Let’s face it — the availability and popularity of short-term, ad-hoc positions, or “gigs,” look much different than they did just five years ago.
No longer is it just the Avon lady or Mary Kay consultant. These gigs span a growing number of verticals and industries, from home help and tutoring, to accounting and design.
The gig economy is here, and if the data from the latest PYMNTS.com Gig Economy Index™ — produced in collaboration with Hyperwallet — is any indication, the bubble isn’t bursting anytime soon.
People are flocking to be a part of this new sector of the workforce. In fact, the index revealed that 40 percent of gig workers (or “giggers”) 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.
“What the study reinforces is that this particular business model — gigs and giggers — is proliferating horizontally and vertically,” Brent Warrington, CEO of Hyperwallet, explained.
The gig economy has highlighted a transformative business model that is not only creating opportunities for new players in the space but also attracting the attention of existing companies looking to invest and experiment as well.
The Impacts Of Transformation
Though the gig economy certainly has traction and a pulse, as Warrington described it, the space has also opened the door to a growing number of implications.
This business model has not only changed the way employees work but also the traditional relationships that exist between employers and employees.
For the workers themselves, the transient nature of gig work offers a kind of freedom. Individuals need not worry about losing a job simply because of the availability of gigs in the market.
“There’s so much demand for skilled labor … A lot of them are jumping jobs anyway, so this can take some of the pain out of filling out employment paperwork,” Warrington explained.
For the employers, the gig economy offers a break from the expenses and effort that go into onboarding and retaining full-time employees. By utilizing the freelance contractor workforce, these businesses are able to find workers with a particular skill set — without having to exert the kind of time and effort it would take to hire someone to a more permanent position.
“It gives them the ability to scale quickly and globally,” Warrington added. “Uber wouldn’t exist the way that it does today without the existence of the gig economy.”
The Responsibility Shift
Though the gig economy offers a whole new world of opportunities to those interested in being a part of the growing temporary workforce, it also requires giggers to take on the new responsibilities of their employment status.
As Warrington pointed out, the industry has seen a seismic shift from W-2 to 1099 workers, and many individuals are ill-equipped to handle the implications that come with that.
Gig workers are responsible for many of the ancillary costs that would traditionally fall to the employer — there’s no employee-provided health care, 401K, equipment, expense reimbursement, handling taxes, etc.
A particular concern for newly initiated gig workers is tax: What they can or can’t write off or even the legal implications and liabilities of their contractor employment.
But workers aren’t necessarily being left to figure it all out on their own.
“Everybody is scrambling to provide these layered-on services to bridge the gap between W-2 and 1099,” Warrington said. “The next transformational shift will be that all of these traditional services will sort of renew and refurbish their business model to fill that gap.”
Warrington speculated that this is just the beginning of a much broader transformation in business and employee services. Over the next 12 months, there’s going to be an unbelievable amount of activity and announcements around adapting traditional employee services to help 1099 workers, he added.
“It’s going to be a big movement, a groundswell,” Warrington concluded.