It is a free market system whereby independent workers are offered temporary positions to work for someone or an organization. They are the short-term engagement type of business. Gig economy comes from the word “gig,” which is a job contract for a determined time period in slang.
Gig employees may include people like contractors and freelancers.
The gig economy is an upcoming trend whereby it is expected that about 40 percent of the American workforce will be independent contractors operating in the gig economy by 2020. Several reasons contribute to the rise of independent contractors and short-term jobs.
Among the reasons is the fact that the workforce is becoming mobile and most of the jobs can be easily done from anywhere. That categorically means that location and job are no longer always together like there before. Digitization is another issue that has reduced the handy jobs as software programs have been developed to maximize the time used in production.
Again businesses tend to save a lot in terms of training, benefits, expenses, and even office space. Those are some of the crucial reasons why the gig economy is becoming more and more popular.
How it Works
An individual task stands for a small portion of an employee’s total income. When the employee pools together shifts for different clients, the cumulative income could be almost that of a full-timer.
Other workers will, however, engage in the gig economy to supplement their earnings or just as a part-time job. Gig economy seems to work perfectly for the involved parties. Workers are looking for short-time employment, and the companies are also looking for contract-based employees instead of full-time workers.
If you are looking for a handyman or plumber near me, then the gig economy is the right place to find him. Especially in big cities. Handyman and plumbers mainly prefer short-time tasks as well. For instance in Amsterdam it’s now possible to hire a local handyman from Amsterdam via Zoofy. Zoofy works according the principles of the Gig economy. You can compare it with Uber, but than for local professionals, like plumbers, handyman etc. Full-time jobs do not work for these professionals, because 9 out of 10 tasks they need to do are temporarily.
The freelance economy also gig economy involves independent contractors. Payment is after they complete the tasks at an agreed rate with the employer. Here the workers pay taxes on their own and also plan their own savings strategies. They do not receive any benefits that full-time employees get like retirement investments or group health insurance.
Independent employees have the advantage of tax benefits as they run their businesses. So they enjoy benefits such as tax deductions for operating expenses like supplies and travel.
Merits of the Gig Economy
The most significant benefit of being in short-time jobs is flexibility. When there is no full-time commitment to a single employer, the professional can control their work schedule and look for higher-paying gigs.
Full-time employees who wish to supplement their monthly income can perform a few tasks in the evening because they are already exhausted by nightfall. However, a local handyman has control over their career path, and they will engage only in tasks that are high-paying and are building them as professionals.
The independent professionals also have a lot of time to engage in other activities like bonding with the family more because they are not always occupied with work all day. An independent workforce also benefits businesses and companies a lot. Companies will save a lot when they contract a plumber for some repair of broken pipes rather than hiring him on a full-time basis. They will be paying him a significant monthly salary, and the plumber is not always occupied since maintenance and repair is not done daily.
Companies are also saved from contributions such as retirement savings accounts or group health insurance. That means that the costs incurred by hiring a contractual based employee are less compared to employing on a full-time basis.
Another crucial issue is that even startups can manage the fees charged on a contractual basis for skilled professionals. It would be hard to contract the experienced professionals on a full-time basis as their salary would be a six-figure salary every month.
How to Leverage the Gig Economy
If you are in the freelancing economy and you wish to leverage your career fully then make sure you follow the steps below:
- Find your ideal area of specialization/niche.
- Join technology platforms where they look for people with your skills.
- Set your routine. The jobs are flexible but ensure you have a schedule of working days and rest days.
- Manage your cash meticulously. You are independent, and all the money is paid to you.
- Organize your income so that you do not find yourself with no money for taxes or any other expenses.
Interesting related article: “Five top side gigs that don’t revolve around tech.”