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The Gig Economy Explained: Why the Jobs Market is About to Change Forever

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Have you heard about the “gig economy?”

The chances are that you’ve heard people talking about it in the news, but have no idea what they are going on about in their discussions. The gig economy isn’t as confusing as it sounds. Economists and financial journalists use the term to describe people that look for contract work online.

In this article, we’ll unpack everything you need to know about the gig economy. We’ll also look at how working online is changing the world, and what we can expect from the evolution of the gig economy in the jobs market as we move into 2020.

How the Internet Evolved the Workplace

Only a few decades ago, people that worked from home were a rare commodity. To work out of your residence was a luxury that many people still dream about to this day. Most people that worked from home were entrepreneurs that founded a business, or they were professionals working remotely off-site.

Everyone else had to drag through a commute, that’s getting longer with every year that passes. Today, more people work from home than ever before. Recent surveys conclude that people that work from home are also among the top earners in America.

The primary driver for the increase in people working from home is the internet. The launch of the worldwide web and its cultural adoption in the early to mid-2000s opened up more opportunities for people to find work anywhere in the world.

With an internet connection and a laptop or PC, you can now get in touch with people looking for contractors, without leaving the comfort of home. The internet paved the way for a new communications system, and people started to post jobs online, hoping to get a response.

Some smart entrepreneurs saw a gap in the market and decided to create a platform where people could come together to post and apply for short to medium-term contracts. As a result, the Internet’s first jobs platform for freelancers birthed into existence.

Freelancer, initially founded in 2009, paved the way for a new means of looking for work online. Now anyone can post a job and its description, and then wait for hungry freelancers to bid for the chance to win the contract.

It wasn’t long before many other freelancing platforms started to pop up online. Fiverr and UpWork are also examples of platforms where freelancers and employers come together to negotiate terms and conditions around short to medium-term contract work.

Today, millions of people rely on these platforms to find work every day. It’s a challenging and competitive environment in which to operate, but it’s possible to make a living.

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What is the Gig Economy?

By now, you should be starting to get the concept of the gig economy. In case you are still hazy about the whole spiel, then we’ll ensure that you understand the complexities of the gig economy by the end of this section.

The gig economy describes a working situation where people use the internet to find short-term contracts or jobs. For example, an Uber driver is part of the gig economy, and so is a writer that finds work through job platforms like Freelancer.

The gig economy involves people working when they please and on their terms. If you want flexibility and the power to choose your work, then the gig economy offers you this luxury. For instance, if you’re an Uber driver, no boss is telling you when to go to work. When you feel like earning money, you turn on your app and jump in your car.

As a result of the flexibility of working in the gig economy, many people find it an attractive means of making a living or supplementing their current income. Working in the gig economy is going against the traditional rules of the workplace.

With a typical 9 to 5 job, you’ll need to adhere to a dress code, find transportation to your office, get along with your colleagues, and listen to your boss’s instructions. Managers hound you throughout the day to boost your productivity, and everyone in the office can’t wait for the weekend to arrive.

By working as part of the gig economy, none of that applies to you. While this sounds like the ideal working environment for you, you also need to be aware of the drawbacks of choosing a career as a freelancer. When entering the gig economy, you need to be sure that its right for you before you take the plunge.

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The Transition to the Gig Economy

So, now that you have a firm understanding of the gig economy, you might be wondering what led to the rise of remote work? The internet is a content machine. Every 48-hours, global users upload enough content online to replicate the entire written history of the human race. That’s a staggering statistic.

There is so much demand for content online that it will leave your head spinning. Websites need content, and whether that blogs or videos, someone has to produce that content. Webmasters may be geniuses at running and maintaining sites, as well as enhancing the marketability of the site through the use of SEO practices. However, they often don’t have a clue about how to produce excellent content, and they also don’t have the time to put it together.

As a result, these individuals rely on freelancers for their content needs. You can pick up freelancing jobs in a variety of categories. Writing, editing, music production, website design- these are only a few examples of the skills required in the gig economy.

The growth in the jobs market online is also taking a toll on US employment figures. According to the data from the BLS, more seniors are entering the workforce than young people. At the same time, America is currently experiencing a mass exodus of millennials from the job market. People between 25 and 40 are in the prime working years of their lives. However, the data shows that more of them are fleeing the workplace.

However, unemployment figures continue to remain low. So, where are all these millennials moving their careers? The answer is to the gig economy.

It’s challenging for the BLS to track Americans that decide to take part in the gig economy. It’s one of the reasons why seniors seem to be getting more work than millennials. However, seniors are far less tech adapted than millennials. Therefore, seniors are more likely to find employment in a traditional job than they are to apply for work online.

The current job numbers show a shift in participation in the labor force, away from the traditional employment positions, and into the gig economy. We expect this shift to continue to increase in intensity as we move further into the digital age.

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The Pros and Cons of Working in the Gig Economy

Just like with anything else in life, there are pros and cons of working in the gig economy. Below we list what you can expect from a career as a freelancer.

Pros of Working in the Gig Economy

  • Independence – Working in the gig economy has many benefits, and one of the best is the level of freedom and independence it provides for freelancers. By working online, you get to avoid a commute, you don’t have to deal with a boss directly, and you control when and where you go to work.
  • Flexibility – The best part about working online in the gig economy is the flexibility it offers you. If you’re tired of the same old 9 to 5 grind of getting up, going to the office and coming home, then the gig economy might be what you’re looking for to bring some flexibility into your daily routine. You choose when you want to work. If you had a hard night last night, then you don’t have to get out of bed until noon if you don’t feel like it, no manager is screaming in your ear.
  • Variety – There are so many jobs available through platforms like Freelancer, Upwork, and Fiverr, you’ll never struggle to find a contract. Regardless of whether you work in web design, video production, or you write blogs; there is plenty of work available. Log onto one of the freelance sites and browse through the categories. Take a look at the job posting in your industry and start applying for contracts.
  • Remuneration – Freelancers earn money when they complete a contract. On most of the sites, you’ll have to bid for the work. However, the lowest bidder does not always win the contract. When people choose to work with a freelancer, the budget might not always be the most critical part of the hiring process. Some people might be looking for a higher quality of content, and they are willing to pay more.
  • Supplemental Income – If you have a job, and you’re looking for ways to earn more money on the side, freelancing in the gig economy presents you with an excellent opportunity to boost your bank account. Go to work during the day, and take part in the gig economy in the evenings and on the weekends.

Cons of Working in the Gig Economy

  • Getting Started is Challenging – The gig economy is growing. If you take a look through a platform like Fiverr, you’ll find hundreds of thousands of freelancers posting their services. It’s getting more challenging to stand out from the competition online. Most Freelancers rely on a quality rating, and testimonials, to provide social proof of their capabilities to potential clients: the better your score, the more jobs you’ll receive.
  • However, getting started presents you with a catch-22 situation. You don’t have any experience or client testimonials – So, how do you find work? You’ll have to discount your services deeply until you build a solid reputation on the freelance platforms.
  • No Retirement or Employee Benefits – When you work for an employer, they contribute to your retirement account in the form of an IRA or 401(k) program. However, when you work for yourself, you are solely responsible for your financial future. You’ll need to set up a Roth retirement account for yourself and ensure that you make contributions toward your retirement.
  • Self-Employment Taxes and Quarterly Filing – As a self-employed individual, you have responsibilities to Social Security and Medicare. Most employers pay half of these costs for their employees. However, as a freelancer, you’re responsible for covering the full amount yourself. Speak to an accountant to understand your tax obligations.
  • Isolation – One of the drawbacks of working from home, instead of out of an office, is isolation that comes with the job. Freelancers have flexibility ion their schedules, and time on their side, but they don’t have anyone around to talk to during the day. As a result, some people might find that they fall into depression.

If you’re comfortable as a lone wolf, then you’ll probably have no issues of working in the gig economy. However, if you crave social contact with others during the day, then stick with your day job. This situation may also suit new mothers that need to earn an income while staying home with the baby. Freelancing lets you work whenever you like, without the need to send your child to daycare.

Wrapping Up – The Gig Economy is the Future of Work

The changes in the economy are trickling down to all levels. The shrinking employment opportunities are disappearing from the traditional workplace as more people move online for business and work. It won’t be long before working from home becomes the new normal, and the gig economy is one of the leading industries employing millennials.

With the rise of AI, more jobs are experiencing automation, and the traditional workplace will experience a massive shock when the singularity arrives within the next ten to 15-years. Many people will have to move away from their careers as their jobs experience automation.

Preparing yourself to work in a digital environment is the best way to safeguard your employment opportunities in the future. By entering the gig economy, you get more control over your career and your financial life.

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Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business.His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More.He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased reporting.oliver@moneycheck.com


Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank or credit card issuer and have not been reviewed, approved or otherwise endorsed by any of these entities.


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