What Scares People Most About Working in the Gig Economy
The term “gig economy” first gained popularity in 2009 during the Great Recession. That’s when newly unemployed workers began taking on several temporary jobs to cobble together an income while they looked for full-time work. Since then, it’s become increasingly common for workers to jettison full-time employment in favor of taking a series of short-term jobs. Google searches for the term have boomed since July 2015.
Up to 15.5 million people — accounting for 10 percent of all employment — rely on contingent and alternative work as their primary source of income, according to a report by talent acquisition software company iCIMS. “The reality is a lot of people are doing it intentionally and because they want to, even workers who are older and more experienced,” said John Wright, iCIMS chief economist.
Yet, despite claims that the gig economy will keep growing and forever change the U.S. economy, there are growing concerns that the gig economy isn’t actually as large as predicted and that, as the U.S. economy improves, more full-time jobs will be created and many gig workers will begin looking for full-time jobs. In fact, two prominent researchers, Alan Krueger of Princeton University and Lawrence Katz of Harvard, recently published a paper warning that they overestimated the impact of the gig economy.
While many gig workers say they prefer the flexibility of taking on contract assignments over holding a 9-to-5 job, they also admit there are downsides to being an independent contractor. Here are 12 things contingent workers are most fearful of in the gig economy.
Poor Job Security
Lack of job stability was cited by 46 percent of respondents in the iCIMS study. Being a gig worker “requires a lot of gumption,” Wright said. “People won’t just hand work to you. There is always the feeling you are only as good as your last project.”
In fact, 27 percent of iCIMS respondents said there is more competition for contingency jobs than for full-time positions.
Constantly Finding Work
Most contingent workers find new assignments through referrals from friends, colleagues and professional contacts so it’s essential for gig workers to invest in networking by participating in conferences, online communities and social media.
Multiple Jobs, Many Bosses
To earn enough revenue to replace a full-time job, gig workers need to take on more than one job at a time. Most contingent workers need to juggle at least four jobs at the same time to earn enough income, according to the iCIMS study.
Lack of Career Resources
Employees who work on their own find fewer opportunities for career development. In fact, according to the iCIMS study, 17 percent say there’s less potential for advancement and 14 percent say there are few opportunities for mentorship.
No Retirement or Health Care Plans
Saving for retirement and paying for health insurance were cited by as top challenges by 61 percent of the iCIMS respondents. Gig workers need to be proactive about contributing to their retirement savings and? health care accounts, Wright said. They also need to keep track of their income and pay their own state and federal taxes.
Lack of Other Insurance
Gig workers aren’t eligible for unemployment benefits or disability. They also could be putting themselves at financial risk if they don’t have professional liability or business insurance and something goes awry on the job.
Most independent contractors work alone yet nearly 50 percent say they miss having coworkers, according to a study by Porch, an online site connecting home homeowners and home improvement professionals. In addition, 43.9 percent say they miss feeling connected to their coworkers, 29.4 percent miss being part of a team and 19.5 percent miss company events. Some gig workers (13 percent) say they even long for office gossip.
Lack of Steady Income
If gig workers don’t work, they don’t get paid. There’s no paid sick leave or vacation time. And, unlike a steady, biweekly paycheck, there’s no guarantee that gig workers will be paid on time. Independent contractors often spend time each month following up with their clients to make sure they are paid on time. In fact, 75 percent of Porch study respondents said they miss having a steady income.
It’s much easier to replace a contractor than a full-time, salaried employee. More than one in four gig workers say they worry they'll lose a client or contract without notice, according to the Porch survey. In fact, nearly 55 percent said they are always looking for new job opportunities in case their current client replaces them or stops sending them work.
Possible Lower Wages
While independent contractors can potentially earn more money as a gig worker than they earned working full time, there’s no guarantee that they will. Contingent workers often turn to lower paying jobs such as dog walking, home cleaning or ride sharing when they can’t cobble together enough income from knowledge-based jobs.
Lack of Equipment
Independent contractors need to use their own equipment to perform tasks, and if they don’t have the right tools, they need to buy them. Employers often don’t provide contract workers with smartphones, computers or vehicles, even if this equipment is essential to performing their job.
Court Rulings Could Limit Independent Contractors
A 2018 California Supreme Court ruling limits businesses from classifying workers as independent contractors, putting the burden on California employers to prove a worker is an independent contractor, not a full-time employee. Massachusetts and New Jersey have already adopted similar employment standards. Many worry that this ruling will have a long-term effect on gig workers across the country, making it much more difficult for employers to classify someone as an independent contractor.