What is the Gig Economy?
The “Gig Economy” is a segment of society’s overall economy where the workforce is engaged in short-term contracts or free-lance work in lieu of permanent jobs. Short-term contracts may be as brief as a few weeks or several months and allow companies to meet certain output demands without burdening budgets with extended overhead costs, as is the case with full-time/part-time employees.
Gig work may be as beneficial to those individuals who are looking to supplement their regular income, or are in-between traditional employment as it is to employers seeking to get additional support for a project without additional costs beyond the life of the project.
Many attribute the steady growth in the Gig Economy as the result of various market consolidations, down-sizing, and industry downturns, such as those beginning in the late 1970s: energy/utilities, automobile manufacturing, aerospace-defense companies, pharmaceuticals, and telecommunication, etc. In 2008, the overall downturn of the US economy as the US (and global markets) grappled with the “Great Recession,” contributed to a significant number of unemployed people willing to accept short-term contracts or free-lance jobs while seeking more permanent employment. For this particular downturn in the US economy Americans in what were generally considered middle management roles were significantly affected – individuals in this group (predominantly of the baby Boomer generation) have led to the vibrant Gig Economy.
Why Baby Boomers and who else is driving it?
Boomers contributed largely to the Gig Economy as they sought alternative means of income following the Recession of 2008, a protracted period toward market recovery and increased employment opportunities. In a report by Richard Johnson of the Urban Institute, the number of unemployed people aged 50 and older more than doubled from Nov 2007 to Aug 2009. Laid off Boomers in households with two incomes could explore other career paths or income sources. Today Boomers are active in the Gig Economy since age is less a factor when vying for short-term contracts. Reasons for their activity in the Gig Economy vary between direct daily financial need, inadequate retirement funds, discretionary spending or a desire to remain active among like-minded professional or community peers. For many in this age group it is likely they have children who have left home and have a house that they own, so their gig work may be less about maintaining an income and more about earning extra income for special interests.
Millennial and Gen-X-ers also contribute to activity in the Gig Economy. Millennials became involved in the Gig Economy as they moved into financial independence and began seeking more traditional roles. Researchers have found that Millennial Gig workers were most likely to proactively work in this way as they found the flexibility and freedom of the work more in line with their long-term aspirations.
Like many Boomers , Gen-X Gig participants found their way to the Gig Economy due to circumstances outside of their control. In comparison to Boomers, they feel a greater degree of pressure to perform well financially and tend to seek paths via gigs to more traditional jobs, whereas Boomers whose immediate financial needs are considered less demanding, or Millennials whose lifestyle decisions lend more in-the-now and exploring life-experiences, and less about acquiring things (E.g. travelling versus home ownership.)
Boomers and Gen X – who’s who?
The Gig Economy – is it here to stay?
Recent statistics provided by AARP note that Boomers are retiring at a rate of 10,000/day.
Unfortunately, a majority of those boomers appear to be entering retirement not because they want to but because they are being encouraged or forced to do so by their employer and are unable to secure traditional positions elsewhere.
Americans who enter their 50s holding full-time, long-term positions — the steadiest type of work — report being pushed out of their jobs by their employers. As noted in a study conducted by Urban Institute Health and Retirement Study, which ran from 1992 thru 2016:
66 percent of people working full time, full year in their early 50s on a long-term job subsequently left their employer involuntarily. Another 16 percent were still working when last observed at age 65 or later, and thus they might still experience an involuntary job separation.
It appears from the study that there is little opportunity across industries for older employees.
Incidence of Employer-Related Involuntary Job Separations after Age 50 (%) By industry
Notes: Estimates are based on a sample of 2,086 respondents employed full time, full year at ages 51 to 54 who are observed at least until age 65. The analysis considers only job separations that were followed by at least six consecutive months of non-employment or that resulted in at least a 50 percent decline in weekly earnings for at least two years. Estimates for the agriculture, forestry, and fishing industry are not reported because the sample is too small for meaningful interpretation.
A significant percentage of those boomers who experienced involuntary job loss/forced retirement are ill prepared financially to retire in the traditional sense and “enjoy those golden years”. Incomes dropped 42-65% within the first 12 months and continued to decline with age. Less than 5% of involuntary retirement boomers are able to obtain a position close to their previous pre-retirement level of income.
So regardless of where the decision making lies, many Boomers will continue to seek additional income.
Where people needs meet logistical abilities
The flexibility afforded to participants and employers in the Gig Economy through technology appears to have no limits. Working remotely from one’s home, RV or even out at sea – as long as you are able to connect to the internet, location is not an issue. Power provided through storage units and enabled by solar, wind or other means truly makes gig employees free to roam. From the employer/project manager perspective it also means there is a richer pool of experienced knowledge-based freelancers available. Some have referred to this phenomenon as “The Human Cloud”.
A CNBC article from October 2018 (4 Gig Economy Trends That Are Radically Transforming The U. S. Job Market, by Susan Caminiti; noted that:
● The Gig Economy is now composed of 60 million workers, and it is now an ever bigger slice of the American workforce.
● By 2027 the majority of workers in the U.S. will be contract workers.
● The rise is owed to these four trends: blockchain systems, F500 (Fortune 500) utilizing more contract employees, an uptick in fully remote companies and more robust networking among freelancers.
A recent CBS news article noted the increase in jobs taking care of automated systems which are replacing service counter and other stationary manual labor activities. e.g. in a coffee bar, the barista is replaced by a robotic arm.
According to FlexJobs, an online platform specializing in remote and flexible employment, there are approximately 170 virtual companies operating in the United States, up from 26 in 2014. Among the largest are Automattic, AnswerConnect, InVision and Toptal. Supported by document/file sharing and editing platforms, many virtual companies don’t actually have brick and mortar central headquarters. In addition, such platforms and blockchain systems are also providing the means to better track virtual contractor’s performance and workflow.
Next Steps for participating in Gig Economy
- Consider your motivation for becoming a participant in the Gig Economy. Are you looking for longer or shorter term projects? Hoping to convert to a permanent/full time role?
- Will you build upon skills you already have or will you try something new? If you’re trying something new, try finding training either online or at a local organization, such as a community college. Even if you’re seeking to continue in your current area of expertise, be sure to stay current on the latest trends and tools. Also, consider joining a professional organization that offers opportunities to network and hear from speakers on your subject of interest.
- What are your preferences? Do you have a specific industry in mind? Would you rather work remotely, on site, or some combination of the two?
- Once you’ve answered the first three questions, you can begin your research into your Gig-tools. How will you:
- Identify opportunities?
- Market yourself?
- Invoice and receive payments?
- Identify and obtain any apps or software you might need?
- Always be networking – reach out to former colleagues, business acquaintances, even family members. As previously mentioned, Professional Associations can be a great source of contacts and potential business leads. LinkedIn can be a great resource as well.
Resources for participating in the Gig Economy:
Some of the most common positions that lend themselves to remote support include: programming, marketing (digital), customer support services, online sales and data entry. Essentially any position where the inputs and outputs can flow through the internet can be fulfilled remotely. That does not however exclude projects that are “tangible” in nature, if the materials before and after can be shipped then work can be done off-site as well.
The following websites (in no particular order) provide resources in identifying various opportunities and suggestions in navigating the Gig Economy:
This list is by no means exhaustive. Search the internet for “gig jobs” or even “distributed jobs” (for an emphasis on remote oriented tech jobs).
The demographics of the labor market are inevitable. Given current trends, as the general population ages, more workers will probably find themselves forced out of a regular full-time job. Additionally, Americans are tending to live longer, healthier and more active lives than previous generations. These trends, coupled with existing and emerging technologies will only fuel the Gig Economy.
Fortunately, companies still require talented individuals to support their operations and goals, particularly given the demand for greater productivity. There is an abundance of resources available to workers wanting to participate in the Gig Economy, and opportunities for Gig work will only continue to expand, eventually becoming the “new normal.”
About the Authors:
Lex Konnerth (linkedin.com/in/rkonnerth3) is the Chief Integration Officer at Konnerth Consulting LLC, delivering development and coordination of effective Organization Development and Change Management strategies, which promote strategically focused, collaborative corporate culture and integrated organizational branding.
Tom Glasscock (linkedin.com/in/tomglasscock) has a broad background in HR, ranging from workforce analytics to serving as the Head of HR for Lucent Technologies operations in the Middle East and Africa. As an Independent Consultant since 2007, he has primarily focused on helping HR departments select, implement and optimize HR Information Systems.