Gig economy 101

We break down what exactly the gig economy is and what it means for you as a gig worker, small business owner, or entrepreneur.

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Thanks to technology and continually evolving consumer trends, the job market is shifting in tandem. While the gig economy has been on the rise, it definitely isn’t a new kid on the block. We break down what exactly the gig economy is and what it means for you.

Welcome to Gig Economy 101. 

What is the gig economy?

Although it may sound like hip slang, the term “gig” goes so far beyond open mic nights; it describes a large swath of the modern economy, of individuals who are part-time or temporary workers. Within a gig economy, it’s both common and preferable for companies to hire freelancers or independent contractors rather than full-time employees.

However, the term encompasses individuals who pursue positions as full-time independent contractors, as well as those who might take on a role on the side.

What led to the growth of the gig economy?

As mentioned previously, short-term jobs are not newfound innovations. However, with the devastating financial crisis in 2008, the need for any job, even a temporary one, or an additional source of income rapidly escalated. And, like many rideshare drivers will tell you: these types of jobs are perfect for those seeking flexibility and a supplementary form of income.

According to Harvard Business Review, there are presently about 150 million North Americans and Western Europeans in the labor market that veered from the traditional 9-5 route for a career as an independent contractor.

Who makes up the gig economy?

The first thought you might have when thinking of an independent contractor is an individual who prizes autonomy and flexibility. While you might not be incorrect, several factors shepherd countless onto this path. However, nearly every worker conforms to one of four groupings:

  • Anyone who enjoys the license to do as they wish and uses gig work as their primary source of income.
  • Individuals that make independent jobs their main income generator but would prefer a traditional position.
  • Those who choose to do gigs for some extra pocket change.
  • Workers that take on independent work because they need additional earnings.

Gig workers clearly encompass a broad demographic in the workforce, all of who have different motivations for entering. Here are some examples of occupations that can be considered gig economy jobs:

  •  Tasker (e.g. TaskRabbit)
  • Delivery or courier person
  • Airbnb hosts
  • Artists
  • Carpenters
  • Consultants
  • Drivers (e.g., truck, taxi, Uber/Lyft)
  • Journalists
  • Musicians
  • Photographers
  • Programmers

Is the gig economy good?

While each source’s opinion differs, from the doom of the economy to the savior, there’s no black-or-white answer as to whether a gig economy is good or bad at this moment in time. There are, however, an observable handful of pros and cons of the burgeoning gig economy.

Gig economy benefits

These are some pluses, for both gig workers and customers, that explain the gig economy’s continued existence and success:

  • Access to more flexible forms of employment
  • Boost in productivity
  • Decrease in operating costs without having to provide full-time benefits
  • Generation of new jobs for the unemployed
  • Increased availability to find a perfect match for consumers’ and companies’ needs

The challenges of a gig economy

Unfortunately, a gig economy isn’t solely an independent contractor being able to work-from-home in their pajamas or the capability of having anything you might ever need to sustain yourself delivered to you through a mobile application. As surprising as it may seem, there can be downsides of a gig economy:

Financial Instability – Unlike a regular job, there is no guarantee of a steady source of income, which can be incredibly stress-inducing. Some app-driven platforms are notorious for not even compensating their workers at the minimum wage rate.

Disintegration of Traditional Careers – Some argue that the greater availability of contingent workers decreases companies’ desire to invest in full-time employees, which makes it more difficult for those seeking to stick with long-term employment to develop their careers.

Imbalanced Work-Life – Due to a lack of financial security in the contingent workforce, it may push gig workers to remain “on the grind” and even operate during odd hours. Thus, the lifestyle could interrupt sleep schedules and skew work-life balance.

Lack of Security – While it’s great to toss a conventional desk job out the window, gig work also tends to throw out steady income, health insurance benefits, and 401k structures. Not only does it mean no health coverage, but it also leaves these lone rangers unprotected in terms of risks. As with any career decision, there are going to be pros and cons, no matter what. Ultimately, being a gig worker allows you to be your own boss with the following perks:

  • Operating on your own schedule.
  • Choosing your workspace (from your couch to a condo in the Caribbean).
  • Selecting the projects to undertake.

But being your own boss will require time-management skills and some things that aren’t so fun, like insurance and contracts. The key is finding the tools and resources to make your life easier and win more work.

Securing your future

Should you choose to brave the exciting and mysterious waters of the gig economy, you should have a safety jacket. You never know what a certain job can throw your way—and without any protection, you could be found liable should something go wrong.

Being in the independent workforce means you’ll need to be the boss and bodyguard of your well-being, which means investing in general liability insurance and professional liability insurance. Since you are not a part of a corporation, and even if you were, you are exposed to risks and liabilities.

You don’t have to manage every aspect of your business alone, especially not the convoluted workings of the legal system. Everybody needs a little help.

Thimble: protection for those in the gig economy

Consider getting an insurance policy to help mitigate the consequences (legal fees, lost time working on projects, lost time finding more work) of a claim being filed against you. The gig economy has changed how, when, and where people work. At Thimble, we believe business insurance should fit to your schedule and needs. That’s why small business insurance with Thimble is affordable, flexible, and immediate.

With our pay-as-you-work structure, gig workers pay for coverage only when they need it. Choose by the hour, day, or month, and we’ll ensure that you’re covered when you’re on a job—never when you’re off.

Despite the downsides, the gig economy seems to be here to stay. So, despite what kind of gig worker you want to be, or if you’re flirting with the idea of entering the gig economy, an insurance policy is your greatest safeguard. Download Thimble, get a quote, and get insured (then get to work!).

 

Sources:

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.

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