What Is the Gig Economy? Definition, Pros & Cons

SOURCE: TYCOONSTORY MEDIA

Gig Economy is rather referred to as a free-market system, where independent contractors, short-term workers and freelancers are hired by traditional businesses. Their task is to perform individual jobs, assignments or tasks. This term is derived from performing arts, where comedians, musicians are paid for individual appearances known as ‘gigs’. Millennial generation workers seem to be interested in deriving greater flexibility to balance their life-work demands. This compels them to change jobs numerous times throughout their lifetimes. This economy thrives due to advancements in technology, fast-speed net and the ability to work remotely.

Related Post: 4 Ways to Keep Your Remote Workforce Happy

What is the size of the present Gig Economy?

Moreover, the digital economy also grew by 5.6% annually on an average between 2006 and 2016. This is when compared to a growth of 1.5% in the overall economy. This economy supports 4 percent of the total employment in the U.S., which are approximately 6 million jobs. It is quite similar to industries such as warehousing, transportation, wholesale trade, insurance and finance.

Industry experts believe that Gig economy is likely to develop much faster. The reason is people have started to realize the benefits of adopting mobile devices. By 2020 end, approximately 70 percent of people across the globe (6.1 billion people) are expected to use a smartphone. This is a sharp increase since 2014 from 2.6 billion users.

Pros & Cons

Know the advantages

  • Flexibility: Gig workers can choose any type of work depending on their convenience and the place available. They can work from home, thus managing family and work schedule demands.
  • Variety: The work rendered can be interesting as it will be a mixture of different types of tasks. This way, gig workers can be creative and enthusiastic in their work.

Know the cons

  • Modest pay: Although earning potentiality is $15,000 annually, studies revealed that approximately 85% of workers earn $500 or even less a month. Hence, they are compelled to work on multiple gigs.
  • Stress: They are likely to face increased stress due to multitasking. They are to complete the assigned tasks within the specified timeframe.
  • Expenses & Taxes: Legally, they are not classified as ‘employees’. This is because Social Security taxes or income tax is not deducted from their paychecks. But quarterly tax payments are to be made to the IRS depending on their earnings. Tax payment generally ranges around 25–30 percent from their paychecks. They are held responsible to own work-related equipment such as computers, internet, smartphones, car, bike, etc. Only a few expenses are tax-deductible. They are also to consider expenses on tax preparation software or accountant services.

However, the pros seem to outweigh the cons, thereby helping the Gig Economy to enjoy greater demand in 2021.

Originally Published on https://www.tycoonstory.com/market/what-is-the-gig-economy-definition-pros-cons/

I'm Divya an elegant writer for Tycoonstory Media

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store