Understanding the Gig Economy and its Benefits

8 mins read
Understanding The Gig Economy and Its Benefits

The gig economy is a term you’ve more than likely heard several times over the past few years. What, though, does this ‘gig economy’ phrase mean? In the following post, we will look at what it means to work in the gig economy. As well as history, we will also consider its benefits of it and why you should be part of it.

What is the gig economy?

The gig economy may feel like a new thing. The term is a relatively new thing. Freelancing, though, has been around for eons. The concept of working for oneself without a fixed contract is in no way, shape, or form, new.

Yet, there has been an increase in the number of independent, self-employed workers. Many think it’s because of trends related to the current generation. Placing higher imports on meaningful and flexible work over higher salaries.

For others, it’s the choppy economic and employment waters we all navigate through. It doesn’t matter, as there are no signs the gig economy is a fad.

The gig economy – an expansive, but the apt definition

The gig economy, by definition, is a workforce environment of independent and temporary contracts. Other names used to describe it include ‘sharing economy’ and ‘freelancer economy.’

Yes, it’s a fun buzzword that people like to band around and use in their media headlines. Yet, there’s a sheer number of startups out there utilizing the gig economy. There’s also a vast number of people trying to gain benefits from it. Meaning that work and employment as we understand it, are changing.

The significant difference between the gig economy and the traditional environment is jobs are no longer seen as permanent. To be precise, work exists as individual shift arrangements, assignments, and one-off tasks.

The term can also describe more long-term independent contracts and freelance arrangements.

How does the gig economy work?

Each gig, job, assignment, or task, makes up a small percentage of an individual’s income. Gig economy workers carry out shifts/functions for different clients to make an income. Not everyone uses the gig economy as their primary source of income, though.

Some use short-term gigs as a side hustle. To achieve an extra income. It’s successful because there are plenty of people looking for short and flexible work while there are also companies who only want to hire temp staff.

Modern technology platforms advertise gig economy work. These sites/apps are places where freelancers find companies looking for temp staff. Many focus on specific areas and sectors. Including private hire car drivers, delivery drivers, and warehouse staff. Whereas others connect companies with individuals with a broader range of skills.

Gig economy employees work independently and are paid at a rate that has been agreed upon by both parties. As a result, they aren’t eligible for the benefits of full-time employment and contracts. They are also responsible for dealing with their taxes.

The popularity of the gig economy means health, accident, and liability insurance are easier to access. There are also substantial tax benefits independent contract workers get from running their own businesses. Including deducting operating expenses like supplies and travel from their bill.

Benefits of working in the gig economy

There are a variety of benefits that come from leveraging the freelance economy. The most popular, by far, cited by freelancers, is flexibility. When you’re not committed to an employer on a full-time basis, you have more control over your schedule.

You only need to accept shifts, assignments, and gigs that don’t interfere with others

Even those who have full-time jobs looking to earn extra with a side hustle, enjoy the flexibility. They can take gigs on the weekends, evenings, or whenever they have free time. Skilled and experienced individuals can take on higher-paying projects.

This can help them to build up their resume, giving them the advantage of gaining more work in the future.

Companies benefit from the gig/freelance economy too

It’s not only the workers who gain from the gig economy, though. Companies reap the benefit of the saving associated with taking on shorter-term staff. There are less admin and paperwork involved. They don’t need to make contributions to retirement savings or group health insurance.

So, it costs them a whole lot less than it would take on a full-time team member.

Companies can also gain the benefit from the help of more skilled individuals. Individuals who would be too expensive to take on as a full-time member of staff. For instance, a rising startup may not be able to afford a six-figure salary for an executive.

They may, though, be able to afford a five-figure commission for a short-term contract.

They can benefit from the expertise and experience of an individual for a specific project. Then, once that project has run its course and reached completion, they are not indebted to that individual.

As it is all above board and everyone knows where they stand, everyone benefits.

The benefits of this agile economy

The broader economy, in general, also benefits from the success and popularity of the gig economy. Goods and products are delivered quickly and with greater efficiency. A study showed over half of the US workforce will be independent contractors by 2020, as freelancing begins to have an impact on the overall economy of the USA.

Whereas automation and digitization threaten more traditional jobs, this agile economy provides security. Though, not in the conventional sense.

How you can benefit too from being a part of the gig economy

It may seem counter-intuitive to take on temporary contracts with various employers. By not placing all your loyalty with one company, you won’t suffer because they let you go. Instead, you will be able to get work when it’s available; something full-time employees don’t have the freedom to do. You can go where the action.

With the increase also of digital nomads, you are not only free to work for whom you want and on specific projects. You can also work from the base of your choice and within the region of your choice.

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