Even if you aren’t familiar with the term “gig economy” chances are you’ve participated in it. If you’ve ever used Uber, AirBNB, or Etsy you are doing business directly with the person who owns the car, apartment, or goods you are in need of. Technology has created a space for regular folks to conduct business together. Nearly half of adults in the U.S. have participated in the gig economy, either as freelancers or as clients, and Uber’s explosive growth is a sign things aren’t going to be slowing down any time soon.
EBay was arguably the start of the gig economy. Individuals participated in the buying and selling of goods on a massive scale in the mid 1990s. Smartphones made it even easier to buy and sell goods on an individual basis, and eventually the idea made its way into other areas of the economy. The so-called “sharing economy” was born with the idea of renting your house when you weren’t going to be there or sharing a ride with someone who needed one using an app to connect someone who has something to share with someone with a need who is willing to pay for it.
Uber was small and limited at first, but as people warmed up to the idea of having a car come to pick you up at the touch of a button it spread all over the world. In just five years Uber has come to be valued at over $60 billion, making it the fastest growing startup in history. Whether you love it or hate it, Uber is here to stay.
So what does this mean for the freelancers? According to one survey over 70% of freelancers are happy with their arrangements, describing their experiences as positive. Twenty-two percent described their experiences as mixed, and 2% described their experiences as negative. However, 58% of freelancers said they felt like providers were exploiting the lack of regulation in the industry. Pros of the freelance lifestyle are that you can break out of the 9-5 rut and choose to work when you want, but the cons are that you are lacking in any sort of safety net such as healthcare or sick days or retirement matching.
Even for employers there are risks to the “gig economy.” For starters, you lose control over how and when your freelancers work. There’s also growing government scrutiny over how workers are classified, and eventually there could be regulations placed on the industry. But for now using freelancers is great for a company’s bottom line- you save on health insurance, 401k contributions, payroll taxes, and office space among other things.
Some companies that started out with freelancers are reverting back to more traditional business models. It’s easier to get employees to stick around when they have good pay and benefits- the old models are tried and true. Learn more about the gig economy from this infographic. It’s growing and changing, but it has definitely made a lasting impact on the business world.