What is the Gig Economy?

What is the Gig Economy? In recent years, the gig economy has grown in popularity, becoming a viable alternative to traditional employment. Gig workers can decide how much time they want to put in and how many jobs they want to complete, essentially acting as their own bosses.

While gig work may sound like an attractive option compared to full-time employment, it does have some drawbacks. So, whether you’ve been looking for a second income source or you’re thinking about quitting your job to freelance, we want to help you make the most of everything the gig economy has to offer.

Gig economy definition

The gig economy is a type of free market system based on temporary, freelance, or flexible jobs. Gig workers are hired as independent contractors rather than salaried employees.

The term “gig” was originally used by musicians to refer to performance engagements. If a band books a venue, they have a gig to play. In today’s gig economy, however, a gig refers to the small contracts or short-term commitments that workers take on to make a living.

Advantages of the gig economy

Thanks to technological advancement, gig work is everywhere. You can find opportunities for every level of education and skill, from app-based fulfillment tasks to short-term professional jobs. Here are just some of the advantages the gig economy offers:

Flexibility

Many people have flocked to gig economy jobs because of their flexibility. In most cases, you’re assigned a task with a deadline. It’s up to you to decide when to work based on meeting that deadline.

This type of flexibility is ideal for people needing to work around family obligations, chronic medical conditions, travel, and other job schedules. Gig work can also give you the flexibility to work from home or in a co-working space.

Freedom

Gig workers typically have more independence than salaried employees. You won’t have a supervisor looking over your shoulder, you’re not obligated to work a predetermined schedule, and you don’t have to request time off.

Due to this level of freedom, the most successful gig workers are highly motivated and independent. Procrastination and gig work aren’t a good combination because you’ll need to hold yourself accountable.

Variety

Since you can select your own gigs, you’ll likely find that gig work offers more variety than traditional jobs. If you get bored completing a certain task, it’s up to you to choose something else.

For example, let’s say you’re a graphic designer who feels more creative working on a variety of projects, but your office job has left you feeling burned out because you’ve been designing the same types of ads every day since you started. You might consider starting a freelance business to offer the creative services you enjoy, such as logo design, sticker creation, illustrations, and websites.

Income potential

You might be asking, “are gig jobs worth it?” Well, it depends.

How much money you can earn in the gig economy is up to you. Many people accept gigs as a side hustle, supplementing their main income with popular platforms like Uber, Instacart, and TaskRabbit.

The most successful gig workers build their businesses around services they offer, such as writing, photography, catering, programming, and lawn care. If you’re able to provide quality services and attract big-ticket clients, your income potential could surpass any amount you might earn in traditional employment.

Challenges gig economy workers face

With so many advantages of the gig economy, what’s not to love? Well, there are a few downsides worth noting:

Lack of steady income

While you may have an unlimited income potential in the gig economy, that income is inconsistent at best. At worst, you may go several weeks or even months without getting paid.

If your family already lives paycheck to paycheck, working as an independent contractor might be too unpredictable. Some gigs are also seasonal, so you might have more work than you can handle in the spring and summer but none in the off-season.

Lack of benefits

Another major disadvantage of the gig economy is the lack of benefits. Since you’re working on a contract basis, you don’t get the same perks that full-time employees enjoy, such as health insurance and 401(k) contributions.

This is an advantage for companies because it doesn’t cost as much to hire freelancers, which is why so many of them opt to fill positions with independent contractors, further boosting the gig economy. But gig workers are left to figure out their own insurance and retirement-planning options.

No sick days

Salaried employees can build up sick time, paid time off, and vacation time. Gig workers don’t have that luxury.

As a freelancer, whenever you’re too sick to work, you aren’t earning income. This leaves many gig workers feeling like they have to push through and accept jobs even when they shouldn’t.

Stress

Freedom and flexibility are nice, but they come with a tradeoff: unpredictability.

The lack of predictability associated with the gig economy can create more stress than traditional employment. You’re always looking for your next gig or client, planning your next advertising strategy, trying to resolve negative reviews, tracking down non-paying clients, juggling multiple gigs, and wondering when your next payday will be.

Are gig economy workers self-employed?

The answer to the question of whether gig workers are self-employed is more complicated than you might think. It all depends on the situation.

Someone pursuing supplemental income on an app-based platform wouldn’t necessarily be considered self-employed. These are gig workers who snag jobs for DoorDash, Lyft, and similar platforms, but they aren’t building a business out of these gigs.

Alternatively, let’s say someone offers services driving clients to and from the airport. They still rely on each “gig” to make money, but since they’re operating outside an app, setting their own rates, and doing their own advertising (even if it’s word of mouth), they’re self-employed.

Regardless, all types of gig workers are taxed at the 15.3% self-employment tax rate, and that’s true whether you drive for Uber or provide services via your own business.

What are the most common gig economy jobs?

The gig economy offers a wide range of options if you think it’s a good fit for you. Here are some of the best gig economy jobs and platforms that connect you to work or allow you to sell services:

• Driver (Uber, Lyft)
• Deliverer (DoorDash, Grubhub, Instacart)
• Freelance writer (Elance, FlexJobs, Fiverr)
• Graphic designer (Fiverr, Upwork, Etsy)
• Photographer (Shutterstock, RocketPhoto)
• Social media manager (Bark, 99 Dollar Social)
• Web designer (Fiverr, Etsy)
• Programmer (Bark, Indeed)
• House cleaner (Bark, Angi, Care.com)
• Pet sitter/dog walker (Bark, Care.com)

Are gig economy jobs worth it?

As we’ve explored, gig economy jobs have their pros and cons. Whether the gig economy is right for you depends on your circumstances and the type of work you prefer.

Individuals who find the most satisfaction as contract workers tend to enjoy being their own boss. They thrive on the ability to create their own schedules, remain flexible with their hours, and accept gigs that interest them.

So, yes, the gig economy is worth it if your goals and personality align with contract work.

Why wait to get the money you need?

The gig economy offers many advantages for those looking to supplement their income and bridge the gap between paydays. It’s a great option to fall back on whenever you need a little extra cash.

If your side hustle still isn’t enough to get you by, we’re always here to help with online loan options that fit your life. Visit us online or at your nearest Advance America location today.