Gig workers will make up a full half of the American workforce by 2028, responsible for creating online content, designing webpages and conducting local food or historical tours, as well as ferrying passengers for rideshares or renting out their homes on homesharing platforms.
This growing segment of workers took home $1.4 trillion in earnings in 2018, but many of these payments were sent out via frustratingly complex and slow payment methods. Paper checks are still one of the most popular ways for companies to pay freelancer workers, despite workers' increasing desire for faster digital payments. Platforms that do not innovate to support the payment needs of the gig economy will soon find themselves out of touch and obsolete.
In the inaugural Gig Economy Tracker, PYMNTS examines how the U.S. gig economy is growing and why payment innovation and speed are becoming critical to platforms fighting to maintain freelancer loyalty.
What’s New In The Gig Economy Payment World
The world is watching as California’s Assembly Bill 5, better known as the “gig economy bill,” comes into effect within the state. The bill could have a significant effect on how freelancers are paid, and could even reclassify many of these workers as employees that should be receiving benefits from employers. But first, the state is going to have to work out exactly where the bill applies as it deals with lawsuits from industries like ridesharing and trucking contesting its requirements.
Freelancers and their partner companies are bracing for several other regulatory shifts to payments inside of the U.S., which is why departments such as the Internal Revenue Service (IRS) are making strides to help. The IRS has introduced a new Gig Economy Center on its website to cut through some of the confusion in regards to freelancer payments, designed to help such workers figure out what income is or is not taxable as well as what type of information they must report about their gig work.
Gig economy participants themselves have their own feelings regarding the continued rise of the freelance world, and they are expressing them through their work. Seventy-five percent of workers in this space are more loyal to companies that support same-day payment methods, for instance. The ability to support fast and convenient payments is becoming one of the deciding factors for which firms freelancers work with and which are passed on.
For more on this and other trends, visit the Tracker’s News And Trends section.
How kimkim Protects Travel Experts’ Payments In An Experience Economy
Eighty-six percent of millennials want to spend their hard-earned money on exploring new cultures and locales rather than shopping at their local retailers, which provides a tremendous opportunity to the growing number of specialists who make their living as cultural tour guides. These travel experts are just as likely to move to other platforms if their payments are delayed or sent through slow, frustrating methods such as checks, however. That is why online travel platform kimkim is making it a point to entice freelancers with faster payment options, says head of product Yenyi Fu in a recent interview with PYMNTS. To find out more about how kimkim is approaching freelance payment innovation, visit the Tracker’s Feature Story.
How Outdated Employer Payment Systems Can Oust Freelancers
Lifelong freelancers are used to dealing with delayed payments, and typically they do so by shifting to work for other platforms. Twenty-nine percent of freelancer invoices are sent out late, which complicates an already lengthy and paper-heavy payment process. Firms that are still relying on slow payment processes to compensate their freelancers may find themselves struggling to keep them from moving on to competing platforms as these workers seek greener pastures. To learn more about why outstripped payment processes can deter freelancers, visit the Tracker’s Deep Dive.
About the Tracker