Gig work, freelancers, independent contractors, and the gig economy. These are terms that are becoming increasingly relevant to the way we work in the 21st century.
Today, I want to take a deeper look at the gig economy. We’ll define some key vocabulary, look at the history and development of the gig economy, discuss some criticisms and think about the future of work!
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Vocabulary
- Gig (Noun): A temporary job or task.
- Sarah picked up a gig as a freelance writer to supplement her income.
- Freelancer (Noun): An individual who works independently, providing services to multiple clients rather than being employed by a single company.
- John transitioned from a full-time job to being a freelancer to have more control over his schedule.
- Employment (Noun): The state of being employed, where the employee provides services in exchange for compensation.
- Mark finally found steady employment as a software engineer.
- Benefits (Noun): Additional perks or advantages provided to employees beyond their regular salary, such as health insurance, retirement plans, or paid time off.
- The company offers competitive benefits, including dental insurance.
- Client (Noun): A person or organization that engages the services of another individual or company to perform a specific task or project.
- The designer works closely with her clients to deliver designs.
- Contractor (Noun): A person hired to perform specific services under the terms of a contract, often operating independently or as part of a contracting firm.
- The construction company hired several contractors to complete the project.
- Flexibility (Noun): The ability to adapt or change easily according to varying circumstances or needs.
- Working as a freelance consultant provides Maria with the flexibility to travel.
The Gig Economy, Gig Work, and Gig Workers
A few weeks ago, I released an episode looking at work culture, remote work, and the “return to office” movement (288. The End of Remote Work?).
While researching and preparing for that episode, it occurred to me that work, jobs, careers, and the economy in general have changed in more ways than simply people working remotely. The entire economy is changing, and the way people work and are employed, is developing in an interesting direction.
Compared to 30 or 40 years ago, there are millions more people working as freelancers or independent contractors.
In the past, if you had a skill, ability, or service, you would be hired by one company as an employee. An example of this would be a delivery driver.
When I was young, if you ordered a pizza for home delivery, the pizza shop would have an employee, a delivery driver, who would deliver the pizza. They were probably paid hourly and just worked for the one pizza company.
While this way of working does still exist today, there is another choice. Rather than working exclusively for one company, delivery drivers can instead be independent. Using apps and technology, they can take jobs for a variety of different companies and be paid per job or per “gig.”
This is an example of gig work. Today, I’d like to talk about and discuss the rise of the gig economy and investigate some of the criticisms and future possibilities of this style of work!
Definitions: Gigs, Gig Workers, and the Gig Economy
First, let’s look at a few definitions to help us understand this topic.
In the context of “gig work” and the “gig economy”, a “gig” refers to a temporary, flexible, or freelance job or task. It can be a specific project, assignment, or piece of work that is completed within a certain timeframe or scope.
For example, I used to occasionally tutor English on a website called Cambly. Students would pay Cambly a monthly fee, and then Cambly would pay me for any work I did. I wasn’t an employee, but I was paid per “gig” or per class. If I taught a 20-minute class, they would pay me for 20 minutes’ worth of work!
Gig work usually involves short term and irregular “gigs”, which are often arranged or facilitated by online platforms or applications.
A gig worker is an individual who engages in gig work, typically as an independent contractor or freelancer. As a gig worker, you perform tasks or provide services for clients or customers on a flexible basis.
We should probably think about the difference between an employee and a freelancer or independent contractor.
An independent contractor usually works on a contract basis (hired for a specific time frame – like one day – or for a specific project). They control their own schedule and work method, have their own tools and equipment, and pay their own taxes and benefits.
An employee works under the control of a company. They follow a set schedule determines by their employer, use tools and resources owned by the company, receive benefits like a pension, and usually their tax is dealt with by the company.
This is all part of the wider gig economy.
The gig economy is the name given to a labour market dominated or characterised by lots of gig work and gig workers. In many cities around the world, the gig economy is growing.
In the gig economy, individuals have the flexibility to choose when, where, and how much they work, but they often lack benefits and employment protections associated with traditional full-time employment.
Examples of Gig Work
The gig economy encompasses a wide range of industries and sectors.
A stereotypical example that most people think about when they hear “gig work” is being a delivery driver. A delivery driver who works for food delivery services like DoorDash, Grubhub, or Deliveroo is engaged in gig work. They pick up orders from restaurants and deliver them to customers’ homes or offices, earning income based on the number of deliveries completed.
I used to tutor online, through a platform, which was considered gig work. In fact, many individuals who provides tutoring services through online platforms are engaged in gig work. Tutors may teach various subjects to students of different ages and academic levels, conducting lessons remotely, and receive payment per class.
Many graphic designers are also gig workers. They often work on a freelance basis, taking on projects such as designing logos, marketing materials, or website layouts for clients. They may find clients through online platforms, referrals, or networking and charge on a per-project or hourly basis.
At the higher end of the pay scale, there are many highly qualified professionals who work freelance and can be considered to be part of the gig economy as well.
For example, experienced professionals in fields such as management, strategy, or finance may work as independent consultants, offering their expertise to businesses on a project-by-project basis.
Skilled software developers or programmers may take on freelance or contract gigs, working on projects such as developing custom software, building mobile apps, or creating websites for clients.
Universities also use the gig economy, hiring part-time professors and academics to teach classes. Rather than being full time employees, many highly qualified professors are hired as contractors – meaning they are not paid over the summer and winter breaks, and given no help with their research!
History of the Gig Economy
The concept of gig work itself isn’t entirely new. Various forms of freelance and temporary work arrangements have existed throughout history. However, the modern gig economy, as we understand it today, was driven by technological advancements and changes in labour markets during the 20th and 21st century.
Before the widespread use of the internet, freelance work and temporary employment arrangements existed mainly in industries like construction, entertainment, and consulting.
Actors and musicians, for example, would be hired for one project, or play, or performance. In fact, a band performance is called a “gig” in English.
These early freelancers would use personal networks, word-of-mouth referrals, or agencies to find work. And if a company needed temporary workers or some help completing a project, they would contract with an agency to find workers.
The emergence of the internet changed things. Early online marketplaces like Craigslist and eBay provided platforms for individuals to offer services or sell goods independently. Freelancers also started using online platforms to find work.
Around the mid-2000s, smartphones and high-speed internet access became increasingly common. Digital platforms and apps offering regular gig work opportunities began to appear. Companies like Uber (founded in 2009), TaskRabbit (founded in 2008), and Airbnb (founded in 2008) pioneered the gig economy model.
They connected individuals directly with customers or clients for specific tasks or services. They used technology to match service providers and consumers, making it easier for people to find work or services on-demand.
In recent years, the gig economy has been expanding rapidly. As technology improves and remote work has become easier, more and more industries, including transportation, accommodation, delivery, and food services have been able to move towards freelance and gig work.
According to Upwork (a gig economy platform) up to 38% of the US workforce could be freelance or gig workers (at least part time).
Why? Why has the gig economy been growing?
Factors behind Gig Economy
For Employers
Let’s start with why gig work is becoming increasingly popular for companies.
First, employing gig workers can be cost-effective for companies. It can be a way of saving money and reducing expenses. Most of the time a company will only pay a freelancer for the specific tasks or projects completed. For example, paying an artist for a logo design.
They can do this without incurring the costs associated with traditional full-time employees. This includes expenses such as benefits, pension and insurance payments, office space, equipment, and training.
I’m from the UK. If you were to hire me as a full-time English teacher, you would need to pay me at least the minimum wage, pay part of my national insurance, probably pay into my pension, buy the equipment I need to teach, and give me at least 4 weeks’ vacation a year as well as sick leave for when I’m ill. This is UK law for employees.
However, when I was teaching online, I was freelance. The company that hired me let me choose my own hours and own students, and in doing so didn’t need to give me any of the benefits above – just a fixed fee for the class I taught. This saved them a lot of money!
The gig economy also provides companies with flexibility and the ability to scale their operations up and down quickly. Hiring an employee is usually a long-term commitment. But many companies don’t want to, or can’t afford to, add extra employees.
Gig workers often possess specialized skills and expertise that may not be part of a normal worker’s skillset. If you need an artist, designer, software engineer, social media content creator, or copywriter, it can often be more efficient to pay a specialist to do this job for you rather than giving extra tasks to your employees (who are probably not as good at doing the job).
You can also hire a gig worker much quicker than a recruiting a full-time employee. If you go onto a platform like Fiverr and look for a freelance script writer, you will find thousands of qualified candidates who are available to start working immediately.
For Employees
You can now see why companies have been using the gig economy, but what about workers? Why do more workers want to become freelance and join the gig economy?
Flexibility is often a big reason. Gig work offers individuals the freedom to choose when, where, and how much they work. Flexibility allows you to balance work with other commitments, such as family responsibilities, education, or personal interests.
If you want to become a digital nomad, or work remotely for a foreign company, often the only way to do this is by becoming self-employed and working freelance!
Gig work also enables people to diversify their income streams. Many people with full time jobs also engage in the gig economy on a part time basis for a little extra money!
Freelancers and independent contractors are essentially running their own small businesses. Many people, including myself, enjoy this challenge and the ability to be your own boss. All the money I make is mine (apart from the taxes of course) – if I was making my podcast for a company this would not be the case!
Many gig jobs can be performed remotely, allowing freelancers to work from anywhere with an internet connection. This opens up opportunities for individuals to live and work anywhere, including rural areas or places with a lower cost of living.
And getting started in gig work is often quick and easy! The sign-up process just takes a few minutes, you often don’t need much extra equipment or training.
Criticisms of the Gig Economy
As you probably realise by now, the gig economy seems to offer opportunities to both workers and companies, but there also some clear issues and problems. Let’s take a look at a few of these criticisms.
First, gig workers are usually classified as independent contractors rather than employees, which means they may not be entitled to benefits such as minimum wage, overtime pay, healthcare, retirement plans, and unemployment insurance.
If you are sick, you don’t get paid. You can be “let go of” or “fired” instantly for no reason. You need to plan for your own future and pay your own pension and insurance contributions without the help of a company.
In fact, freelancers and gig workers lack job security and stability. An artist may have a really busy month designing T-Shirts for clients, and then the next month struggle to find any work.
This makes it difficult to plan for the future, but it can also have other issues. For example, I have struggled to apply for reputable credit cards and open bank accounts at mainstream banks due to being a freelancer. I don’t really have any long-term contracts, and it is hard to predict future income based off Patreon subscriptions and sponsorships!
Companies have been accused of exploiting workers by setting low pay rates, imposing unfair contract terms, and having significant control over working conditions without providing benefits or protections.
Many companies treat freelancers as if they are employees, but don’t pay them or give them the same benefits. I’ve heard of independent IT contractors being told to work at specific times and attend department meetings even though they are not actually part of the department.
The growth of the gig economy has raised concerns about its impact on traditional employment. Some critics argue that gig platforms give employers the opportunity to replace full-time employees with gig workers to reduce costs.
Future of the Gig Economy
What does the future hold?
I think the gig economy is likely to continue growing. More people and more companies are going to find themselves relying on gig work and gig workers.
Advances in technology, such as artificial intelligence and automation will allow gig work to spread into new industries and sectors. Already, there are platforms online offering opportunities for doctors, therapists, lawyers, and accountants to engage in gig work!
And as it continues to be cheaper to hire gig workers, both companies and workers may be pushed into the gig economy.
At the same time, governments are definitely going to scrutinize the gig economy more closely. In particular, they will be making sure that a freelancer is really freelance, and not simply an employee not being given the correct benefits.
California, for example, has introduced strict laws on contractors and the gig economy. And for this reason, many companies will no longer hire freelancers based in California!
The future of work may involve hybrid models that blend traditional employment with gig work. Companies will likely use both full-time employees and gig workers. And workers may look to the gig economy for extra income.
And the gig economy is likely to become increasingly global. Gig workers and clients will collaborate across borders and time zones. But again, this will bring problems. In the UK, for example, the minimum wage is around £11 an hour. Why would a company hire someone at this rate or higher, when they could find an equally skilled person living in another part of the world and charging half the price!
However, surveys suggest that many people engaged in the gig economy are happy. A majority of freelancers and contractors are happier and more satisfied than when they were full-time employees.
Perhaps, regardless of fewer workplace benefits and chances of career progression, the flexibility and independence of the gig economy is enough to make people happy!
Final Thought
The gig economy as become a significant shift in how people work. It offers both opportunities and challenges for workers and companies.
As the gig economy continues to grow and evolve, it is bringing changes in employment and ways people are employed. Freelancers and independent contractors are becoming increasingly common.
While the gig economy offers flexibility and independence to workers, there are also concerns about job security and benefits.
Looking ahead, the future of work may see a blend of traditional employment and gig work, with governments likely to closely monitor and regulate the gig economy to ensure fair treatment of workers.
What do you think? Are you a freelancer, contractor, or part of the gig economy? What are your thoughts on the gig economy?
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