The so-call “gig” economy in its most fundamental form has been around for a long time. Think temporary employment agencies and day workers. What has made it different – in fact has revolutionized it – is the multiple forms of digital communications connecting workers with work and an increased desire for many, including Millennials and parents, to have the flexibility to work remotely and be their own boss.
The temporary or day worker has now become the gig worker, which research by Intuit on CNNMoney.com shows is on a growth curve. Think Uber and Lyft alongside freelancers in the media industry (reporters, advertising and PR consultants).
A Growing Workforce
“The gig economy…is now estimated to be about 34 percent of the workforce and expected to be 43 percent by the year 2020,” said Intuit CEO Brad Smith in the article. “We think self-employed [work] has a lot of opportunity for growth as we look ahead.”
Why so many gig workers in 2017 as opposed to 10 years ago? Two things: the fallout from the Great Recession (December 2007 to June 2009) and digital connectivity. Throw into the mix some 80 million Millennials who prefer work independence, and you have the makings of an employment revolution.
From a Grinding Recession to Free from the Grind
Being free from the 9-to-5 grind is a key attribute of gig work, according to a Forbes.com story by Kristopher Jones, founder of LSEO, a full-service SEO company. But it got its start from the Great Recession when 15 million workers from all walks of life were unemployed and looking for a job – in some cases, any job.
“The gig economy, an idea coined in 2009 at the height of the most recent financial crisis, is not a new phenomenon,” explains Jones. “At the time, newly unemployed professionals sought short-term compensation by gigging, working a series of small short-term positions.”
The true essence of the gig economy came into being when some innovative technologists came up with the concept of tying unemployed or underemployed workers together with immediate opportunities for temporary work via expanding digital connectivity.
Uber and Lyft were pioneers and began to revolutionize the way many people work today, especially Millennials. “Uber, Airbnb and other major players are going to continue to grow and become more powerful,” writes Jones. Some believe it’s an entirely new world of work – everyone has the potential of being his or her own boss.
The Insurance Challenge
Being an independent worker has its drawbacks, primarily when it comes to benefits such as health and life insurance. Younger entrepreneurs have the advantage of youth when purchasing health and life insurance, which can be quite expensive for older freelancers or sole proprietors, a difference that could be several hundred dollars a month.
Finding affordable health insurance can be especially challenging in today’s healthcare market and there are no easy solutions if you want decent coverage. For health insurance, there are online resources that can be helpful, such as The Freelancers Union and the National Federation of Independent Business.
One of the biggest concerns that a gig worker might face, regardless of age, is the potential of losing work time due to an accident, illness or a major health impairment. Even if you have health insurance, you really need the protection of disability income insurance or a healthy bank account…which most freelancers don’t have. This can also be a concern for women in their childbearing years who plan to start a family but need a dual income to support their expenses.
“The cold reality is that, at any age, you have a greater chance of suffering a long-term disability during your working years than dying,” warns the American Institute of CPAs on its website. “As a self-employed person, suffering an illness or injury without disability income insurance could mean disaster for both your business and your family.”
The CPA website explains that disability income insurance is designed to provide for the essentials of daily life and does not replace your entire paycheck – most policies will replace 50 to 70 percent of your salary if you meet the criteria of being “disabled.” If you are planning to become pregnant, Intuit provides resources for finding policies that include pregnancy and childbirth (generally six weeks for a complication-free pregnancy and delivery).
More information on disability insurance can be found at The Freelancers Union or at the union’s more comprehensive Benefits Platform, which has information on benefit packages such as life and liability insurance. Not as easy to address are non-insurance issues that a freelancer or sole proprietor may confront, such as lack of a retirement plan (investing in an IRA is essential), and the difficultly in collecting payment of invoices. In the past, some freelancers saw loneliness as a challenge, but the recent rise of co-working offices like WeWork have offered the ability to easily collaborate with others in their fields.
Earning a living in the gig economy is not for everyone. Yet for millions today, the benefits outweigh the downsides and increasingly satisfy the lifestyles of people who value flexibility, diversity and new challenges in their work place, and want more than anything to be the captain of their own ship.