On Mondays and Fridays, Beth drives for Uber, picking up and dropping off traveling professionals at the airport. On Tuesdays and Wednesdays, she meets with some professionals she met through Sortfolio at a coffee shop to discuss her design recommendations for their new websites. If she feels like it, she can do someone a Favor by picking up a coffee and delivering it down the street. On Thursdays and Saturdays, she hangs picture frames and assembles IKEA furniture through TaskRabbit (now, IKEA), or she just hangs out with her kids. Beth does not have a full-time job. Is Beth lazy? Is she uneducated? Maybe, or maybe she has just chosen a different lifestyle—a more flexible approach to work.
The gig economy, or the sharing economy, is an economy comprised of short-term, temporary work contracts or freelance work. The gig economy "gigsters" perform a specific task and leave. The gig economy is commonly misconstrued as a way for workers with a full-time job to make extra money, but that is not always the case. Uber, Postmates, Favor, and TaskRabbit are platform companies known for building the companies on the gig economy. Many of the contract workers on the platforms hold various contract-based jobs across various platforms. A recent study by Brookings Institution shows the gig economy is growing faster than traditional payroll employment with freelancers currently making up 34% of the workforce. The gig workforce is made up of more than just pay-per-service workers. Many technical professionals, including lawyers, accountants, and engineers are participating in the gig economy.
The continued advancement of technology will drive the expansion of the gig economy, as companies and individual workers are able to easily connect over platforms. With the growth of technology-based education, individuals can easily access specialized training to become experts in various industries, business processes, or subject matters. Platform businesses are leveraging technology to connect specialized white-collar professionals with large corporations. Companies are looking for people who have the targeted experience the company can use to solve specific problems. Designers, marketing staff, and IT specialists are common roles that can be filled on a freelance basis.
Millennials prefer flexible schedules that allow them to fully experience life, travel, and family. Having seen baby boomer parents trade family and life experience for a paycheck, most millennials are opting for seemingly less rigid opportunities. Traditional career advancement came in the form of a promotion, which meant more responsibility and money. The gig economy offers advancement by leveraging online learning opportunities and turning knowledge into immediate cash. The more knowledge and "stars" a freelancer earns on the platform results in more money. Flexibility is winning, and the rigid career ladder is not worth the trouble.
Even large companies can benefit from leveraging the gig economy. Platforms give companies access to a larger talent pool to provide targeted expertise. For example, a talented tax professional is hired as a full-time employee. The tax professional may spend four hours per week focused on providing the high valued expertise for the company. To fill his work week, the remainder of the tax professional's job includes more mundane paper work. The tax professional commands a high salary regardless of what other work he is assigned. The result? The company is paying more and the tax professional is bored with the mundane work. Fast forward to the gig economy: the company hires a less-skilled administrator for half the salary to handle the mundane tax paperwork and crowdsources a freelance tax professional when needed. The freelance tax professional may charge double for his four hours per week, and he can leverage his experience across several companies, increasing his flexibility and his return. Both the company and the tax professional win.
By 2020, 50% of workers are predicted to participate in the gig economy. As technology continues to improve, companies that ignore the gig economy may not be as competitive in the fight for talent. Companies should understand the unique values the core workforce and the gigsters each bring to the organization. The core workforce sustains competitive leadership and culture to the company while freelancers bring specialized knowledge when it is needed. Balancing both forces of workers is important for companies to capitalize on the opportunities provided by the gig economy.
Trenegy is a non-traditional consulting firm dedicated to helping industry professionals take advantage of changes and trends in the economy. We translate business jargon into useful terms and solutions that actually benefit your company. Contact us at info@trenegy.com to learn more.
