The Current Landscape of the Gig Economy

The Gig Economy is a fascinating development in our workforce. While nowhere near “new,” its recent hold on Talent Acquisition and HR conversation is interesting. For one, the elements the Gig Economy has been enjoying throughout their careers are slowly being implemented as perks within the permanent labor force. Think: remote working and flex scheduling.

The term floods our publications and research. We discuss how it will affect the future of hiring and the stability of our workers and organizations. Hot topic or not, what does the landscape of the Gig Economy actually look like?

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Technology saddles a great deal of the blame when it comes to the influx of Gig work and the conversation that surrounds it. Businesses like Uber, Door Dash, and Postmates established a whole new approach to employment. Their models allow individual workers to make their own schedule, work as many hours as desired under the classification of an independent contractor.

Getting paid is as simple as turning on an app and finding a sale, the app merely making the connection. And yes, similar models have existed in their own right, but with these “on demand” positions, there are no requirements of the employee to work. That raises concerns of the dedication a company has for its employees in return.

In many circumstances, because of shifting responsibility, the wage setting process essentially just becomes contracting for services. For instance, if you, General Motors, a major auto company, are setting the wages for your janitors, you are much more cognizant of their pay relative to the rest of your pay structure. You may be taking into account that they are your employees (or whether they are union or non-union). But you likely will not make that same consideration if they are subcontractors working for someone else, and you are just paying a different party for janitorial services.David Weil, Administrator of the US Labor Department’s Wage and Hour Division

Read more: Online Staffing is Engaging Contingent Workers

Almost half of the workforce are freelancers or independent contractors.

In 2015, the US government released a report stating that 40.4% of the workforce is now made up of contingent workers. This is factual, and yes that is a drastic increase from 2005 when contingent workers made up nearly 31% of the workforce. Nearly half the workforce is considered contingent. The problem is what most people consider a contingent worker. We hear contingent, we think Gig Economy (freelance, contracted, and all other tax-exempt employees). Unfortunately, what we see as Gig is only a fraction of what the US government labels “contingent.”

Here’s how that 40.4% breaks down:

  • 16.2% are standard part-time workers
  • 12.9% are independent contractors (who provide a service or product and find their own customers)
  • 3.5% are on-call workers
  • 3.3% are self-employed workers (shop/restaurant owners, etc)
  • 3.0% are contract company workers
  • 1.3% are agency temps

These numbers show that it’s actually the definition of contingent that is one of the leading causes of this idea of the Gig Economy take over. In fact, the standard part-time worker is actually the largest percentage of the contingent workforce, which is rarely considered within the same league as a freelance or independent contractor.

What we see as “Gig Economy” is only a small fraction of what the gov’t labels #contingent: Click To Tweet

The Majority Want Task-Based Work Arrangements

Recent studies find that only about 800,000 Americans work within the Gig Economy. Contingent or not, a majority of today’s workforce is mobile. This can be as simple as answering emails from a handheld device outside of the office or as encompassing as working remotely 100% of the time. There’s a belief that employees are restless, looking for a new employer every few months to every few years, while dreaming of flex-time, or work-from-home hours.

While a great deal of people are interested in those accommodations and opportunities, it’s nowhere near the majority. In fact, 58% of freelancers agreed providers were exploiting the industry model and lack of regulation. 71% of Gig workers claim their experience is positive, so they continue providing their services. It’s important to note many of these workers might have a more traditional job in addition to their Gig work.

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Millennials Want Contingent Work

Millennials, the generation overtaking the workforce are driving the change to contingent work with their tech-savvy tendencies and interest in hyperconnectivity.

  • 91% of Millennials own a smartphone
  • 71% of Millennials use the internet as a main source for news and information

Interestingly enough, Millennials are actually very much interested in the same things as the generations before them. This includes achieving a healthy work life balance which can be easier to do with contingent work agreements.

Like those in every generation before them, millennials strive for a life well-lived. They want good jobs — ones with 30-plus hours of work a week and regular paychecks from employers. They also want to be engaged in those jobs, meaning they are emotionally and behaviorally connected to them.Amy Adkins, Gallup

While contingent might be the direction many organizations are taking, it seems that employees are possibly more interested in the potential for skill development than the flexibility itself. Professional development or career growth are important to 89% of employees in the North American workforce – 87% of Millennials cite it as very important when choosing a job. All this goes to show the growth of contingent labor stems more from this and the growth of technology than any one generation.

The next few years with more tech advancements and, even the Department of Labor’s updates to the Fair Labor Standards Act, will undoubtedly affect practices and trends in the Talent Acquisition space. As always, Talent Tech Labs is watching it all with analytical eyes.

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