What is the gig economy?A gig economy is a free market system in which temporary positions are common and organizations hire independent workers for short-term commitments. The term "gig" is a slang word for a job that lasts a specified period of time. Traditionally, the term was used by musicians to define a performance engagement. Show
Examples of gig workers include freelancers, independent contractors, project-based workers and temporary or part-time hires. Gig apps and digital technology are often used to connect customers and gig workers. The gig economy is a recent trend, with a number of factors contributing to its rise. The two most important factors are the following:
As a result, jobs and locations are being decoupled. That means freelancers can take a job or project with an employer anywhere in the world. At the same time, employers can select the best person for a specific project from a larger pool than is available in any given area. The gig economy is part of a shifting cultural and business environment that also includes the sharing economy, gift economy, barter economy and more flexible jobs. The cultural impact of the gig economy continues to change; for example, the COVID-19 pandemic has had a significant effect on hiring trends.
Who is part of the gig economy?The gig economy is made up of companies, workers and consumers. All gig workers aren't the same. They include the following:
The gig economy provides consumers with an alternative to commercial products and industries. They turn to the gig economy for convenience, better service or both. This is the case with ride-hailing apps, like Uber, and food delivery services, like Grubhub. Gig apps have also met consumer demand where a service is in short supply or expensive. This is a role Airbnb has played in places where hotel rooms are in short supply, making more temporary accommodations available, sometimes at lower prices. Common gig economy jobs and industriesGig economy jobs include familiar positions found in diverse industries, including the following:
Perks of the gig economyThe benefits of the gig economy vary, depending on whose perspective you take -- the business, worker or consumer. The businessIn a gig economy, businesses save money and resources. They aren't responsible for providing employee benefits, such as sick leave and health insurance, and they often don't have to provide workers with office space, equipment and training. A gig model also enables a business to contract with experts, who might be too expensive hire as full-time staff, for specific projects. The workerFrom the worker's perspective, a gig economy can improve work-life balance compared with many traditional jobs. Independent workers are able to select freelance jobs that they are interested in, that provide new opportunities, and that look right for their preferences and schedule. They don't get stuck in a full-time job that doesn't interest them or have the flexibility they need. This sort of freelance economy also lets workers choose when they want to work and helps them avoid being locked in to or dependent on a single employer. The consumerConsumers often find a gig model provides more choices and convenience in personal services offered. In many cases, services are higher quality and offered at lower prices. Services are also offered more flexibly, and there are more choices in service providers, as well as times and locations of offerings. Issues with the gig economyDespite all the advantages, the gig economy has considerable downsides, including the following:
What impacts the gig economy?Shifting political, cultural and business environments affect the gig economy. For example, changing government regulations and company policies around the employment status of gig workers -- who is considered a full-time employee versus an independent contractor -- can alter the gig workforce. A full-time worker may be eligible for certain benefits and a base level of pay that an independent contractor would not automatically receive. One example of this is California's Assembly Bill 5 (AB5), which became law in January 2020. It required companies to reclassify independent contractors as employees. Later that year, California voters approved Proposition 22. It allowed app-based ride and delivery service drivers to remain independent contractors, overriding AB5. Legal challenges are currently working their way through the courts. Some other factors that have affected gig work and work in general include the following:
This was last updated in February 2022 Continue Reading About gig economy
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