What is the gig economy?

The gig economy is an economy that operates flexibly and where labor and resources are exchanged through digital platforms that actively promote the matching of buyers and sellers.

In the gig economy, companies hire independent contractors and freelancers instead of full-time employees. This is because tasks are assigned ad hoc and do not require a structured schedule. Similar implementations can be seen at companies like Uber, DoorDash, and Airbnb. The temporary employment economy results in cheaper, more efficient, and flexible service offerings, providing consumers with a unique and rapid alternative to the usually standardized alternatives.

In addition, it is very popular with younger audiences as it is exclusively administered online. In the United States, it is estimated that about one-third of the population has some form of employment. That number is expected to grow as more organizations work with independent contractors to save time and money. The temporary employment economy has grown exponentially in popularity over the last decade and is now a popular way for individuals to earn an extra income. More precisely, it is estimated that 1.6 million workers worldwide get their income from the gig economy.

What are the Advantages of Working in a Gig Economy?

Operating in the gig economy produces a wide array of advantages realized by both the business and the workers.

Shown below are some of the advantages realized by businesses:

1. Cost-Effectiveness:

Minimizing costs and expenses is widely considered one of the major benefits of operating in the gig economy. This is because businesses are able to hire off-site workers which significantly reduces the need to maintain expensive workspaces and large offices. Additionally, hiring an independent contractor completely eliminates key costs such as employee benefits, retirement plans, and paid leave.

2. Labor force:

The gig economy provides a workforce that can connect businesses directly with freelancers. This eliminates the hassle of dealing with intermediaries in the hiring process and makes it easier to find people to fill the job.

3. Output production:

Modern workers in today's society are beginning to value flexibility much more than in the past. This is the reason for the rise of the temp industry. People interested in earning extra income will be encouraged to apply for a job that offers a unique work schedule. This flexibility has a direct impact on employee motivation, which in turn creates a positive association with the resulting output.

Here are some of the benefits that workers have achieved:

1. Independence:

Independent contractors in the gig economy are not required to work in offices but in their own spaces. It ranges from someone who works in a home office and writes articles to someone who drives from their car for Uber.

2. Flexibility:

Employees who are active in the gig economy are allowed to work any hours. In most cases, an employee is given a task with a deadline, but when they work on it is entirely up to them.

3. Income:

As mentioned above, the gig economy is an increasingly attractive market due to the flexibility it allows people to earn extra income.

What are the Disadvantages of working in a gig economy?

While the gig economy has a wide range of benefits, there are also drawbacks that often make the process difficult. Here is the list of cons made by companies:

1. Employee Commitment:

 People who work freelance may not be as involved in their organization as if they were hired full-time. Additionally, gig economy companies are generally not known to incentivize their employees. Arrangements like this can lead to loyalty issues, further reduce the likelihood of working and reduce overall motivation to work.

2. Ethical issues:

In some cases, organizations operating in the gig economy have been criticized for the ethical practices they engage in. Their employment is precarious, does not provide benefits, and generally does not offer competitive wages.

The disadvantages felt by workers in the gig economy are presented below:

1. Lack of benefits

Organizations operating in the gig economy do not offer benefits to their employees. Independent contractors are not fully “employees” of a company.

2. Personal Expenses

In some cases, gig economy organizations are not required to cover personal expenses such as gasoline used while driving DoorDash.

3. Quarantine

Being an independent contractor is a very independent job. For some people, cleaning up is an important motivating tool, but for others, it can lead to feelings of isolation, which can negatively impact productivity and mental health.