The gig economy refers to a variety of services performed by freelancers rather than full-time employees. This includes Lyft and Uber drivers, people who offer services on sites such as Fiverr and Upworthy, as well as the many thousands of “gigs” arranged independently. Craigslist, for example, has categories for gigs as well as jobs. According to a report by the McKinsey Global Institute, around 27 percent of working age people in the United States and Europe rely on independent work to some degree.
The idea of the gig economy overlaps with the sharing economy as more and more people work as freelancers rather than employees. There are many benefits to this approach for customers, who can book a ride or find a graphic designer or someone to deliver their groceries by using an app or signing into a website. What about the people who provide these services? For gig workers, however, there are both pros and cons to the gig economy.
Features of the Gig Economy
What, exactly, is the gig economy? The idea overlaps with the sharing economy, a broad term that encompasses services from Uber to Airbnb to Bitcoin. The gig economy is a bit more narrow, focusing on tasks that were traditionally performed by employees. Airbnb, for example, is part of the sharing economy but providing a room for travelers isn’t exactly a “gig” in the traditional sense. Since the gig economy is so new, there are no hard and fast rules. Services are often ordered via an app. This is the case with Uber, Lyft, TaskRabbit, and many others. On the other hand, people can also order gigs on websites such as Fiverr or by replying to posts on Craigslist. Gig providers on many sites are reviewed and rated, giving customers more security before ordering. Let’s look at some of the pros and cons of working in this manner.
Pros
- Create your own schedule. This is one of the biggest advantages. If you’re a night person, you don’t have to set your alarm. If you go to school three days per week, you can arrange gigs on days when you don’t have classes. Stay-at-home moms can do gigs while their kids are at school. It’s completely flexible.
- Focus on your specialty. When you offer gigs, you can specify what you will and won’t do. If you offer a gig on a site such as TaskRabbit, Fiverr or Upworthy, you set the terms. Of course, if you’re an Uber driver your basic task is fairly specific. Even there, however, it’s up to you whether to accept a certain ride or not.
- You can build up a base of loyal customers. By providing good service, you can obtain positive reviews and get a strong reputation. In some areas, you can get regular customers, giving you a certain degree of income stability. For example, some people who provide services such as writing, graphics, SEO or who run errands on TaskRabbit (or independently) have regular customers on a daily, weekly, or monthly basis.
Cons
- Lack of security. Since you’re not an employee, you have no guarantee of work. One week you might have more work than you can handle while another week you could have nothing.
- No benefits. When you work in the gig economy you don’t have benefits such as unemployment insurance, worker’s comp, overtime, or health insurance. Nor are you paying into social security, a pension fund or 401K.
- Companies can change conditions. If you perform gigs for a company, you’re at the mercy of their policies. For example, pay rates for Uber drivers change constantly depending on many factors. While this is also true, to some extent, for traditional employees, conditions tend to change more rapidly in the gig economy. And gig providers have fewer legal recourses than employees.
These are some of the benefits and drawbacks of the gig economy. It’s always hard to generalize. It’s also worth noting that some of the cons of the gig economy now apply to many employees as well. For example, many companies now hire employees on a part-time or seasonal basis in order to avoid paying them benefits. And even if you have a full-time job with benefits, there’s no guarantee that the job will last forever.
As the gig economy matures, it’s likely that people will develop more strategies and resources to make this type of work more secure. More savings and health insurance plans for freelancers are likely to emerge, for example. As with any other way of life, there will always be pros and cons to the gig economy. Either way, the gig economy continues to grow and shows no signs of slowing down.
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