Reflecting on the gig economy: What its ‘first wave’ can teach us about investing, homeownership and the changing nature of work
It’s no secret that rising student loan debt, an increasingly high cost of living and stagnant wages are making it take much longer for millennials to afford the same luxuries as previous generations, particularly when it comes to buying a home.
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However, thanks to the rapidly growing gig economy, millennials are pursuing contract and freelance work to help them reach their financial goals. While Lyft and Uber may have helped lead the way for nontraditional workers, today’s gig work is hardly limited to ridesharing — and it attracts people of all ages, backgrounds and skill sets who are looking for more flexibility than a standard 40-hour work week provides.
As a platform for connecting people to part-time, one-time and contract work, Steady is seeing industry trends unfold and supporting a diverse community of workers. With this in mind, what lessons can everyone take from this “first wave” of the gig economy?
Here are a few, from both workers’ and employers’ perspectives:
- Gig work is here to stay. A recent survey of U.S. workers by Upwork and the Freelancers Union found there are 56.7 million freelancers in the United States, making up approximately 35 percent of workers. Freelancing has experienced a growth of 3.7 million workers since 2014, and these numbers will continue to rise as more companies look to contractors to occupy positions previously held by full-time employees.
- Older workers embrace gig work, too. Nearly 50 percent of millennial workers may be freelancing, but make no mistake: The gig economy is for everyone. Contract and freelance work allows retirees to boost their retirement funds and cover unexpected costs. (In fact, my father belongs in this category; a few years ago, he needed to look for part-time work to cover his expenses and increase his savings. Thanks to a couple gig platforms, he was able to find flexible jobs that matched his skill set.)
- Financial planning tools are essential. One significant lesson we’ve learned from the gig economy is there’s absolutely no “safety net” when it comes to healthcare, sick/vacation days, or retirement — benefits that most full-time employees enjoy. For contract workers, it’s up to them to ensure their finances are in shape and prepare for retirement. Whether it’s on paper, with software or with the help of professionals, income tracking is crucial to help gig workers recognize their month-to-month income volatility and understand what they’re earning versus what they should be earning.
- Advancement opportunities are scarce. One drawback to freelance and contract work is that, for the moment, workers have fewer chances to advance within a company.
- Change should happen — on all levels. Let’s be honest: There’s little incentive (aside from a PR standpoint) for employers to change or rethink their policies. Generally speaking, our system is built around having predictable work and one employer who provides the aforementioned “safety net.” But given the rapid, growing change in the nature of work, that infrastructure needs to change at the legislative level.
- The future of work looks bright (and big). As the space continues to grow and more companies look to the “Uber and Lyft model” of employment, new companies will continue to emerge, providing new services and creating competition. Overall, today’s contract and freelance workers are satisfied with their jobs. As these “alternative workers” become even more mainstream, one hopes that rates of job happiness will also rise.
With the gig economy’s first wave behind us, workers can move ahead with a better understanding of the tools they need to manage their finances and, of course, find work. Millennials can proactively pursue gig work to help them afford homes and achieve their short- and long-term goals.
In the last decade, companies have learned how a workforce comprised of mostly independent contractors and nontraditional workers can be profitable and sustainable. As we enter the next wave of the gig economy, this should spark serious conversations about the evolving nature of work, how workers are treated and how benefits are enacted.
Article By Adam Roseman, CEO of Steady
Adam Roseman is the CEO of Steady, a groundbreaking platform building a better future for America's workforce by helping them fill their income gaps, as well as manage their income. Prior to Steady, Roseman Co-Founded two businesses in Asia and spent the first decade of his career in M&A advisory.