The gig economy is a labor market full of independent contractors and freelancers working on flexible, temporary, and short-term jobs.
The gig economy is opposite to traditional full-time, permanent employment and operates on flexible and efficient services.
What is the gig economy?
The gig economy is a flexible free market system where independent workers find temporary and short-term work commitments on a centralized platform.
The pandemic escalated the freelance and remote work lifestyle, and the development of technology has made the gig economy increasingly popular.
Gig work is a sharp contrast to traditional jobs, which include expensive overheads, long-term commitments, and inclusion of employee benefits such as health insurance and retirement plans.
The gig economy differs from the sharing economy as individuals sell their skills to companies of all sizes. Either on a part-time basis, for short-term contracts, or on an assignment basis.
How does the gig economy work?
The gig economy uses digital platforms to connect freelancers and independent contractors with businesses and customers.
The gig economy is characterized by a few key aspects, such as the following;
- Individual gigs are a single, isolated source of income
- Contractors and freelancers hire contract work using technology
- Gig workers operate as independent contractors
- Gig workers are responsible for their own taxes and benefits
While many interpret gig workers as self-employed, this isn’t necessarily the case.
With the above characteristics in mind, gig economy workers don’t exactly operate as their own bosses as they sell their services through an online platform.
Benefits of the gig economy
The freelance economy offers many benefits for both employers and employees.
In the gig economy, professionals don’t need to choose a single company to commit to on a full-time basis. Instead, freelancers and contractors can choose when they want to work, as well as their rate. Employers also benefit from the flexibility of the gig economy, removing the risk that comes with a long-term contract.
Some freelance workers leverage the gig economy as their full-time jobs, while others offer services as a side hustle. In the latter instance, professionals are involved in the gig economy part-time and earn additional income working on specific projects.
The gig economy provides an array of work opportunities for professionals to refine their skills and build their resumes. By diversifying job opportunities, professionals are exposed to new projects and expand their horizons.
Access to a vast pool of talent
Employers who hire from the gig economy have access to a global talent pool at affordable rates. As the competition increases, the skill level is heightened, and the standard of work rises.
Freelancers can charge a higher rate for their services as they take on all the risk of job stability and cover their own benefits. Employers also save money by cutting costs on expensive overheads such as paying benefits and large office rentals. They also pay for services when needed, rather than hiring a full-time employee.
Common gig economy jobs and industries
The gig economy works exceptionally well in specific industries where freelance jobs and temporary positions are readily available, such as the following.
Various food delivery apps allow consumers to order a meal from a restaurant directly to their door. While the chef may be a full-time employee of Denny’s, the Doordash driver is a gig worker providing a delivery service on an ad-hoc basis. In this instance, the gig worker is the middle-man between restaurant and consumer.
The advancement of digital technology has produced various mobile apps that streamline daily life, saving time and money. Centralized transportation platforms, such as Uber and Lyft, provide drivers with ad-hoc work, making them a part of the gig economy.
Networking plays a significant role in the gig economy, and some industries take advantage of a skilled community of workers who offer their services for one-off tasks. Gig workers sign up for centralized platforms to offer services in babysitting, childcare, senior caregiving, and housekeeping. Users assess reviews and ratings before choosing a gig worker for the job.
Hospitality and travel
Hospitality and travel platforms, such as Airbnb, are an example of a gig marketplace for hospitality and travel. The platform brings two parties together and streamlines logistics, payments, and communication. In this way, individuals who provide hospitality and rentals form a part of the gig economy.
Digital freelance services
The development of digital technology has made remote work and global business possible, opening the door for digital freelance professionals to adjust their work arrangements and shift toward the gig economy. Remote jobs such as graphic design, software development, and digital marketing are prime examples of digital freelance services. Online platforms, such as Upwork, help facilitate these arrangements.
At Deel, we make it easier to hire and manage remote workers using our robust, comprehensive platform. Built for today’s world of work, our platform helps to streamline payroll, compliance, and onboarding for global employees and gig economy workers.