Truth And Myth In The Gig Economy

It’s true that young people are embracing the gig economy at a higher rate than older generations, but project-based work isn’t just for Millennials. PYMNTS’ Karen Webster sat down with Hyperwallet CEO Brent Warrington to discuss some of the myths that pervade independent work and highlight the ingredients of a successful two-sided marketplace.

Is the gig economy only for millennials? Is the flexibility offered by online marketplaces, matching skills to needs, the playground of large companies alone?

Consider a recent article in The New Yorker that focused on the range of person-to-person transactions in gig work — everything from hanging pictures to renting out rooms to strategizing marketing campaigns. The reasons for joining the gig economy are as varied as the tasks themselves, with one overarching theme for careers as a whole: flexibility.

In an interview between PYMNTS’ Karen Webster and Hyperwallet’s CEO Brent Warrington, the discussion compared popular perceptions of the gig economy — and the marketplaces that serve this economy — with the reality of independent work.

Webster pointed out that there have been mischaracterizations of what the gig economy really is, highlighting that it’s not all dog-walking and car-sharing. Instead, the gig economy is increasingly becoming an alternative labor force for use by large companies.

“This kind of labor force isn’t new,” explained Warrington, “It’s been around for quite a while.” Fortune 400 companies have long supplemented their permanent staff with contract workers, only recently tapping the gig economy reserve. “We are seeing this embraced across all types of verticals.” And despite the widespread adoption of the gig economy, “observers mistakenly associate this work model almost exclusively with millennials.”

In reality, companies are drawing upon a diverse demographic range of contract workers, from fresh-faced graduates to active retirees. Senior gig economy workers are often “looking for something that will keep them active” during their golden years.

Referring to the criticism leveled against the industry — that employers are looking to sidestep their traditional obligation to provide employee benefits — Warrington noted that the perceived “escape clause” was a hot button issue that demonstrates how politics has crept into the conversation.

“I think anybody who participates in the gig economy understands what it comes with and what it doesn’t come with in terms of benefits. They’re making a decision that flexibility is more important than some of the benefits that come with being a W-2 worker.”

The gig economy provides flexibility for companies as well. As an example, Brent imagines an organization that needs a video editor for a six-week project. “What are they to do? They could hire somebody, employ them for the length of the project and then lay them off, but we know the costs of that. Alternatively, that company can go and contract with a marketplace that can provide video editors. And that’s how many video editors prefer to deploy their services anyways.”

Gig marketplaces enable firms to break the cycle of bulking up for projects and then going through layoffs. “That’s unhealthy, compared with creating this matchmaker skill set.”

The gig economy is also deepening, Webster noted, with service providers cropping up to complement other two-sided platforms — cleaning services for Airbnb hosts, for example. Companies wishing to participate in the gig economy, said Warrington, need to juggle a number of operational processes — including things like contractor payouts — and often need third-party support.

“Anywhere we see marketplaces, there are going to be supporting firms in the supply chains … it’s the trickle-down economics of the gig economy.”

And, as Warrington pointed out, within the gig economy, speed is everything. “As soon as people have completed their tasks, they want to get paid in whatever manner they choose. That’s sort of the heart of what we do at Hyperwallet: ensuring that as people participate, we give them the freedom to be paid in a currency and form they prefer.”