Even When Pandemic Ends, Gig Economy Is Here to Stay
The “gig economy,” which first was popularized during the 2009 recession, has now become an even more significant fixture in our current economy thanks to COVID-19 and promises to grow to become an even greater influence post-pandemic.
What has become known as the “gig economy” (or freelance economy) involves creating income from short-term assignments. Providers perform work, bill the source/client directly and operate as sole practitioners. There is nothing new about the concept, but the current business climate creates obvious advantages for both the source of the work and the provider of the product/service.
Employers who utilize freelancers do not have to deduct for Social Security, Medicare, or state and federal withholding. Income to the freelancers is accounted for through a 1099 form, placing the tax compliance onus on the freelancer. Moreover, employers do not have to pay benefits such as health or life insurance.
The freelancer, on the other hand, has the convenience of doing the work at his/her home and at his/her convenience. A busy freelancer can earn far more on a per hour basis doing “gigs” or assignments than he/she can make as a full-time employee. Most importantly, the quality of work produced by the freelancer is often far superior than the employer can get from hired staff
Gig work has especially helped parents continue to work as children were forced to stay home during the pandemic. Parents could watch the children during the day and work at night.
In a similar vein, university professors and retired executives often provide private consultancy. Lawyers with specialized skills, such as litigation and intellectual property, will often take on short-term assignments with corporations or law enforcement organizations. During the pandemic, laid-off executives and technicians turned to freelance assignments to make up for lost income thereby adding new sources to the gig economy.
A study by the Boston Consulting Group (BCG) and Harvard Business School (HBS) reports the accelerated movement towards the freelance economy “is more than a stopgap: it is a means for resolving the chronic problems companies face while filling talent needs.”
“Business leaders cannot risk missing a critical opportunity to build a more flexible, resilient organization,” according to Harvard’s Joseph Fuller, professor of management practice and co-chair of the Project on Managing the Future of Work at Harvard.
Rebecca Henderson, a contributor to Forbes and a board member of Randstad, the world’s largest human capital company, observes that not only has the volume of gig work increased during the pandemic, but competition has increased as well. “Workers who participate in the gig economy as their sole source of income must now compete with one another as well as previously full-time employees who have been forced into gig work.”
William Arruda, founder of Rach Personnel Branding and senior contributor to Forbes, writing in a July 12, 2020, article “6 Trends That Will Shape the Gig Economy In the 2020s,” outlined the following trends we can expect to see in the “gig economy” moving forward:
- Automation will act as a fork in the road. The Internet is the crucial cog in the freelance world.
- Executives will get in the game. “While low-ranking roles will continue to be the big-part pf the gig economy, those at the top will shift toward gig work as well,” Arruda writes.
- Stigmas will slip away. “In the future, gig workers may wear their multiple lines of work as a badge of honor,” writes Arruda, who points out that freelancers in the past have been considered second-class workers.
- Regulations will catch up. Arruda predicts employers of freelancers may be required to initiate benefits not offered previously.
- Workers’ unions will grow. Transportation Secretary Pete Buttigieg is quoted in the article as saying, “…I propose we allow gig workers to unionize because a gig is a job and a worker is a worker.”
- Business services will cater to gig workers. Arruda predicts that gig workers will need help from other gig workers such as lawyers and accountants.
Arruda concludes: “Growth brings change, and the gig economy is about to go through more of it than the traditional labor market has in decades. And for both workers and corporations, this may be a boon.”