, the emphasis may move from full-time employee career paths, to temporary jobs focused on skill. Making space for gig work can create more competition for talent, lower hiring costs and even make organizations more agile and responsive to the market.