Millions of millennials have joined the gig economy, and according to Hyperwallet CEO Brent Warrington, they’re motivated by a desire for freedom and flexibility. Those gig workers represent a powerful potential force for employers, but as Warrington recently told PYMNTS, most will need to change their business model in order to keep millennial gig workers happy.
Here is an excerpt of the conversation.
PYMNTS: We’re starting to see some interesting trends emerge from our research on the gig economy. It appears there are more millennial gig workers than there are millennials in the regular workforce. Do you think that’s by choice, or is that a byproduct of the world we live in right now?
BW: I think it’s a combination of both. The movement of millennials into the gig workforce has a lot to do with the cultural expectations of this generation. It’s the freedom of being independent, of being your own person. I don’t think it’s a fad or phenomenon. As the millennial generation comes of age and continues to become the largest economic contributor in the United States, I suspect we’ll see many more individuals pursuing professional independence.
Businesses that have employed traditional business models are now adopting or accepting the fact that we’ve got to change. For us to attract the talent that we need, we have to adapt to how this new workforce wants to engage with us.
This is less about Uber going to find Uber drivers. This is about established, professional people who are going through this transformation regarding how they choose to earn.
For example, there are a lot of folks out there who qualified and talented photographers, but they’ve been limited in earning potential by the opportunities within their immediate geographic reach. Now, they have access to platforms that help them market their talents to a much broader set of potential customers. I think that, in itself, it is creating a whole new workforce of this sort of undiscovered talent, particularly with skills like photography or video editing. We see it across the board, and it’s really pretty interesting.
At the same time, FinTech needs to adapt to these new expectations in order to help our partners give people the flexibility they want.
PYMNTS: It seems that it becomes this self-propelling cycle where marketplaces provide access to talented workers, which encourages more businesses to use that talent instead of a full-time worker, which attracts talented workers that want professional independence, and so on.
BW: Absolutely. Today, it’s supplemental income, but I think we’ll see more and more individuals relying on gig opportunities as their primary income. People can earn their necessary household income exclusively through a sort of independent economy.
And that’s exactly what they want. They want to be able to work for two weeks, earn the amount they need, then take two weeks off and travel. I applaud that. I have nephews and nieces, and they just think differently from how you and I think. They put a lot of weight into where they want to work and the independence they want, and their professional goals are completely different from what you might have expected from individuals their age a few generations ago.
The good news is that there is now this business model that supports that mindset. Companies that are driven primarily by independent workers are looking to control the experience gap between 1099s and W-2s, and I think we’ll see more and more of that, where the difference between being a contractor and a full-time employee will be negligible. Be it benefits, retirement planning, insurance — I think that gap is closing very quickly.
PYMNTS: You talk about gig workers redefining what it means to have a business and a business model, but they’re also redefining what it means to have a payroll and a payroll model. According to the study, 75 percent of gig workers say they are paid within a week, but they clearly want that to be faster, even on the same day or next day. How do these expectations need to be managed by marketplaces?
BW: The existing model is a biweekly paycheck, always the same amount. You set an employee up, you enter their payroll information, and then you pay them. It’s really simple.
On the opposite end of the spectrum are gig workers, who complete a task and then expect to be paid for their work shortly thereafter. And they should be: They need to pay for gas to get from job to job, pay for the materials they need — getting paid quickly often determines whether or not they can keep working that day. In the survey we’ve conducted, this emerged as a big priority. Folks want to complete a task, and they want to get paid.
Trouble is, there’s no regular payment cadence or amount in gig work, and that itself brings total chaos to the traditional payroll platforms. It just breaks it. That’s really the nature of the pain and friction with a normal payroll versus the freelance employee payroll.
There’s also not always a consistent currency. Most traditional payroll systems go geography to geography. If you are a global employer, you contract a different payroll provider for employees in different geographies to handle specific currencies. Now, we’re seeing individuals receive payments of irregular amounts and different currencies every week. It’s important for us to be able to put all that in the stew and still pay people quickly.
PYMNTS: Fast and efficient payouts can also make these marketplaces more competitive in attracting gig employees, right?
BW: Yes. If you’re a freelance writer, for instance, there are a number of platforms where you can market your talents. And the marketplace that provides the best experience — the quickest and most convenient payments, the simplest system for freelancers to log in and monitor their earnings— is likely going to be the winner.
Among the folks we contract with, probably the dominant conversation is this issue around speed of payment.
Sending earnings across borders is a significant complexity, but it’s not necessarily of concern to the payee. They want to get paid in a certain currency, and they want it to be fast.
The other thing they want is transparency — especially when it comes to foreign exchange. If someone earns $100, they don’t want to get $47 by the time you’re done with it. When they lose a portion of their earnings to foreign exchange or other fees, they want to know why.
There are a lot of payout schemes out there that involve multiple foreign exchanges and numerous routing points. And who loses? The payee, quite frankly.
PYMNTS: These marketplaces may have started out as an outgrowth of the financial crisis, when they were more necessity than preference. At this point, though, now that the marketplaces are well-established, are they about enabling professionals with skills and services and goods to reach their customers in an efficient way? And is this the way business is going to continue to evolve?
BW: Yes, absolutely. One of the things I really like about this is that, as the gig economy grows, we can enable individuals to engage and earn in unprecedented ways. If I’m a software engineer in some remote village, maybe I don’t need to leave to find work. As long as I can get online and utilize my talents to earn, I don’t have to physically move somewhere because the employment platform doesn’t demand that.
It creates all kinds of opportunities. It allows marketplaces to scale very quickly. If Uber had to go out and hire drivers, Uber would still be trying to hire drivers. They’d still be in San Francisco, and they’d be struggling. Instead, marketplaces have really accelerated the notion of a borderless world for commerce.
The challenge is in helping businesses with decades-old infrastructures accelerate to the speed at which they’re capable of quickly hiring and paying gig workers. They’ll catch up. The gig model is here to stay, and it’s one that’s going to continue to be embraced as we move forward.
Today’s workers want freedom, they want independence, they want flexibility. With that expectation, there will be more and more businesses that adapt to the gig model and provide even more earning opportunities for individuals.
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About The Index
The PYMNTS.com Gig Economy Index™, a Hyperwallet collaboration, is designed to better understand workers in the gig economy — people who often work in short-term, ad hoc positions — who they are, what services they supply and what percentage of their overall income the gigs represent.