Gig Economy 101: Everything You Need to Know About Today’s Hottest Workforce

The Gig economy is on everyone’s lips these days, but what is it, and what impact has it had on the modern workforce? This article breaks down exactly what’s driving the immense growth of Gig workers, and what role marketplaces have in managing supply and demand.

This is part of an extensive series of guides about workforce management.

Is the Gig economy the same as the freelance economy?

First off, let’s take a moment to define the Gig economy, and differentiate between how we think about freelancers and Gig workers. The Gig economy is the rise of work that relies on people performing simple one-off tasks, or “Gigs”. The difference between Gig workers and freelancers as we see it is that while freelancers naturally have a longer-term relationship with their clients, being paid per unit of time, or for specific deliverables or projects in a group – Gig workers are usually paid for a set task, and then move onto the next. Your Uber driver is a Gig worker, while the non-employee you use for sporadic, ad-hoc graphic design projects is a freelancer.

The Gig economy therefore relates to the rise of workers who perform one-off or single project-based tasks for individuals. While of course they might end up working for the same clients again in the future, each task exists in a silo, and they are paid for completing that specific need.

Understanding the growth of the Gig economy

There are so many reasons why the Gig economy has exploded into the modern workforce. First off, Gigs don’t take any commitment from the worker, and are totally flexible. That means many employees decide to add Gigs on top of their everyday work. They might teach at a school during the day, and then offer Gig-based one-off lessons in the evenings via Tutor.com, or they might be a full-time desk worker who picks up jobs on TaskRabbit on their way to or from the office. At any point, they can scale up to make some more money, or down again if they are low on time. For anyone hit by the recession in 2008, or even furloughed during COVID-19, the Gig economy provided a way to earn some extra dollars with the ultimate flexibility and control.

On the demand side, many businesses also relied on the Gig economy during COVID-19 to keep the lights on. Business owners couldn’t open the doors of their stores, but they could lean on Gig workers to pick up items and drop them at the kerb of customers in need. Restaurants had to shut front of house, but they could keep the kitchens open as long as they had Gig workers to make deliveries. Even services like online tutoring, virtual events, or filling gaps due to sick workers tapped into the Gig economy during this uncertain time.

Of course, the Gig economy couldn’t exist without the rise of digitization. Now that we have widespread internet access and mobile app usage, the Gig economy has really taken off, allowing buyers and sellers to reach one another at the click of a button. Remember how your mother used to warn you against getting into a stranger’s car, or talking to people you don’t know on the internet? Well, Uber and Lyft have turned ignoring that advice into a business.

The essential role of marketplaces in the Gig economy

We’ve made it pretty clear by now that the Gig economy is heavily reliant on supply and demand. As a result, for Gig workers to find a steady stream of work, they need to be connected to buyers who need their services. As by nature their work is short-term, they are continually reliant on finding more and more clients in need of their ad-hoc services. Where it’s possible to have repeat business, like with babysitting services for example – they need a way to communicate and stay in touch with their customers. 

This is where a marketplace or a Gig economy platform comes in, and why 16% of Americans say that they have earned money using an online Gig platform. An Uber driver can only find people in need of taxi services by connecting to a marketplace where individuals are also signed up and specifically looking for a lift from A to B. Without the marketplace, they are just a person driving around with empty seats in their car!

There are also additional benefits to working through Gig economy marketplaces. One important one is that they lend the seller legitimacy so that the buyers can feel confident they are working with someone reputable. In many cases they have functionality that proves the seller is vetted or tried and tested. Think about the star rating system that many Gig economy marketplaces will use, where you can view the experiences of other customers before you. Would you happily click “Book now” on an Airbnb rental that had zero reviews, or worse still – a 1* rating? It’s unlikely to say the least.

Another great benefit is the ability to manage payments. When you’re working with a freelancer, you build trust over time, and they might have simple processes in place like a deposit or a contract to add confidence or legitimacy to those first few transactions. However, with a Gig worker – it’s cumbersome and unrealistic to have a contract in place for every time you source a logo or get a delivery picked up. By working through a platform like Fiverr or DoorDash, you get the benefit of their own in-built processes, where the marketplace acts as an intermediary, holding the payments, managing the financial agreement, and ensuring both sides are happy.

The Gig economy is here, and it’s being catapulted forward by marketplaces

Unlike freelancers, Gig workers aren’t usually looking to build a long-term client list. Instead, they want a steady stream of buyers who are looking for their services, whether that’s dropping off a take-out, renting out a room, or any other task under the sun. With marketplaces as their intermediary, Gig workers can supercharge their ability to reach exactly the right demand for their supply, add legitimacy to the work they are completing, and rely on robust systems and processes to get paid accurately and on time.

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Written by
Stoke Talent

Team

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