5 Facts You Should Know About the Gig Economy

Origins, or what it all has to do with jazz

The gig economy is a relatively new term for a rather well-trodden freelancing practice in the labor market. One may wonder why we call it a gig economy, not just a freelance economy? The answer is in the etymology of the term. In particular, the “gig” part (a slang word for “performance”) informs us that the first “official” freelancers were not all those tech-savvies working their flexible hours in coffee shops.

Freelancing was created by underground jazz musicians of the 1920th, who engaged the public in jazz culture through irregular (and illegal) live concerts, called “gigs.” A jazz performer would get paid right after the successful show, having “a few other gigs in a downtown club the next week.”

This “payment-after-completion system” went far beyond the jazz scene, getting a strong position in the modern labor environment and creating the whole economy based on the contribution of freelancers, contractors, temporary workers, and independent consultants.

Despite this quite romanticized background, the gig economy concept is a rather down-to-earth one, with its benefits and controversial sides. And since it is one of our epoch’s key terms, its understanding is necessary for both company owners and freelancers to navigate the labor realities and thrive on them. The five facts below will help look at the gig economy from several perspectives and get valuable insights.

Fact 1. The gig economy is not just about making the full-time employment model obsolete

It simply has its unique functions, presenting benefits for both sides. Freelancers and contractors can fill in the hard-to-find skill gaps and provide services that are needed on an irregular basis or as per specific demand to achieve certain business goals. Gig workers, on the other side, have ample opportunities to gain experience in a variety of projects and choose those that will contribute to their professional development (and, if they prefer, still have a traditional job, using freelancing as an extra source of income).

Cooperation with gig workers presupposes a completely different corporate culture, which involves flexibility, trust, workspace convenience, healthy competition, and no micromanagement. It is no wonder why freelancing is a crucial part of the US labor market. About 57 million people in the USA have freelanced in 2019, which is now 35% of its entire labor workforce. 

An opportunity to switch between the two options — gig work and full-time work — is important in today’s unstable environment, and either option can serve as a safety net for freelancers and businesses. 

Fact 2. Gig economy reconsiders the issue of trust

One of the biases that used to be associated with freelancers is that working with them presupposes a limited trust space in comparison with in-house full-time workers.

However, the gig economy’s growth gradually changed this narrative, developing a suitable framework for cooperation between the two parties. Trust is warranted through competition, rates, feedback, as well as the availability of various freelancing platforms.

The latest research on freelance developers among tech and non-tech companies concerning trust demonstrated its generally high level. 66% of respondents replied positively about whether they would hire a freelancer to complete small tasks, maintenance, creation of mobile and web applications, integration with third-party apps, etc. Reliability is one factor that makes up freelancers’ reputation and enables them to compete and get desirable financial compensation.

Fact 3.Gig economy jobs make up a very profitable job sector

It may not come as a surprise that the gig economy has boosted in recent years. The income earned by freelancers reached $1 trillion in 2019, which equals 5% of U.S. gross domestic product, not to mention that it managed to exceed some major countries’ GDPs. Almost half of the freelancers earn more than $75,000 per year, while the average hourly rate is $20 and $28 for skilled freelancers. For 44% of freelancers, gig work is their primary source of income. Such figures prove that the freelance community holds strong economic positions with even more promising perspectives. 

Fact 4. Technology catalyzes the gig economy

Freelancing was initially enabled by technologies. It serves as a tool for quick search of projects, efficient cooperation, and upgrading one’s knowledge and honing one’s skills. During the last three years, 63% of freelancers stated that freelance had changed significantly, while 77% noted that technology simplified their search for a job. Technology created the whole generation of digital nomads, removing the stigma from gig work. Due to the professional platforms, gig work became more associated with highly-educated and high-cultural specialists, who work on their branding, ratings, and involvement in professional freelance communities. 

Fact 5. The gig economy is not without challenges.

The fact that gig work is not for all, and sundry is attributed to a number of challenges that accompany this sector. And it is better to have realistic expectations concerning them. One of the challenges is that the legal framework for business-worker cooperation still has some gaps, which means that both freelancers and businesses should double-check requirements to contracts and tax laws, especially when switching between different gig identities. Other concerns include the risk of unstable income, economic anxieties, and no guarantees of access to affordable healthcare. Finally, freelancing often presupposes working in isolation, communication barriers, and social exclusion.

But like in every other sphere, the ability to turn challenges into opportunities is key for success. The same applies to the gig economy. Considering the pace at which the freelance community develops and grows (by 2027, 6 out of 10 Americans (58%) will be full-time or part-time freelancing), the game seems to be worth the price. Searching for freelance alternatives is a step to keep up with the time, not to mention the ample opportunities to turn gig work into a successful long-term career path.

Rylie Holt