As the modern workforce continues to transform, an increasing number of workers are departing from the conventional model of full-time, office-based jobs with set hours. Instead, they are gravitating toward the flexibility and autonomy offered by the gig economy, where freelance, temporary or contract-based work arrangements have become more prevalent.
The gig economy refers to a labor market characterized by short-term contracts or freelance work, as opposed to permanent employment. Workers are paid upon completion of each “gig.”
Although the concept of temporary work has existed for decades, these alternative work arrangements gained widespread adoption in the early 2010s due to the proliferation of online platforms like Uber, Upwork and Fiverr that enabled matching freelance labor with companies or individuals that needed their services.
In recent years, there has been an emerging shift in when, where and how people are choosing to work. Instead of being a loyal, corporate drone, scratching and clawing their way up the corporate ladder, more and more Americans are exploring the benefits of gig work.
According to the 2023 Freelance Forward survey conducted by the Upwork Research Institute, which polled 3,000 professionals across the United States, a remarkable 38% of labor participants—64 million Americans—engaged in freelance work over the past year. This figure represents an upswing of 4 million total professionals compared to the previous year’s data.
The study further revealed that American freelancers collectively contributed an astonishing $1.27 trillion in annual earnings to the nation’s economy.
White-collar workers in the gig economy can potentially earn competitive salaries, and in some cases, even exceed what they might make in a traditional job. However, it requires focus, hustle and strategic marketing of your skills. Gig workers must carefully weigh the tradeoffs to decide if it is the right fit for their situation and goals.
The Benefits Of Gig Work
The Upwork research found that the vast majority of freelancers have an extremely positive outlook regarding the gig economy landscape when it comes to career development (80%), income (76%), future job prospects (74%) and personal growth (84%).
Looking ahead, a remarkable 85% of freelancers believe that the best days for freelancing are yet to come, indicating a strong belief in the continued growth and prosperity of the gig economy.
Flexibility and Autonomy
Flexibility and autonomy are main drivers of professionals entering the gig economy, as it awards them the opportunity to be their own bosses. Gig workers have the entrepreneurial freedom to dictate their own schedules, workload, geographic locations and what projects or tasks they engage in.
Since freelancers are self-employed and not tied to a specific location or office, these workers are able to embrace the digital nomad lifestyle, traveling and experiencing new cultures while still earning an income. They can work from anywhere in the world, as long as they have a reliable internet connection.
While employers are requiring staff to return to the office, 60% of freelance work remotely.
Expansive Work Experiences
As a gig worker, you have the opportunity to work on a wide range of projects for different clients across various industries and sectors. This exposure allows you to gain diverse experiences, learn new skills and expand your knowledge base.
High Earning Potential
In a separate Upwork survey, “financial gain” was a top motivator for freelancers, as 83% reported that it allows them to “earn extra money.” For some individuals, gig work serves as a supplemental income source. Since gig workers can engage in various simultaneous employment opportunities, these professionals can have multiple sources of income and revenue streams, driving up their earning potential. Since gig workers are their own bosses, they can also set their own rates.
High Job Satisfaction
Gig employees demonstrate high levels of job satisfaction. A majority of freelancers report experiencing heightened levels of intellectual stimulation and overall happiness from their gig work.
Nearly two-thirds (66%) of freelancers indicate that they feel more mentally engaged and challenged by the work they undertake as independent contractors. Furthermore, an even larger proportion (68%) express a greater sense of contentment and satisfaction derived from their freelance pursuits, surpassing the levels of happiness they experienced in conventional job roles.
Improvement of Overall Health
More than half of gig workers report an overall improvement in their general health since beginning freelance work.
The flexibility that comes with being an independent contractor allows them to have a healthier balance between their professional and personal commitments.
Since gig jobs can be performed remotely, this saves time and reduces any commuting-related stress. The personal control over their own workload allows them to manage their time more effectively and avoid burnout, which can positively impact their overall well-being and work-life balance.
The Downside of The Gig Economy
It’s essential for professionals to carefully consider the potential drawbacks of participating in the gig economy and plan accordingly to mitigate the risks and challenges faced with this type of work arrangement.
No Employer Benefits
One of the major cons of being a gig worker is the lack of traditional employment benefits, such as health insurance, paid time off, retirement plans and other perks that full-time employees typically receive. Gig workers are responsible for securing and paying for their own benefits out-of-pocket.
Lack of Steady Pay
Gig work often means an inconsistent and unpredictable income stream. There is no guarantee of steady work or pay, which can lead to financial insecurity and stress, especially during periods of low demand or economic downturns. Gig workers must constantly search for new opportunities and manage their workload accordingly.
Lack of Job Security
Gig workers have no job security or long-term employment contracts. They can be let go or have their assignments terminated at any time, without the protections and rights afforded to traditional employees. This lack of stability can be challenging, especially for those who rely on gig work as their primary source of income.
Tax and Expense Burdens
Gig workers are classified as “independent contractors,” which means they are responsible for paying their own taxes, which include a self-employment tax, federal income tax, state income tax and quarterly taxes. They must also cover all work-related expenses, such as equipment, supplies and transportation costs.
Hiring Biases
When a gig worker decides they want to pursue a traditional career path, they may face hiring biases as a job seeker. Some hiring managers have a prejudice against contract workers. When they view a résumé with numerous, frequent job switches over the years and back-to-back contract roles, they generally take a hard pass on the applicant.
Hiring managers are skeptical about “job hopping,” even though they are fully aware of the gig economy trend. A contract worker’s résumé often lacks a clear career progression. The temporary nature of their work makes it challenging for these professionals to build a long-term career or gain specialized expertise in a particular field.
Hiring managers also suspiciously question why these workers couldn’t secure full-time, permanent employment, assuming the worst about the candidate. These preconceived notions make it harder—but not impossible—for a contractor to become a full-time employee.
How To Embrace The Gig Economy
While the gig economy offers the potential for flexibility, high earnings and a variety of opportunities, it also comes with a price of large fluctuations in fortunes. Thoughtful planning, honing your skills and having a thick skin will help you succeed in this new gig endeavor.
Cultivate an entrepreneurial mindset as you will need to constantly sell and market your services. To drive business, you must cultivate a client base. This can be achieved by networking and joining online platforms catering to gig workers.
To earn meaningful compensation, find an area in which you have an expertise. It would be advantageous to have high-demand skills in your toolbelt, so you can request higher rates for your bespoke services. Proper recordkeeping is crucial for self-employed individuals, as it helps track income, expenses and deductions for tax purposes.
Consider investing in a home office or co-working space so you can feel established and interact with other driven, like-minded professionals, as it can get lonely working by yourself.
Source: Forbes
