Remember garage bands from high school? It seemed like every third guy or girl in your homeroom class was in one. That may have been the last time you heard the word “gig” thrown around as much as it is today.
Gig Economy Definition
Bands still refer to having gigs when they’re playing somewhere for a night or two, but “gig” or more commonly “gig economy” refers to the sea change happening in America’s workforce. More and more people are foregoing the security of traditional, full-time jobs with benefits and opting for more flexible careers as independent contractors or temps.
To be fair, it’s not always the employee’s choice. Automation is eliminating more jobs, and employers are realizing that pulling in workers on an as-needed basis is more cost effective. People have had to be resourceful in finding ways to continue putting food on the table.
America’s Gig Economy
Jobs for life are long gone. Some say that America is on its way to becoming a gig economy. Others say we’re already there. It’s estimated that as many as one-third of American workers work gigs.
Uber and Lyft are perfect examples of gig-economy companies, but many smaller companies and individuals use gig employees too. Adjunct professors, online teachers, freelance writers and food-delivery services are all gig economy jobs. Gig economy job apps help employers find employees and the other way around.
Some may say that gig employment is most beneficial to the employer, but it has perks for employees too. For starters, there’s the flexibility and freedom to have a life in addition to your job.
The Gig Economy and Your Business
As a business owner, being able to hire people only when you need them and not have the cost and responsibilities of doing payroll, carrying workers’ compensation insurance and offering benefits sounds great. You can hire people as needed during the holiday season or when you land a big contract. However, there are trade-offs.
Depending on what kind of business you run, having an ever-changing workforce can negatively affect relationships with customers. Customers like having a connection with and being remembered by the businesses they frequent. The same goes for your vendors and any regular employees you keep on staff. It’s just easier and more efficient to work with people who know the drill.
A regular influx and outflow of new people can be disruptive, and then there’s the training of new people again and again. Correcting the inevitable errors new workers make when they’re climbing the learning curve takes time too, and as every business owner knows, time is money.
Gig Economy Jobs
One great thing about a gig economy is that you can usually find people with the skill set for which you’re looking — that is, as long as the work you need to be done is low-level to mid-level work. Finding qualified people at an upper-management or expert level can be tough. The more our gig economy grows, the more it becomes filled with people who haven’t had opportunities to rise through the ranks and acquire the knowledge and skills that come with that process.
A study done by Harvard University found that regardless of age or occupation, gig workers almost universally experience persistent anxiety from not having the security of a regular job. Not surprisingly, most of the anxiety was due to financial uncertainty. Ongoing stress can affect workers’ health and the quality of the work they do, which can cause problems for you.
Weigh All Factors
Like most things in life, a gig economy has advantages and disadvantages. As an employer, you should try your best to quantify the costs of plugging in temporary workers when you need them versus maintaining a steady workforce.
Don’t forget to consider the subjective factors and think hard about how it may affect your customers because without them, your business may not be successful.
LeDona Withaar has over 20 years’ experience as a securities industry professional and finance manager. She was an auditor for the National Association of Securities Dealers, a compliance manager for UNX, Inc. and a securities compliance specialist at Capital Group. She has an MBA from Simmons College in Boston, Massachusetts and a BA from Mills College in Oakland, California. She has done volunteer work in corporate development for nonprofit organizations such as the Boston Symphony Orchestra. She currently owns and operates her own small business. In addition to writing for PocketSense, she writes for Bizfluent, Budgeting the Nest, Legal Beagle, PocketSense and Zacks.