What is the Gig Economy?

By Randall Orser | Freelancing

The gig economy has been defined as “A way of working that is based on people having temporary jobs or doing separate pieces of work, each paid separately.” 

Essentially the gig economy involves working in a free market system as a freelancer, temporary contractor or doing standalone one-off jobs (or gigs) as opposed to having traditional full-time employment. It can also be a way for anyone to make extra cash in addition to their regular job.  In 2018 the Bureau of Labor Statistics in the U.S. reported that 55 million people were gig workers more than 35% of the U.S. workforce and this number is expected to rise to 43% by 2020.  According to Statistics Canada 2.18 million people were temporary workers in September 2017, including freelancers and contract workers.  One of Canada’s biggest temp agencies reported that 20-30% of their workforce were temporary workers and 1 in 4 were freelancers.

Who Works in the Gig Economy?

Millennials like to work in the gig economy because it promises a greater work-life balance.  For boomers and retirees are it brings in extra income without a major time commitment.  Freelancers are often connected to work by websites and apps such as Handy, Linkedin and Task Rabbit.  

The gig workforce includes highly skilled specialists and consultants from every industry but there are other jobs that will enable workers to make money fast without having specific skills.  These include tutoring and teaching, ridesharing (Uber), delivery (Skip the Dishes) and renting out assets that you own (Airbnb).

Benefits of the Gig Economy

  • Employers benefit from the gig economy by cost savings.  They can access a rich pool of talent and only have to hire people to do one specific task or when they are needed, instead of hiring full time employees that they have to train and provide with benefits.  
  • Workers can choose their own hours and projects and can earn income from multiple sources.  In a BMO survey 60% said that they voluntarily became self-employed, 49% said that they wanted a new challenge or change, 31% said that they wanted a way to supplement their regular income, and 13% said that they had been downsized by their employer.   

Challenges of the Gig Economy

  • The financial downside is the biggest challenge as workers have no benefits and don't get paid when they are sick.  Many in the BMO survey reported that they did not earn enough.  Boomers were more concerned about not having benefits while millennials were concerned about accumulating debt.
  • Canadian Employment Law has not caught up to this new way of working so gig workers have a precarious status and are generally excluded from the protections and benefits that come with traditional work such as CPP and EI.  Workers can enrol in these programs but they have to pay both the employer and employee portions.  As they do not have a traditional paycheck their CPP is calculated when they file their income tax which can mean a hefty bill.

Criticisms of the Gig Economy

  • It can make it harder for workers to find full-time employment and develop their careers.
  • For some the flexibility of work can be detrimental to their work-life balance, sleep patterns and daily activities as they always have to be ready to work when gigs arise.
  • As the security of a full-time lifelong job becomes a thing of the past workers rather than employers are taking on the risks of market ups and downs and changing trends.
  • Traditional business relationships between employer-employee, vendors and clients are eroded along with the benefits of trust and familiarity.  There is no investment in a relationship which will only last the life of a gig.
Follow

About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.