There's no doubt about it — the gig economy is booming. As the broader gig ecosystem continues to grow and diversify in the coming years, it will become more important for employers participating in the space to rethink how they view gig work and gig workers.
First, some facts. The PYMNTS Gig Economy Index revealed that 40 percent of gig workers surveyed receive 40 percent or more of their income from gig economy jobs. Nearly 31 percent of the 1,000 gig employees who were surveyed about their experience for the index said that they are able to support themselves through a single gig.
The number of Americans working gig jobs grew at a rate of 50 percent from 2005 to 2015, while the gig economy gained 9.4 million new workers, outpacing the U.S. economy as a whole. The U.S. could hold between 54 million and 68 million “independent workers” — including short-term contract workers, service providers and renters.
Some estimates place as much as 40 percent of the American workforce as part of the larger gig economy — including contingent workers and independent contractors — by 2020. By 2025, some projections account for the gig economy to both reduce unemployment time for more than 250 million people and add more than $2.7 trillion to the GDP.
As the gig economy ecosystem grows and diversifies in the coming years, it will become increasingly important for employers to rethink how they view freelance work. To succeed within the broader gig ecosystem, employers will need to consider gig workers not as cheap, interchangeable and disposable but as specialists taken on to complete essential tasks — especially as the gig ecosystem grows to encompass more niche and essential business operations.
More and more, gig work involves the temporary hiring of professionals with unique skill sets — management consultants, security experts, business professionals, etc. — drawn to the ecosystem by its propensity toward individual control, flexible hours and relative ease of access (far less paperwork, for one). And the gig economy is used by many not just as a supplementary source but, increasingly, as a primary source of income.
Already, some 25 percent of gig workers offer professional services. Of those, the top segments include photography, graphic design, writing/translating, accounting, web design and legal services. Here, outsourcing the work to temporary employees shouldn't be thought of as a way to cut costs, since these freelancers often bring unique, critical skill sets — and, with them, industry standard hourly rates.
For employers, the gig economy offers a break from the expenses and effort that go into onboarding and retaining full-time employees. But to view gig workers as a quick fix, a cash grab or in the same light as seasonal retail workers does a disservice to both employer and employee.
Even in cases where gig work isn't highly specialized or necessarily short-term, there is precedent for broad change. Consider the case of Uber in the U.K. earlier this year. A London employment tribunal ruled Uber drivers are workers instead of self-employed contractors, entitled to holiday pay, paid rest breaks and the national minimum wage.
The regulations are coming. In the next few years, governments and other regulatory organizations will focus their attention and efforts on guaranteeing some measures of income protection for freelancers — ranging from disability insurance to unemployment benefits — as a means to either solidify or erase the as-of-now blurry lines between contract workers, freelance specialists, employees with variable hours and the temporary and seasonal workforce.
Regardless of how the regulations fall in the end, gig work will increasingly be more than a quick fix for companies and a cash grab for workers — it could outright become the new face of the American — not to mention worldwide — workforce.