Will the Gig Economy impact you?

The “gig economy” isn’t just a buzzword. It’s an accurate description of the state of the modern market – an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements – the Bureau of Labor Statistics has admitted difficulty in counting the exact number of independent contractors and contingent workers.

In case you aren’t familiar, the gig economy is a term that refers to the increased tendency for businesses to hire independent contractors and short-term workers, and the increased availability of workers for these short-term arrangements.

No doubt about it. The gig economy is in full force. A study by Intuit shows “gig” workers represent 34% of the workforce, and will grow to be 43% by 2020.

According to Investopedia, a gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career.

There are a number of forces behind the rise in short-term jobs. For one thing, in this digital age, the workforce is increasingly mobile and work can increasingly be done from anywhere, so that job and location are decoupled. That means that freelancers can select among temporary jobs and projects around the world, while employers can select the best individuals for specific projects from a larger pool than that available in any given area.

Digitization has also contributed directly to a decrease in jobs as software replaces some types of work and means that others take much less time. Other influences include financial pressures on businesses leading to further staff reductions and the entrance of the Milennial generation into the workforce. The current reality is that people tend to change jobs several times throughout their working lives; the gig economy can be seen as an evolution of that trend.

In a gig economy, businesses save resources in terms of benefits, office space and training. They also have the ability to contract with experts for specific projects who might be too high-priced to maintain on staff. From the perspective of the freelancer, a gig economy can improve work-life balance over what is possible in most jobs. Ideally, the model is powered by independent workers selecting jobs that they’re interested in, rather than one in which people are forced into a position where, unable to attain employment, they pick up whatever temporary gigs they can land.

The gig economy is part of a shifting cultural and business environment that also includes the sharing economy, the gift economy and the barter economy.

One group that is being most affected by the gig economy is millennials.

For millennials, who are either just beginning their careers or are reaching the end of the first phase of their careers, the gig economy is a mixed bag; it represents massive potential, but at the same time, fewer and more difficult opportunities.

The Economic Downturn

A massive economic recession hit in 2008, when millennials were still in college or entering the workforce for the first time. This had a profound effect on the development of millennials’ careers; for millennials who found a secure career path before the recession developed, the economic downturn wasn’t a massive challenge, but for millennials trying to find work after companies instituted hiring freezes and lowered workers’ salaries, the job market was in a drought. This effect created a massive division between workers under 30, many of whom are doing well in established careers, and many of whom are unemployed.

For the unemployed, the gig economy represents both opportunity and challenge. Because lots of small, part-time jobs are available, even non-full-time employed workers can find gigs to help make ends meet. However, because gigs and contracts are more affordable for employers, it’s also harder to find the full-time jobs they crave—despite loving the internet and being open to nontraditional career opportunities, millennials are still traditionally minded, with 91 percent wanting full-time work.

Student Debt

Student debt is another factor coloring millennials’ experiences with the gig economy. The average college graduate of 2003 left school with $18,271 of debt to pay back, while the average graduate of 2016 left with $37,172. That’s a hefty price tag for someone entering a floundering job market.

With fewer full-time opportunities, many young workers have resorted to finding gig work to make ends meet—and those small, part-time jobs are oftentimes insufficient to provide anything beyond basic needs and student debt payments. For those fortunate or vigilant enough to get more part-time work, the income is often inconsistent, making it harder to plan for the future.

Experience and Opportunities

Millennials get a bad reputation for job hopping excessively, willing to abandon one opportunity for another at a moment’s notice—but that’s only partially true. It’s undeniable that today’s millennials stay in their jobs for less time, on average, than their older generational counterparts, but Pew Research found that this is largely attributable to age; that is to say, millennials aren’t job hopping any more than generation X did when they were the same age.
Young people crave new experiences and new opportunities, especially when they aren’t sure what they want to do. The gig economy gives them that opportunity without demanding excessive sacrifices or risks; in an economy that functions largely on part-time jobs and temporary gigs, turnover is expected, and loyalty isn’t a guarantee.

This makes it easier for millennials to experiment, gain more experiences, and build bigger networks at a faster rate.

Values and Independence

Millennials are known for desiring independence in the workplace, opting for flexible hours and remote work opportunities whenever possible. They also want to work for employers whose values align closely with their own, choosing values over pay as a top priority when choosing a new job.

Becoming independent contractors in a gig economy gives them more control over the work they do, and over their careers overall, helping them build career independence, and simultaneously allows them to choose business partners, clients, and vendors whose values agree with their own. Working for someone else can’t possibly match that level of autonomy.

It remains to be seen whether the gig economy is a good thing or a bad thing for economic development overall, but for millennials, it’s certainly both. For cash-strapped young workers striving to find a good full-time job, the gig economy can be frustrating, but for more established millennials, or those who want a diversity of experiences, the gig economy is the perfect opportunity to achieve those goals.

Regardless of how you feel about it, the gig economy is likely to stick around for the foreseeable future (and experience even further growth), so it’s best to learn how to take advantage of it for yourself—and avoid the pitfalls that your peers are facing.

Sources: Washington Post, New York Times, Investopedia and What is?