According to Statistica, the number of active internet users was approximately 4.48 billion people as of October 2019. That roughly translates into 58% of the global population. As you may imagine, a significant number of this demographic view the internet as their primary source of information. Through the internet, you’re able to keep up with the current happenings in and around your neighborhood, or around the world. Along with finding any piece of information, you can secure new jobs, find a hot date, order food, and plan fun gatherings with your friends

A large number of companies have diverted tremendous amounts of their operations online, in attempts to carve out their pond in this ever-growing online marketplace. From Retail to Travel & Tourism, and now increasingly Food Providers; everyone is itching to leverage this lucrative expanding online experience.

Everyone is taking their share

One of the largest segments flocking to cash in on the opportunities the internet offers are employees, who are being increasingly converted into internet entrepreneurs. From teachers, to musicians, coders, to writers, food delivery drivers; everyone is securing temporary part-time assignments to bring in extra cash. Some have managed to turn these part-time arrangements into permanent and primary ways to generate income. These temporary jobs are what constitute gigs and collectively make up the growing gig economy.

The gig economy has been one of the fastest-growing economies in the world, all thanks to the power of the internet. These gigs range from being fully online, to starting online and involving an offline component, such as ordering food and hiring a server online to deliver a restaurant like experience to your home. Either way, one thing is for sure; the gig economy has immensely impacted the work environment. And it give hints of continuing to do so for the foreseeable future.

But what is The Gig Economy?

The gig economy differs from the traditional work environment in three ways. First, clients here are mostly offering one-time job arrangements. Therefore, payments are task-based as opposed to being made regularly through salaries or wages. Secondly, consumers are typically looking for specific services. The service could be anything from food service gigs, catering services, taxi rides, delivery work, creating a website, to mention a few. Lastly, there are intermediaries that connect gig seekers with their clients. These connections are often done through apps or web-based platforms such as Uber, TaskRabbit, FoodiWant, Upwork and other channels. In exchange for providing a ready platform with potential clients, these companies earn a commission when the gig is successfully completed.

The definition can be relatively fluid, with different people counting different assignments to be “gig” based. In essence, it is an ecosystem that allows freelancers (gig workers) to provide their services to one or more clients (private individuals or companies), with flexible work arrangements. These flexible work options give freelancers the opportunity to work on one-offs or on multiple assignments, while keeping their day jobs. Gig workers can earn great incomes on these gig based platforms provided they do well at building a rapport with clients, prove to be reliable and can deliver on projects as agreed.

While the gig economy is not new, it has recently experienced a huge surge in popularity as new business concepts emerge backed by improved technology. It has become easier than ever to find and connect clients with gig workers looking to put their talents to good use. According to NACO, some 24% of Americans were earning secondary or primary income from “digital platform economy”. And as more people grow weary of the 9 -5 rat race, we can only expect the gig economy to grow even further.

Components of the New Gig Economy

The new gig economy comprises of gig workers, technology companies with gig based platforms, consumers and corporate clients. Gig workers are categorized into services providers, such as drivers, servers, personal chefs and delivery men; and goods providers, such as artists and jewelry retailers.

Technology platforms have significantly revolutionized the gig economy by offering intuitive app-based services. These apps make it possible for freelancers to connect with their clients in ways they never could before. Clients, who have a wide variety of needs, have also benefited greatly from the growth of the gig craze and their platforms. From being able to get convenient and comfortable transportation from eager part-time drivers. To easily creating group dining experiences and having a concierge server cater to your guests in comfort.  

What Challenges Does the Gig Economy Face?

Not everyone is receptive to new ideas, no matter how transformative such ideas may be. The same applies to the gig economy. First, the economy has remained largely undefined and unrecognized, and understandably so. Government bodies are struggling to recognize these marketplaces that lack traditional workplace structure, along with regulations and policies that govern them.  

The following are some more challenges that the gig economy faces.

Changing Mindsets of Work

Traditionally, Americans have viewed work as a full-time engagement that comes with a certain set of rules and levels of accountability. In the contrary, the gig economy is a more flexible and independent option of earning an income.

Unlike traditional work environments, the gig economy lacks elaborate chains of command, and that might limit the potential of some workers who do not have that workplace structure to be guided by. For others who have the drive and capability to manage their schedules and perform duties with a certain level of ethics, can thrive in this system, enjoying its flexibility and freedom.

The Potential of Formulating Work Policies for the Gig Economy

It’s undeniably true that most work policies were developed for traditional work arrangements. Under such provisions, an employee was expected to perform certain duties, at a specified time and place. In exchange for performing these mandated actions, a specified salary was given along with accompanying benefits.

Unfortunately, the gig economy has no such predefined benefits. Instead the responsibility of securing such benefits has been shifted onto the worker. Undoubtedly, there ought to be some legislation governing how things work in the gig economy. The law should cover the interests of both employers and freelance employees, protecting gig workers from unfair exploitation.

Regulations are slowly being developed to address this issue and protect workers in some form. The AB5 that was recently passed in California to improve working conditions of ride-share workers, is one such example of legislation being implemented by law makers to protect freelancers. Assembly Bill No. 5 (AB5) arguably may not be the right solution to solve these rising labor issues, as it seemingly aims to add traditional infrastructure to a system that is anything but. However, the fact remains that tech companies will have to develop a better system that make the gig ecosystem beneficial to all who participates in it.

Accurately measuring its size and economic effects

This is probably the greatest challenge that the gig economy faces, and that legislators will struggle to address. As most engagements in the gig economy happen online, the true size of the segment is hard to determine, and makes it tough to accurately analyze how it skews the employment rate. The lack of a clear picture of the ecosystem makes it difficult to implement equally advantageous labor and taxation policies.

A more favorable problem to consider about this segment and its immeasurability is the long term positive effects on workers and customers. Workers on the lower end of the income spectrum can generate additional cash to cover expenses they are unable to with their normal paychecks. The flexibility of the gig economy also gives workers more control over their schedules which goes a long way in managing their often chaotic and unpredictable lives.   

Those that arguably benefit the most from these gig driven arrangements is the general consumer. With varying contractors in the gig marketplace, customers have the option of getting better bargains and more favorable terms on needed services.

The overall breakdown

The gig economy is not perfect and does have problems that will need to be addressed. There will have to be changes made to protect lower skilled workers from being exploited and underpaid. These changes will possibly have to made in the way of reformatted business models, along with regulations that support, and not hamper, the gig ecosystem from continued growth.

What is apparent is that the benefits of the gig economy to both workers and customers cannot be overlooked. In the long run, giving workers the opportunity to take part in this laissez-faire trade can only help to boost the strength of the overall economy, and lower the financial strain of the average wage earner. Limiting the continued growth of this system would threaten to rip apart the world of convenience and increase trade that this system has opened for consumers.