The gig economy is nothing new, but like many aspects of work, the nature of gig work changed drastically, and the number of gig workers increased dramatically after the onset of the coronavirus pandemic in 2020. As we approach 2023, this trend toward gig work shows no signs of slowing. We may be tempted to think that gig work is solely the domain of technology platforms such as Uber, Lyft, TaskRabbit, Airbnb and Instacart. Still, the reality is that virtually all organizations are currently positioned to benefit substantially by tapping into the gig economy.
Gig workers are an expanding and evolving sector of the labor market. According to recent statistics posted on September 22, 2022 in Zippia, the gig economy has grown by 15 percent in the past decade. That’s 15 times the rate of overall job growth experienced during that time. In addition, at least 48 percent of companies currently hire freelancers and 90 percent of these organizations see gig work as critical to obtaining a competitive edge in the future.
While we may associate our Uber driver with the gig economy, we might initially consider a CEO as something other than a gig worker. However, gig workers actually encompass any person of any skill level who provides services to a company or a consumer outside the normal confines of a traditional full-time employee/employer structure. Everyone from the DJ at your daughter’s wedding to the itinerant C-suite executive can be considered part of the gig economy, which makes a comprehensive list of gig worker types impossible.
For the broad purposes of this article, we will mainly focus on the following types as defined below.[1]
- Freelancer – A person who works as a writer, designer, performer or the like, selling work or services by the hour, day, job, etc., rather than working on a regular salary basis for one employer – e.g., app developers, illustrators or advertising copywriters.
- Consultant – A person who gives professional or expert advice – e.g., human resources consultants, IT consultants or small consulting firms like Mythos Group.
- Contractor – A person who contracts to furnish supplies or perform work at a certain price or rate – e.g., online teachers, social media marketers or web designers.
- Professional – A person who belongs to one of the professions, especially one of the learned professions – e.g., doctors, lawyers or accountants.
- Temp Worker – A person who works as a temporary employee – e.g., warehouse workers, retail staff or administrative assistants.
- Executive – A person or group of persons having administrative or supervisory authority in an organization – e.g., chief executive officers (CEOs), executive directors or vice presidents.
- Service Worker – Any person whose work is performed for remuneration – e.g., delivery drivers, grocery shoppers or dog walkers.
Keep reading to find out how your organization can benefit from this growing class of workers and the skills, flexibility and cost-savings they offer.
History Of The Gig
According to the Online Etymology Dictionary, using the word gig to describe a job of limited engagement might have been in use as far back as 1905, but it became widely employed by jazz musicians during the 1920s. The phrase “gig economy,” on the other hand, wasn’t widely in use until 2009. This may make you wonder, if people were working gigs at the turn of the century, why did it take close to 100 years for us to recognize a gig economy?
The short answer to that question is that in the first decade of the new millennium, we started to see the proliferation of web- and app-based technology platforms that enabled more gig workers to be connected with the consumers that needed and wanted their services. In the words of Molly Turner, Lecturer, Haas School of Business, University of California Berkeley and the former Director of Public Policy for Airbnb, “The gig economy is not new – people have always worked gigs… but today when most people refer to the ‘gig economy,’ they’re specifically talking about new technology-enabled kinds of work.”
According to a working paper entitled The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015, authors Lawrence F. Katz and Alan B. Krueger noted that:
“The percentage of workers engaged in alternative work arrangements – defined as temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers – rose from 10.7 percent in February 2005 to 15.8 percent in late 2015. The percentage of workers hired out through contract companies showed the largest rise, increasing from 1.4 percent in 2005 to 3.1 percent in 2015. Workers who provide services through online intermediaries, such as Uber or TaskRabbit, accounted for 0.5 percent of all workers in 2015. About twice as many workers selling goods or services directly to customers reported finding customers through offline intermediaries than through online intermediaries.”
Even though two times the number of workers found gig work outside of tech-based platforms during these early years, technology platforms decidedly changed the game. And now, due to the COVID-19 pandemic, gig workers are more plentiful than ever. A survey from DaVinci Payments that was done in February of 2021 found that in the first year of the pandemic (2020), the gig economy grew 33 percent to more than $1.6 trillion. Of the 2,788 workers surveyed, 74 percent said that COVID-19 made gig work either important or more important to their financial security.
Let’s take a closer look at why the pandemic served to accelerate the participation in the gig economy so that we can fully understand how and why companies like yours are currently positioned to reap the benefits from leveraging this growing talent pool.
The Pandemic That Changed Everything
In the early days of the global coronavirus pandemic, the gig economy expanded at an exponential pace. Many workers found themselves out of work or furloughed, and many were driven to gig work out of necessity. According to the DaVinci Payments survey mentioned above, 59 percent of the workers who responded said that they started working gig jobs to supplement their income and 14 percent said they “gigged” because they couldn’t find a full-time job.
The demand for gig work also increased at a dizzying speed. During the government-imposed lockdowns, people turned to the gig economy to get groceries, foods, medicines and other necessities delivered to their doors. Companies like Instacart became indispensable for millions of people who couldn’t or wouldn’t leave their homes. According to Instacart Revenue and Usage Statistics (2022), the grocery delivery service was losing $25 million a month in 2019. In 2020, after the onset of the pandemic, Instacart hired 350,000 shoppers and had $35 billion in grocery sales.
Instacart wasn’t the only one employing gig workers. In 2020, it was estimated that gig workers represented about 35 percent of the U.S. workforce, a percentage that was up to 20 percent higher than it was in 2014 and represented roughly 57 million Americans that contributed more than one trillion dollars to the U.S. economy annually. What many of these workers learned in those early days of the pandemic was that they could actually make ends meet working gig jobs, and it gave them much more flexibility and autonomy than their previous jobs did. Of the gig workers in the DaVinci survey, 42 percent said that they liked the flexibility that gig work offered.
Gig workers weren’t the only ones who appreciated this flexibility. Their customers appreciated it as well. All of a sudden, it was OK to delegate time-consuming tasks like going grocery shopping. In an article for Forbes, Ania Smith, CEO of TaskRabbit, calls this “the delegation economy.” She explains, “‘The delegation economy’ normalizes the idea that we don’t have to do everything ourselves and offers easy ways to get help from highly specialized workers. It provides economic opportunities for those who seek flexible work options with particular skill sets, especially for those now used to setting their own work schedules after working remotely for so long.”
It’s clear that the gig economy benefits gig workers and the customers they serve, but if you’re not an Instacart-like business, you may be wondering how the gig economy is relevant to your organization. No matter what industry you’re in, the gig economy is not only relevant to your company, but it is also significantly beneficial. Learn how in my next post.
Does this set the stage for how you can benefit? Do you have any ideas to share? Please start the discussion below.
Amit serves as a trusted advisor to C-level and senior executives to make strategic transformations actionable, impactful and sustainable.He works with businesses to improve organizational capabilities and boost effectiveness while empowering human capital to decrease cost and catapult profitability.Amit firmly believes that strategy, organizational change and business transformation are powerful forces, and that only by working together can the organization elevate itself to the next level.Amit’s clients praise him for his value and purpose, subject matter expertise, approachability, patience and confidence in addressing challenging and ambiguous situations.
A graduate of the Master’s Program from Johns Hopkins University – Carey Business School, Amit has a Masters in Strategic Planning and Organizational Development. He has certifications in Organizational Design (ODC), Leading Organizational Transitions (William Bridges & Associates / Linkage Inc.), Basic and Advance Change Management (Prosci), and PMP (PMI).His co-authored book, Turning Ideas Into Impact, offers practical insights to business leadership.He has published numerous articles and white papers.He is a frequent presenter on topics related to Strategy, Innovation, Corporate Turnarounds, and Business Transformations.
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