Contractor Management 10 min

The future of gig economy and its impact on work

Written by Pedro Barros
June 28, 2024
Pedro Barros

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The traditional nine to five grind is fading fast.

Flexible work arrangements, remote jobs, and side hustles have surged in popularity (sparked by the recent pandemic), alongside a wave of technological innovation, pushing us into a new era of work. The gig economy is a way of working and earning, which typically includes freelance work, short-term projects, independent contracting, or side hustles.

From graphic designers and virtual assistants to drivers for ride-hailing platforms and copywriters (plus apparently, even NBA players) — this rapidly growing sector is transforming the modern workforce and giving workers and businesses access to new opportunities.

Below, we’ll dive into the gig economy’s benefits, and how it’s ushering the future of work into an era of flexibility and agility. 

What’s driving the growth of the gig economy?

The whirlwind growth of the gig economy is changing how we work, and how we think about work. It’s expanding swiftly in size and versatility, with an estimated 35% to 40% of the US workforce being part of the gig economy at the end of 2020. 

The digitization of work

Driven by technological advances and the increasing digitalization of skills and processes — the gig economy has made work accessible to more people around the globe. 

For instance, digital tools (instant messaging and video conferencing) and collaborative platforms (Slack, Microsoft Teams) make it easy for employees to communicate no matter where they are based. The automation of routine tasks via software, artificial intelligence (AI), and robotics has also led to increased efficiency ‌for workers in the gig economy.

Changing attitudes and culture around work 

This shift towards more dynamic working styles is rooted in a change in culture and attitudes around work and life balance, and opportunity.

What you once got from working for the same company for decades — a stable salary for your loyalty, pay increases in line with the cost of living, and the monetary ability to hit traditional life milestones comfortably (like home ownership, starting a family, and saving for retirement) — is not that easy to come by anymore.

So the savvy among us have reshaped their approach to the value they can glean from their skills, while others simply don’t want to be part of a never-ending 40-hour work week (seeking more time for life itself, instead).

Flexibility and independence have become paramount, so much so that governments have introduced and reworked employment laws to keep up — from digital nomad visas to increased worker rights around working style requests (such as WFH, flexi-time, or condensed hours). 

Workers increasingly value autonomy

People want to work in ways that fit their lifestyles and goals. The gig economy makes this possible, especially where workers have faced pushback or a lack of cooperation from their former, traditional roles.

Exploring multiple interests, working around personal commitments with more ease, or the ability to tap into a side project — the gig economy has quickly become the modern answer for those who want these options as a reality. 

What’s more, the gig economy has given us more options for earning money. Instead of being boxed into rigid paths toward set careers (built around degree qualifications or certain years of experience), almost anyone can participate in the labor market, on an equal footing.

link to The future of remote work: Insights from Gillian O'Brien

The future of remote work: Insights from Gillian O'Brien

Gillian shares her thoughts on how businesses can thrive in the future of remote work.

Successful gig workers can use their skills and experience to start their own ventures or contribute to the growth of existing companies, but on their own terms. But it’s not as simple as great skills equal success. Success as a gig worker is closely linked to your network, sometimes your location (even though this is becoming less important), and often the financial resources you start with. 

The potential for higher income with gig work

The gig economy can be a prime opportunity for those looking to bolster their income, tap into multiple income streams, or transition away from traditional employment. This flexibility and the potential for increased earnings have drawn in a wide range of workers, from students and retirees to those simply seeking more control over their work lives. 

Though suddenly earning a lot more money isn’t the reality for most gig workers. They are more likely to earn similarly, or less than the traditional employment alternative (though this does vary widely by industry), making this more about flexibility and taking back control of your time, than turbo-charging your way to huge checks. Also, without a regular paycheck each month, it can become difficult to financially plan, especially if you find yourself with months in between gigs. 

Access for those excluded from traditional employment

In theory, the gig economy makes it possible for people from all backgrounds to access income opportunities. Skills and expertise matter the most when you’re pursuing gig work, less so a laundry list of formal qualifications. This type of culture has opened doors for those otherwise pushed out of traditional career paths or conventional organizations, especially those from marginalized communities. 

Though, it’s important to note that the gig economy is not a full-scope solution to the exclusionary nature of many traditional roles. Those who are disabled, neurodiverse, or from other groups that face disproportionate levels of discrimination (and may even span multiple groups here) often enter the gig market out of survival, with a lack of other tangible options.

Employer inflexibility pushes workers with complex needs out 

Sparked by the onset of the pandemic, remote work gave access to opportunities to those otherwise excluded from conventional ways of working, as did the rise in more general flexibility around working styles. Being able to remain at home, avoiding commutes, flexi-time, condensed hours (and if you’re genuinely committed to a better, more inclusive way of working as a company, asynchronous working is on the table too) gave workers with more complex needs the chance to earn income on their terms.

This includes those with care responsibilities, those with physical or mental illnesses and disabilities, or those facing high levels of stress from being forced into one size fits all approaches. 

Since then, return to office (RTO) mandates, and shifts from remote working to compulsory hybrid set-ups have ripped essential flexibility from workers like these. Many of them have since turned to the gig economy out of survival, and while some have thrived, others feel trapped by a lack of flexible options

Progressive employers give all workers flexible options 

Forward thinking employers make sure workers like these have choice, and aren’t punished for having needs that don’t fit “the norm”. Innovative employers give everyone maximum flexibility, whether it’s a lifeline for them, or not. That’s what respecting autonomy looks like in action.

How does the gig economy benefit businesses?

The gig economy presents a strategic advantage for businesses too, especially when seeking to optimize costs, access global talent, and adapt to changing market conditions.

Scalability and flexibility

Businesses can easily scale their team up or down depending on project requirements. If you find yourself needing more writers for a one-off marketing campaign — hire freelance writers (our Freelancer Hub means you can manage all your business admin for freelance hires in one place). If your busy periods for deliveries are seasonal — onboard additional drivers temporarily. This agility helps businesses adjust to fluctuating workloads, without long-term commitments.

Cost-effectiveness

Businesses can avoid the high costs of yearly salaries, benefits packages (health insurance, paid time off), and office space for full-time staff. They only pay for the work completed, making it a more variable cost based on project needs. This means businesses can allocate resources more efficiently and reduce operational costs. It’s not about cheap labor (freelancers and contractors often have higher rates to account for the lack of benefits) but about funneling resources in a dynamic way.

Talent pool expansion

No longer limited by geographical constraints, companies can tap into a global talent pool. This allows them to find highly skilled specialists, or niche expertise that might not be readily available in their local area.

Faster, better, adaptable

With easier access to talent, businesses can complete projects faster compared to traditional hiring processes. This allows them to capitalize on market opportunities more quickly.

By outsourcing tasks, businesses can free up valuable resources and internal staff to focus on core competencies. This can lead to increased efficiency and productivity.

How will the gig economy shape the future of work?

The gig economy is expected to continue expanding rapidly, driven by technological advancements, and a growing preference for work flexibility — especially among Gen Z and younger millennials

There's a clear trend toward the gig economy becoming a staple in the professional lives of many. Rather than it experiencing a temporary boom, and then tapering off, it’s growing rapidly and taking root.

People are increasingly engaging in multiple gigs, often alongside full-time jobs, turning passions and side projects into monetizable ventures. This trend is evident in both the service and product sectors, where individuals ‌utilize online marketplaces to reach a wider audience.

Companies and workers alike are adapting to this new model of work, which allows for a dynamic engagement with the labor market and a personalized approach to career development.

- Pedro Barros, Senior VP, Contractor Management

Not everywhere is catching on at the same speed

While the gig economy offers flexibility and opportunities for individuals and businesses alike, remember, it’s growth hasn’t been the same everywhere, either. While the gig economy is robust in areas like the US and EMEA, where there is surplus capital and a high demand for flexible work arrangements, the dynamics can vary significantly by region.

The rise of the gig economy means policy has to be updated

The gig economy will also challenge governments and policymakers. Their task will be to ensure that gig workers are not left behind with protections (and benefits next), and to address the potential downsides of this new economic landscape. This includes worker exploitation and tax revenue considerations.

Technology is pivotal to the gig economy

The advancement of digital platforms has made it easier for businesses and workers to connect. We can work from virtually anywhere, manage diverse and global client bases, and receive payments from across the world without major complications.

As this sector evolves, understanding how to operate within this framework globally, and leveraging new technologies will be crucial for those looking to thrive in the gig economy.”

Beware of the risks of misclassification

The perception and classification of gig workers differ widely, affecting how gig work is structured and regulated.

Since gig workers often perform tasks traditionally done by employees, it can blur the lines of classification. Misclassifying an employee as a contractor can lead to legal trouble for businesses, and they may be liable for unpaid taxes, benefits, and other costs.

Get started with gig work

While the gig economy offers increased flexibility and potential for innovation, it also poses challenges that need to be addressed to ensure that the future of work is secure and equitable for all.

If you’re keen to hire contractors yourself, or you’re intrigued about how your business can make use of gig workers or freelancers — we have helpful resources to get you started.

Download our Contractor Management Master Pack to learn how to onboard, pay, and manage global contractors at scale.

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