Most people would know that the term “freelancer” has been around for decades (think “freelance journalist” or “freelance photographer”), and recognize that the word “gig” has been most commonly associated with bands who played “gigs”. Both terms are used to refer to independent contractors who provide services without having the legal status of an employee. They are synonymous with small, short-term job prospects outside of the traditional nine-to-five.
But today, the terms “gig” and “freelancer” have taken on new meanings. The freelance space is ripe with possibilities for an amazing number of entrepreneurs all of whom are seeking flexibility in their personal and professional lives.
Platforms like Airtasker, AirBNB, Upwork, Fiverr and other apps like Uber and MenuLog have created amazing opportunities for people who want to work at times and in places of their choosing. I’ve been a gig worker (freelance writer) for over 10 years now, and engage all of my team members on a gig basis as well. I use Uber when I don’t have my car, and place random jobs on Airtasker (like Mike, who dug 5 holes and planted shrubs on my nature strip on Sunday).
The desire by many to work only when they want to (late into the night, only mornings, weekends, while the kids are at school etc), paired with the rapidly evolving technology that allows us to easily post a gig, bid on a gig, pay for/get paid for that gig, and leave reviews – all on our handheld devices – has inspired many more people to pursue work within this “gig economy”.
Understanding the Gig Economy
Up until a few years ago, careers mostly existed as a self employed person, or within in a traditional economy. Professionals committed to full-time work and rarely changed positions, all with the goal of maintaining a prosperous lifetime career. A gig economy, at its foundation, differs from this by focusing on hiring freelancers and independent contractors by the “gig”, rather than full-time employees.
One of the reasons that the gig economy has become such an interesting space is its unprecedented growth over a fairly short period of time. In the years since the global financial crisis, the professional world has seen an increase in the volume of temporary, contract, and freelance work. Why? For starters, more people are either looking for a steady stream of flexible work or are hoping to supplement an existing income with gig work.
Take the United States, for example. Statistics estimate that the gig economy employed nearly 53 million U.S. professionals in 2016. That accounts for roughly 34% of the entire U.S. workforce. Figures estimate that by 2020, almost 43% of the U.S. workforce will consist of freelance professionals and others driving the gig economy.
Who is Involved in the Gig Economy?
Once upon a time, professionals such as musicians and artists were considered to be the primary demographics of the gig economy. While freelance work is, without a doubt, still popular among those groups, the truth is that the gig economy is made up of more diverse disciplines than ever before.
And while gig workers might not all have an industry or skill in common, they do (for the most part) share one common bond – they are using the internet to reach their customers.
The advent of social media has created a thriving digital space for freelance professionals, from millennials to baby boomers. Workers can connect with clients from all parts of the globe to keep a steady stream of work coming in. All you need is an internet connection and the savvy to communicate and market yourself via digital media.
What are the Benefits of the Gig Economy?
Although professionals choose to cultivate careers in the gig economy for different reasons, there is one primary force driving freelancers today – flexibility. Young and old professionals, alike have become increasingly attracted to the idea of work/life balance and have opted to pursue opportunities within non-traditional workplaces that provide this flexibility.
In a gig economy, professionals can:
• Work when they want. Not all people are at peak productivity during the normal nine-to-five.
• Work where they want. Freelancers can work from anywhere in the world.
• Work how they want. Freelancers can set their own standards for work.
• Be their own boss. Freelancers are not obligated to accept work from a manager. Instead, they can control the type of work they accept.
According to figures from the United States Census Bureau, Americans in 2014 spent nearly two trillion minutes commuting to work. That’s nearly 30 billion hours and a collective travel time of 3.4 million years. In a gig economy, freelancers can cut their commute times to practically zero.
Common Pitfalls in the Gig Economy
Despite the benefits, there are a number of pitfalls to be aware of when considering operating in this new economy.
One of the first things to consider is that succeeding as a freelancer requires excellent communication and marketing skills. Unlike the traditional work atmosphere, where you earn connections through your employer, freelancers are responsible for marketing themselves and cultivating their own vast network of professional contacts. In a way, freelancers must treat themselves like companies.
Freelance professionals must also consider the fact that they are responsible for covering their own taxes and, where applicable, superannuation payments. While traditional full-time employees receive a form to deduct taxes from their paycheques, freelancers are responsible for paying any taxes that apply to their country, including GST in Australia and New Zealand and VAT in the UK (again, where applicable).
Freelancers must also cover all business-related expenses – from food and lodging to the necessary equipment and materials. A worker in the gig economy is responsible for covering costs of operation from top to bottom. Unfortunately, many freelance costs do not qualify for a deduction in the way that many traditional business expenses do.
It is difficult to claim items such as a home office, utilities etc, even if you have a registered business, but items like your smart phone and computer, and a vehicle where it is integral to providing your services, might be claimable.
Different countries have different regulations, but here in Australia, becoming a driver for ride-sharing companies like Uber or Shebah are being increasingly regulated, both in terms of police checks, insurance coverage, and licensing – and it all costs money. It is not simply a matter of being approved by the service and hopping in your car.
Depending on the nature of your business, these pitfalls may be too much to ignore. It’s important that freelancers consider all these factors before deciding whether or not the gig economy is a fit.
Planning to Jump into the Gig Economy?
Just how robust will the gig economy become? Only time will tell. However, if innovations in digital technology and social networking continue to push the boundaries in the professional world, the gig economy – and all its professionals – appears poised to turn the traditional corporate world on its head. And I’m loving it!