A new survey by daVinci Payments found that the gig economy grew by 33%, reaching $1.6 trillion in 2020 despite the economic uncertainty caused by the coronavirus. At first glance, this may seem surprising considering more than 22 million Americans lost their jobs at the height of the pandemic, but gig work offered many the flexibility they needed to make ends meet.
Why American’s Turned to Gig Work
One of the biggest perks of gig work, temporary or part-time work by independent contractors, is control. As someone who is self-employed, you decide what work you want to do and when you want to do it. During the pandemic, this flexibility allowed those in need of a job or additional income to work as frequently as needed. In fact, of those who gig, 59% said they do it to supplement their income, while 42% said they like the flexible scheduling that gigging offers. For example, families that had kids learning remotely could have parent A helping with schoolwork while parent B worked. After parent B returned home, parent A could pick up gig work during the evening.
The Power of Apps
In the past, when you thought of independent contractors your mind likely went to writers, graphic designers, photographers or more. However, cell phones have brought an entirely new meaning to freelancers and gig work. Through applications like Lyft, Postmates and Instacart, the opportunities are now available in the palm of your hand. Not only do users have the choice of when and where to work, but apps have streamlined and simplified the process of finding work and getting paid for your services. More than 70% of freelancers have trouble getting paid at some point in their careers, according to the Freelancers Union, so having a reliable source of income through the app is a huge win for gig workers.
The Challenges of Gig Work
While gig work has been a source of income for many throughout the pandemic, it has its own set of challenges to face. The biggest challenge for independent contractors is securing benefits like health insurance or saving for retirement. While many traditional jobs offer benefits, gig workers must secure them on their own using the Affordable Care Act or by establishing their own IRA. Another challenge for gig workers is unpredictable income. Depending on the work, it’s likely that gig workers will earn a different amount of income each day. This unpredictability can make it more difficult to create a budget and plan for their future.
What to Anticipate for 2021
The gig economy is growing and showing no signs of slowing anytime soon. As of January 2021, more than 10 million Americans are unemployed, and gig work is a great solution for those who need income and need it quickly. In addition, we’ll likely see more states address gig worker classification following the passage of Prop 22 in California, which stated that gig companies won’t have to reclassify their workers as employees; however, it does require companies to provide an earnings guarantee and healthcare subsidies for drivers based on their average hours per week.
The challenges of the pandemic pushed many individuals to adapt and find new ways to make an income while traditional jobs were scarce. While gig work may not be the best fit for everyone, it’s become a solution for many and will only continue to grow in 2021.
Charles Jackson is a published author and has consulted with a variety of small-business ventures. As president of the Association for Entrepreneurship USA, Jackson and his team serve, support, represent and promote the discipline of entrepreneurship for those have, or wish for the freedom of successfully driving their own business.