4 Reasons why the gig economy will only keep growing in numbers

https://www.forbes.com/sites/abdullahimuhammed/2018/06/28/4-reasons-why-the-gig-economy-will-only-keep-growing-in-numbers/#462d52c611eb

Right now, more than one in three workers are freelancers. Of the freelancers who are over 55, 49% are using supplemental gig work to help fund their eventual retirement. This contributes to the overall growth of the gig economy, but the news isn’t all good. Overall, 40% of freelance workers worry that they will not be able to retire comfortably, yet they are not giving up on their vocation.

Further, the workforce share of gig work rose from 10.1% in 2005 to 15.8% in 2015. By 2020, half of the U.S. workers will be freelancers. Let’s take a look at some of the reasons behind this trend as well as some of the challenges that gig workers can expect to face.

1. The educational gap may be contributing to the growing gig economy

It is predicted that by 2020, the United States will have 1.5 million fewer college educated workers than the economy needs. Another 6 million will have not completed high school. This is in spite of the fact that college attendance and graduation rates have improved overall and more people are taking degrees online. Similar developments are expected in other countries.

As a result, a few things are happening now and can be expected in the future. As companies struggle to find people to fit their skill needs, they will have to be flexible. This could mean expanding geographically to find workers they need. They may also have to rely more intensely on gig workers to meet needs that they cannot via full-time hires. In addition to this, workers with a lack of diplomas or degrees are more likely to be forced into unskilled gig work such as data entry or IC driving.

2. Changing attitudes towards work is driving more people to freelancing

As millennials move into business management and members of Gen Z begin participating in the workforce, existing attitudes about work are changing. The option to freelance is becoming more appealing because it allows members of these generations to prioritize the things that are important to them. In fact, 43% list having a flexible schedule as the most important reason to work independently. Other reasons include the increased ability to travel, spend time with family, the appeal of working from home, and to a lesser extent, avoiding office politics.

In addition to this, freelancing may offer people an increased chance to select companies and projects that appeal to them. Since it has become clear that millennials are selective about the companies they wish to be associated with, freelancing, especially remote work, can offer them a wider field of opportunities from which to choose.

3. Employers are increasingly using gig workers to lower costs and meet project needs

The gig worker is often viewed as an “economy” hire. Sixty-six percent of large companies are using freelancers and other gig workers to lower labor costs. The desire to cut down the overheads will not likely disappear in the next few years. And with the rise of new technology for communication and remote collaboration, it may no longer even make sense to have all the staff being physically present in one space.

Additionally, 58% of midmarket companies report that a significant driver behind their use of gig workers is to access skills and experience that is not available in their current workforce. Great talent tends to be concentrated in certain areas, and not always open to permanent relocation. Remote work or contract-based work arrangements can help companies attract the right talent and fulfil current needs to remain competitive.

4. Technology and infrastructure are growing to accommodate freelancers

Cloud computing, advanced networks, and other technologies have combined to make working remotely a possibility for people across the globe. A few years ago, this wasn’t possible. Even in highly developed, urban areas, there simply wasn’t the telecommunications infrastructure for people to work efficiently any significant distance from their offices. In addition to this, much of the hardware and software required was priced out of the range that many people could afford.

Today, someone can order business quality phone and internet for not much more than they would residential quality. Finding wifi connectivity is rarely a problem, even in some of the most remote areas of the world. There are also multiple apps and software that enable workers to do video conferencing, project management, and other tasks remotely.

The truth is, the gig economy has allowed people who may not be able to find full-time employment an opportunity to earn money. In some ways, this is beneficial. For example, earning supplemental income to help guarantee a healthy retirement is a good thing. So is opening up opportunities to workers in emerging nations.

On the other hand, as more people move into freelancing, that’s fewer people receiving health insurance and other benefits through employers. There’s also the issue of pay. The ugly truth behind the gig economy boom is that many companies are drawn to using gig workers because they can pay them exceptionally low wages. Many are paid below minimum wage.

For both businesses and workers, there are many reasons to find the gig economy appealing. Workers enjoy the flexibility and freedom of choice. Businesses enjoy picking from a larger talent pool. Still, these benefits must be balanced with the acknowledgement that the gig economy can be extremely exploitive, and the changes occuring between workers and businesses may not all be positive.