Everything You Need to Know About the Gig Economy and More
Everything You Need to Know About the Gig Economy and More
April 30, 2020
You've hailed an Uber. You've booked an Airbnb. You've seen members of Nu Skin's sales force on social media. You may have even worked in the gig economy yourself.
Gig work has shifted our economy. On both ends, it's more efficient than traditional employment: Companies can pay for only the work they actually need done. Workers can stick to their specialty and, in many cases, have more time flexibility than they would at a regular job.
So why does the gig economy draw such strong opinions? Because it's the most significant change to business models in at least a century. Gig work offers flexibility and opportunity in ways that full-time work does not.
Economic change always comes with challenges. And when we don't understand something, we are usually more resistant to it. So, my goal is to shed some light on the subject so that by the time you finish reading this guide, you'll welcome the gig economy and start getting a glimpse of what’s still to come. If I'm being bold, here's one more prediction: the gig economy is just the beginning of disruption to traditional work.
What Is the Gig Economy?
Believe it or not, the gig economy existed long before full-time work. People have been paying one another to tackle specific projects for centuries, if not millennia. Only because of its recent growth has it been formally named.
In Forbes, the Young Entrepreneur Council defines the gig economy as "the rising labor market that hires temporary, contracted workers instead of traditional employees." It also notes that gig workers are pre-trained individuals who have the opportunity to work for a variety of companies in multiple capacities.
Just how many people participate in the gig economy? Roughly 57 million Americans engage in some amount of contracted work, representing more than 35 percent of the U.S. labor force. According to a report published by ADP Research Institute, which analyzed payroll data from more than 18 million workers, there’s approximately 6 million more gig workers today than a decade ago. This doesn't even include all gig workers — just 1099-MISC contractors and short-term W-2 employees. So Uber drivers, for example, aren’t counted because they’re a different type of contractor. Plus, new research indicates more people and companies are turning to gig workers with greater regularity.
It isn't just ride-sharing workers, either. Gig workers exist in every corner of the economy. Transcriptionists, bloggers, developers, marketers, personal assistants, healthcare workers, and even highly educated professionals like attorneys have joined in.
But if the gig economy is so widespread, why does it still get a bad name in some circles? Frankly, because of a few common misconceptions.
What Critics Get Wrong About Gig Work
The gig economy isn't inherently good or evil; it is merely a different way of getting work done. But I hear a few criticisms of it come up repeatedly:
1. "Nobody actually wants to do gig work. It's just a bridge between jobs."
Gig work is temporary by nature. That does not mean, however, that it's unfulfilling or that nobody wants to do it.
In fact, a Morning Consult survey found that 80 percent of gig workers are satisfied with their current role, while 59 percent said the same about their financial situation. Among all workers, those numbers look awfully similar: 78 percent and 62 percent, respectively.
Take it from workers themselves: Gig work is at least as satisfying, if not more, than a traditional, nine-to-five job.
2. "Gigs are only for 'low level' or uneducated workers."
Similarly, some critics of the gig economy argue that contract work is limited to the unskilled side of the labor force. But a look at the data tells a different story.
Workers of all education and income levels participate in the gig economy. According to Mavenlink, 47 percent of business executives would like to contract out senior-level roles. What's more, 63 percent of executives would choose gig work themselves if given the chance.
In fact, the gig economy may skew toward the more educated side of the workforce. Since many information-age jobs only require a computer and can be done from anywhere, they are more likely to be contracted out.
3. "Gig workers have no opportunities for advancement or professional development."
This misconception is flat-out false: Workers in every type of employment arrangement are ultimately responsible for their own growth and development. The only difference is that gig workers don't have to climb the corporate ladder or wait for an employer to recognize their work.
While it's true that gig workers may not have a specific "step-up" role set out for them by an employer, they can undoubtedly train themselves to take on more challenging, lucrative work. A blogger that masters whitepapers is likely to get more, better-paying projects. A culture consultant that gets results at startups is likely to sign some enterprise clients.
Gig work has its pros and cons, just like any other working arrangement. But for those who decide gig work is right for them, there are more than enough opportunities out there.
How to Get Started in the Gig Economy
The best way to think about gig workers is as entrepreneurs. Every contractor is in business for herself, just like an electrician or startup founder.
Succeeding in the gig economy isn't just a matter of making sales, though. Whether you want to work gigs for extra money on the side or as entrepreneur you need to implement these three things:
1. Start with structure.
In most states, you can be self-employed without owning an on-paper business. But there's a reason most contractors work under LLCs or other corporate structures.
There's a concept called "limited liability" that protects contractors (and other business owners) from being held personally liable for business situations. The idea is that an investor's liability — even if that investor is the company's sole owner — should be limited to his or her level of investment.
Although it's possible to "pierce the corporate veil" in certain circumstances, contractors operating under LLCs enjoy fewer risks. If the LLC is sued, the freelancer's personal assets and liberty are protected.
2. Build relationships and an online presence.
Independent contractors have to do their own business development. Although a freelance writer could technically take out a billboard or place a radio ad, most do not. Why? Because most members of the gig economy secure work by building relationships.
Some of this happens organically. A contractor who does an excellent job for one client is often referred to others in his or her network.
The rest requires networking: If you're in the gig economy, do not underestimate the importance of conferences, social events, and trade groups. Getting your name out there is the first step to making money.
If you're in the gig economy, you need to be online. Even if you're simply a transcriptionist, you need a LinkedIn profile that demonstrates the work you can do.
Better yet, set up your own website. In creative fields, this is key: You need an accessible portfolio to prove that you're worth hiring. And if you're a web developer or designer, that is doubly true.
3. Learn to say "no."
"No" is the most powerful word in a contractor's vocabulary. In the gig economy, not every job you're offered will be worth taking. And even if it is, it might not fit in your schedule. You don't need to be rude about it; explain your objection, and move on. If someone doesn't pay you a fair rate, spend that time on a client who will.
Going into business for yourself is not easy, but it is rewarding. Do the legwork upfront, know your value, and take the setbacks in stride.
The gig economy is all about flexibility. Some weeks, you might have twice as much work as others. Buckle down, make some extra money, and save a little for the lean times.
Fortunately, this works two ways: When you want to go on vacation, attend your child's baseball game, or need a mental health day, you have the power to take it. Being a business owner has its benefits.
Limitations in the gig economy
Every year, more people and companies are tapping into it. The gig economy is an evolving entity. With that comes limitations.
As you look at doing this type of work, you'll need to consider the alone time. Often you won’t go into the office and will miss out on the social elements present there. In fact, in a survey conducted by The Conversation, they found gig workers were almost twice as likely to report frequently experiencing a sign of loneliness.
In addition to isolation there are a lot of gig workers who aren’t feeling fulfilled in the work they’re doing. And who can blame them? Over six million of these gig workers are sitting in traffic, one of the worst experiences people go through on a daily basis. Some of the work is just mindless and don’t offer ways to set goals or work towards something.
3. Lack of scalability
There’s no built-in ability to scale the work or your business. A lot of the work is one dimensional. Meaning you do one job and move on to the next job to do the same thing. This can add a lot of stress to your life. If you work in a traditional job you’ll generally have the chance to build or work with a team to increase your impact and success. You’re not working in a team environment and it’s all on you.
The Future of the Gig Economy
The gig economy is an evolving entity and not all gigs are the same—some gigs provide answers to these limitations, including direct selling and other work-from-home models. Every year, more people and companies are tapping into it.
That's a good thing, but with it has brought growing pains. Workers are struggling for stability and business leaders are still learning how to get quality work out of people they do not directly employ.
In multiple ways, the gig economy is at a crossroads. Laws like California's AB5 prevent media organizations from accepting more than 35 "content submissions" per year from freelancers. The poster child for the gig economy, Uber, has publicly announced that it plans to replace drivers with self-driving cars.
But regulations and technology can also be forces for good — the catalysts that cause positive advancement and evolution. At Nu Skin, we believe the gig economy should generate new opportunities for people, not take them away. We like to see it as more of an “opportunity economy,” which is fundamentally different than how companies like Uber see it.
For companies to truly thrive in the evolving future of gig economy, they’ll need to be more considerate of the human experience; empowering people to have fulfillment in addition to flexibility.
Attacking the gig economy for its imperfections is like blaming roads for having potholes. Rather than tear up the way, why not patch it with things like portable retirement savings programs? The gig economy isn't perfect, and it may never be. But it's helped millions of people around the world build a better life, and to us, that's reason enough to invest in it.
President of Nu Skin