What do you think of when the words, “Gig Economy” come up?
Regardless of your “Gig Recognition Score,” these kinds of personal revenue options are becoming more and more popular…or perhaps, they are becoming a necessity. I wonder if it seems “too good to be true” that a person would drive their car all week and actually make an income that will support them. You know the saying, “If it’s too good to be true…”
As more people become involved with the Gig Economy, trends on the success of this employment model are coming in. So far, it’s not a pretty picture.
A quick review of the “Gig Economy” vocabulary includes:
- The sharing economy
- Part-time worker
- contingent workers
- Contract employee
- Casual employee
- Outsourced staff
- Freelance worker
- Independent contractors, etc.
Is the Gig Economy a new phenomenon?It’s important to realize that this employment model is not new. For example, universities began hiring adjunct faculty decades ago. This article by Forbes writer, Dan Edmonds, tells us that, “By 2011, 51 percent of college faculty were part-time.” He states that the actual number indicated that 70 percent of college faculties were contingent employees. Is it obvious that the quality of a college degree has deteriorated? (Perhaps we can all agree that education is over-due for an overhaul.)
A part-time job is something with which we are all familiar. Economix writer Catherine Rampell cites an “unsettling trend” in the recovery from the Great Recession. This includes the rise of part-time employment. She also writes that this would be less troubling if employees were electing to have fewer hours. But that is not the case. I highly recommend this article. My point is that part-time work, where a person needs multiple jobs to make ends meet is a part of the gig-economy—which is not new.
What has caused the Gig Economy to explode?One specific driver of the Gig Economy certainly points to technology. Cell phone apps that allow connectivity to a potential solution-provider has caused much of the substantial growth. So, the answer is “technology.” No surprise; technology has caused the Gig Economy to explode.
A second reason companies switch is simply ensuring a profit. An article back in 2013 shows that employee wages, benefits, payroll and other costs account for up to 30% of the labor costs. So when a business needs to pare down expenses, layoffs are likely. Then the business demands that the reduced workforce now has an additional workload to make up for the people lost in the layoff process.
When a company switches to a contingent workforce, the savings are enormous. By opting to hire temporary or part-time workers, they reduce cost through benefits and other advantages. These workers do not have a contract for “ongoing employment.” This allows for seasonal engagements or the flexibility to hire for specific projects. Companies enjoy cost savings on training, benefits and a host of other budget reductions.
On the one hand, during the Great Recession, businesses were strapped to stay afloat. Managing their bottom line was essential… so these changes were understandable. On the other hand, here we are 10 years later. The economists tell us we have recovered and we see companies reporting record profits. But, but, but… the workload of the reduced workforce has not returned to pre-recession demands and the part-time and temp jobs remain.
The challenge to businesses includes finding top talent that will invest in the business in the same way an employee would. This article in Forbes showcases Jody Greenstone Miller, CEO of Business Talent Group (BTG). BTG is leading-the-charge for on-demand business talent. She encourages businesses to take the plunge to hiring freelance talent. Her firm will find the exact right consulting talent to match the needs of a business. (Just like employment agencies, BTG obviously takes a percent of the contract…money that would otherwise go to the freelancer.)
Did the Gig Economy create a monster?Did the Great Recession provide a one-way-street for companies to raise profitability at the expense of their full-time permanent workers?
By joining the Gig Economy, many businesses pared down their expenses. They stayed afloat and for many, they have increased their profit margin through changes in their labor costs. This in turn has given them an advantage over companies whose may still have higher labor costs. Further, the companies that have moved to freelance workers now have a new model in place—which puts them ahead of companies who may just be starting the change.
Therefore, if companies are going to remain competitive; if they haven’t moved to the Gig Economy model; they may have no choice but to do so in the near future.
Do workers lose by switching to the Gig Economy?The primary woes to the worker includes lower wages, less job security, and reduced access to benefits such as healthcare, retirement programs, and paid time off. These challenges are significant.
I hold to my evaluation that the greater the skills needed, the greater the pay. (This assumes there is a market for those skills) Conversely, If minimum skills are required, minimum wages are likely.
Therefore, Airbnb, Lyft, Uber and the others, that require a modicum of skill, will not likely generate significant income.
Can the Gig worker ultimately win?I believe the answer is YES.
There is a process that I have outlined on how to manage your career and make the Gig Economy work for you. This process clearly outlines exactly how you can evaluate your abilities under the umbrella of the current job market. That is key. Again, the more in-demand your skills, the higher your compensation.
Neil Patrick and I understood these changes to the workforce are coming and quickly! That’s why we wrote Careermageddon. Part 1 presents the Six Engines of Change and tells you what you need to know so you can read the jobs market and stay ahead of the curve. Part 2 outlines a process to re-evaluate your skills as changes occur and establish your credibility to potential employers.
I hope you get the book. I hope you read it and embrace these changes so you and your family can enjoy the revenue you need and a future that is bright.
That’s why we wrote the book.
Please get the book. …and navigate your future with stealth.
If you need help managing your career, contact us.