The Growing Importance of The Gig Economy

Technology always influences the economy, but it’s done so in a particularly dramatic way over the past few years. In particular, the rising availability and popularity of GPS-enabled smartphones, laptop computers, online freelancer platforms, and time tracking apps allow people to easily find clients themselves and work from home rather than seek employment in a traditional office setting. At one time we only thought of musicians as searching for the next “gig.” Now, many people are choosing to freelance and join the “Gig Economy” as opposed to the traditional work environment.

This new technology has also made it possible for people to start immediately earning a living in fields that would have previously taken much more effort to enter. This is the case with ride-sharing apps like Uber and Lyft in the taxi service industry and Airbnb in the lodging industry.

About a third of the American workforce is already made up of freelancers, and that number is only growing, with one Intuit study projecting the figure to pass 40% by 2020. The gig economy has grown far too large for anyone to ignore.

More Competition Is A Boon For Consumers

For consumers, the gig economy offers many benefits.

  • It’s much more affordable and more convenient as well to have an Uber pick you up than it is to hail down a taxi.
  • Compared to a hotel room, a stay in an Airbnb will save you a lot of money, and you even receive a better service – an actual person’s home is usually more interesting and memorable than some cookie cutter hotel room.
  • In many cases, consumers are being charged less at traditional businesses as a result of the gig economy, as this is what such businesses have to do to keep up with all the new competition.
  • Operational costs are lowered, and that saving has been passed along.
    Consumers also benefit from the convenience of expanded availability of goods and services. A recent survey by The University of California at Berkley shows that rider pickups from app-based transporters are significantly faster and more reliable than traditional taxis.
  • Higher quality is often the outcome of the gig economy.
  • Expansion has offered more choices.
  • Online reviews of products and services are extremely helpful when we look for quality and deliverability.
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The Gig Economy Is More Of A Mixed Bag For Workers

As a benefit, the gig economy provides opportunities for low-wage workers to make significantly more money than they would at McDonalds or any other minimum wage job.
Flexibility is a major upside for workers in this arena. Independent workers can now set their own schedule and juggle their workload with personal time with the family. They enjoy more control over what they do and when they do it.

The best way to get ahead today is to identify one thing you love doing that’s in a growing field. This economy offers a lot more options for workers to do so.
But it wouldn’t be true to say that everyone in the workforce is better off now with the gig economy. Just ask cab drivers and hotel managers – they surely prefer things the way they were before.
And then there’s the security factor. Traditional jobs often come with things like long-term contracts, guaranteed 2-week notices, and severance packages that make it relatively easy on your financial situation to transition over to another job.

Freelancing gigs don’t come with these perks, making it possible to suddenly miss out on a lot of expected income. This is a scary prospect when rent, electricity, and other bills are to be paid consistently.

This Economy Is A Challenge For Businesses

The impact of the gig economy on businesses has been much more negative. The competition compels businesses to lower prices and make less profit, and the number of highly-skilled workers going independent has forced many businesses to bump up their salary offers and take a big hit on payroll expenses in order to attract top talent. Professional business consulting is often required for businesses to figure how to best face the challenges the gig economy brings.

In comparison, large companies are different. They are constantly searching for the high-growth market and have the advantage of working capital to adapt their business model. The iPhone has been a boon for Apple. However, they didn’t start out making their now desirable gadget. They did, however, focus on an incredible growth opportunity that they were well suited for.

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Whatever you do, it’s in your best interest to adapt as well as you can to gig economy. It won’t be going away anytime soon. It’s a desirable opportunity for many entrepreneurial people, creating new opportunities for workers and benefits for consumers too.