Gig Economy: The Poisoned Chalice of Freedom
Updated: Feb 20
Image source: CareerAddict
In recent years, the gig economy in the US has become a prominent component of the modern US workforce. In 2020 approximately 57 million Americans engaged in freelance jobs, contributing around 1 trillion dollars to the US economy. Moreover, gig work is only expected to grow, with forecasts predicting that by 2027, around half of the entire US population will engage in freelancing in their lifetime.
The gig economy, also known as the sharing economy, refers to the trend of people earning income from short-term, freelance, or contract work. There are two types of gig workers. The first is those who engage in traditional jobs, with gig work as a source of additional income. The second is individuals who gain all their income from gig work. The Pew research centre surveyed working American adults. It determined that in 2021, 31% of respondents had gig work as their main job.
Proponents argue that the gig economy provides flexibility and a new source of income for people, particularly those unemployed or underemployed. Gig economy workers are also their own bosses, meaning they can work flexible hours, pick and choose the jobs they want, and pursue multiple income streams.
However, the cost of such freedom is a future filled with uncertainty. Traditional jobs typically provide worker benefits and generally a guarantee for steady pay. Freelance work does not offer this guarantee.
The lack of benefits is especially concerning, given the freelance workers' wages. A Survey done in the spring of 2020 by the Economic Policy Institute but published in 2022 discovered that around 14% of gig workers made less than the US federal minimum wage of 7.25$. When accounting for individual state minimum wages, this percentage increased to 29%. Such deprivation leads to severe hardships, such as 31% of gig workers being unable to pay their utility bills. In comparison, 19% reported going hungry for extended periods of time. In traditional jobs, employees can negotiate wages with their employers through unions or other forms of collective bargaining. However, full-time gig workers are classified as independent contractors and are not negotiating under any employer. So changes in economic factors such as inflation, competition, or tax must be dealt with by the gig worker alone.
While freelance presents new opportunities for some, it raises concerns about job security, benefits, and wage levels. As the gig economy continues to grow, policymakers and economists should monitor it and consider steps to ensure that all workers are protected and able to share in its benefits. It is also essential for individuals to consider their role in the gig economy and make informed choices about their employment and financial future.