The gig economy is the economic system by which a workforce of people (known as gig workers) engage in freelance and/or side-employment. [1]
The gig economy is the economic system by which a workforce of people (known as gig workers) engage in freelance and/or side-employment. [1]
The gig economy is composed of corporate entities, workers and consumers. [2] The Internal Revenue Service defines the gig economy as "activity where people earn income providing on-demand work, services or goods", noting that the activity is often facilitated through a digital platform such as a mobile app or website and earnings may be in the form of "cash, property, goods, or virtual currency". [3] According to the Fair Work Ombudsman, the digital platforms or marketplaces connect individual service providers directly to customers for a fee. [4] The BBC presented the following definition for the term: "a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs". [5] The term "gig" comes from the slang term for individual appearances by performing artists like musicians and comedians. [6] Instead of being paid a regular salary, gig workers are paid for individual gigs performed. [5]
The corporate entities employ the services of the workers for short-term commitments for temporary work assignments. They are often disrupting a market place with an alternative form of commercial product. The corporate entities are often able provide a different type of service or product because the gig business model does not burden them with costs such as sick leave and health insurance benefits as well as office space, equipment and training. Sometimes this enables them to hire expertise that they could not otherwise afford. [2] The workers include "freelancers, independent contractors, project-based workers and temporary or part-time hires". They often enjoy greater flexibility in terms of scheduling control and work-life balance. [2] The consumers enjoy the benefit of better choices and convenience. [2]
In the design industry, gig workers are increasingly seeking legal protections around intellectual property (IP) and contract terms. Freelancers often face challenges with clients claiming ownership over creative work without proper compensation or acknowledgment. A 2022 survey conducted by Freelancers Union in partnership with the Authors Guild and other organizations found that 62% of freelancers in New York had experienced wage theft at least once in their careers, with 53% reporting losses of up to $10,000 from nonpayment. [7] Legal developments like California's AB5 law continue to influence the gig economy, aiming to reclassify some design freelancers as employees, ensuring legal protections like minimum wage and benefits. [8]
Among the common types of digital platforms in the gig economy are those to provide ridesharing services, food or package delivery services, crafts and handmade item marketplaces, on-demand labor and repair services, property and space rentals. [3] [9] A study completed in 2016 by Lawrence Katz and Alan Krueger showed an increase in gig workers, freelancers, and independent contractors of 50 percent between 2005 and 2015. These jobs accounted for 94 percent of all employment growth in the United States during those ten years. [10] As of 2021, 16% of all adults in the United States had earned income through the gig economy with higher levels of gig economy experience having accrued to younger demographics, according to the Pew Research Center. [11] As of 2017, 55 million Americans contributed services to the gig economy. [12] As of 2018, 150 million people were active in the gig economy in North America and Western Europe, according the Harvard Business Review . [13]
The size of the gig economy depends on how one defines it and whose statistics one uses. The Bureau of Labor Statistics uses the term "electronically mediated work" to represent "short jobs or tasks that workers find through websites or mobile apps that both connect them with customers and arrange payment for the tasks." A work published in September 2018 determined that such work accounted for 1.0 percent of total employment in May 2017. [14] At about the same time the Government Accountability Office stated that the definition and the data source variations support claims from below 5% to over one-third of the labor force engage in non-traditional employment. [15] According to Forbes the gig economy is a $1 trillion sector of the United States economy. [12]
Regardless of the definition used, the gig economy is growing. CNBC reported that during the 2010s, the gig economy grew by 15%. [16] Forbes describes the growth as "slow and steady". [12]
As of November 2022 the 10 largest gig economy companies by market capitalization included Intuit (tax preparation software), PayPal (online payments), Airbnb, (hosting marketplace), Uber (ride-sharing) and Shopify (e-commerce). [17] Other leading companies include Lyft, OnlyFans (content-subscription service), [18] DoorDash, and Instacart. [19]
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Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any other entity, pays the other, the employee, in return for carrying out assigned work. Employees work in return for wages, which can be paid on the basis of an hourly rate, by piecework or an annual salary, depending on the type of work an employee does, the prevailing conditions of the sector and the bargaining power between the parties. Employees in some sectors may receive gratuities, bonus payments or stock options. In some types of employment, employees may receive benefits in addition to payment. Benefits may include health insurance, housing, and disability insurance. Employment is typically governed by employment laws, organisation or legal contracts.
Temporary work or temporary employment refers to an employment situation where the working arrangement is limited to a certain period of time based on the needs of the employing organization. Temporary employees are sometimes called "contractual", "seasonal", "interim", "casual staff", "outsourcing", "freelance"; or the words may be shortened to "temps". In some instances, temporary, highly skilled professionals refer to themselves as consultants. Increasingly, executive-level positions are also filled with interim executives or fractional executives.
Freelance, freelancer, or freelance worker, are terms commonly used for a person who is self-employed and not necessarily committed to a particular employer long-term. Freelance workers are sometimes represented by a company or a temporary agency that resells freelance labor to clients; others work independently or use professional associations or websites to get work.
Self-employment is the state of working for oneself rather than an employer. Tax authorities will generally view a person as self-employed if the person chooses to be recognised as such or if the person is generating income for which a tax return needs to be filed. In the real world, the critical issue for tax authorities is not whether a person is engaged in business activity but whether the activity is profitable and therefore potentially taxable. In other words, the trading is likely to be ignored if there is no profit, so occasional and hobby- or enthusiast-based economic activity is generally ignored by tax authorities. Self-employed people are usually classified as a sole proprietor, independent contractor, or as a member of a partnership.
An independent contractor is a person, business, or corporation that provides goods or services under a written contract or a verbal agreement. Unlike employees, independent contractors do not work regularly for an employer but work as required, when they may be subject to law of agency. Independent contractors are usually paid on a freelance basis. Contractors often work through a limited company or franchise, which they themselves own, or may work through an umbrella company.
Contingent work, casual work, gig work or contract work, is an employment relationship with limited job security, payment on a piece work basis, typically part-time that is considered non-permanent. Although there is less job security, freelancers often report incomes higher than their former traditional jobs.
An employment agency is an organization which matches employers to employees. In developed countries, there are multiple private businesses which act as employment agencies and a publicly funded employment agency.
Sara Horowitz is a founder of the Freelancers Union and a proponent of mutualism. She has been working for unions since age 18, when she held a summer internship at the International Ladies Garment Workers Union. She has worked for the UAW, CSEA, and SEIU, and she currently serves on the board of the Albert Shanker Institute. Under her direction, the Freelancers Union built a first-of-its-kind Portable Benefits Network in 2004 and launched the Freelancers Insurance Company in 2009, which provided health insurance to more than 25,000 New York freelancers before it was closed in 2014. In her work, Horowitz advocates for the role of mutualist organizations, including unions, cooperatives, mutual aid groups, and faith-based groups, as the foundation for the next labor economy and social safety net in the United States.
An online marketplace is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.
Upwork Global Inc., formerly Elance-oDesk, is an American freelancing platform headquartered in Santa Clara and San Francisco, California. The company was formed in 2013 as Elance-oDesk after the merger of Elance Inc. and oDesk Corp. The merged company was subsequently rebranded as Upwork in 2015.
Precarious work is a term that critics use to describe non-standard or temporary employment that may be poorly paid, insecure, unprotected, and unable to support a household. From this perspective, globalization, the shift from the manufacturing sector to the service sector, and the spread of information technology have created a new economy which demands flexibility in the workplace, resulting in the decline of the standard employment relationship, particularly for women. The characterization of temporary work as "precarious" is disputed by some scholars and entrepreneurs who see these changes as positive for individual workers. Precarious work is ultimately a result of a profit driven capitalist organization of work in which employment is largely understood as a cost that needs to be reduced. The social and political consequences vary greatly in terms of gender, age, race, and class and result in varying degrees of inequality and freedom.
Unreported employment, also known as money under the table, working under the table, off the books, cash-in-the-claw, money-in-the-paw, or illicit work is illegal employment that is not reported to the government. The employer or the employee often does so for tax evasion or avoiding and violating other laws such as obtaining unemployment benefits while being employed. The working contract is made without social security costs and does typically not provide health insurance, paid parental leave, paid vacation or pension funds. It is a part of what has been called the underground economy, shadow economy, black market or the non-observed economy.
Fiverr is an Israeli multinational online marketplace for freelance services. Fiverr's platform connects freelancers (sellers) to people or businesses looking to hire (buyers), encouraging a wide range of services in a free market. Fiverr takes its name from the $5 asking price attached to all tasks when the company was founded in 2010 in Tel Aviv, though many sellers now charge more.
The sharing economy is a socio-economic system whereby consumers share in the creation, production, distribution, trade and consumption of goods, and services. These systems take a variety of forms, often leveraging information technology and the Internet, particularly digital platforms, to facilitate the distribution, sharing and reuse of excess capacity in goods and services.
Fabio Rosati is an Italian-born American executive who served as CEO of online work marketplace platforms Elance and Upwork, as chair of the board at hourly work marketplace Snagajob, and currently serves as chair of the board at on-demand manufacturing marketplace Xometry. Rosati is a contributor to online work, the freelance economy, and real-time hiring.
A platform cooperative, or platform co-op, is a cooperatively owned, democratically governed business that establishes a two-sided market via a computing platform, website, mobile app or a protocol to facilitate the sale of goods and services. Platform cooperatives are an alternative to venture capital-funded platforms insofar as they are owned and governed by those who depend on them most—workers, users, and other relevant stakeholders.
India had 15 million independent workers or freelancers in 2020, with industries like IT, finance, HR and design hiring people on a project basis. 70 percent of freelancers from India reported working exclusively as freelancers, with 48 percent of them dedicating 30 hours or less per week to their work. In a report of (National Institution for Transforming India) NITI Aayog has estimated that India’s gig workforce or Freelancing will grow to 2.35 crore by 2029-30. In 2020-21, it was at 77 lakh. Of this 26.6 lakh gig workers were from sales and retail trade.
Gig workers are independent contractors, online platform workers, contract firm workers, on-call workers, and temporary workers. Gig workers enter into formal agreements with on-demand companies to provide services to the company's clients.
California Assembly Bill 5 or AB 5 is a state statute that expands a landmark Supreme Court of California case from 2018, Dynamex Operations West, Inc. v. Superior Court ("Dynamex"). In that case, the court held that most wage-earning workers are employees and ought to be classified as such, and that the burden of proof for classifying individuals as independent contractors belongs to the hiring entity. AB 5 extends that decision to all workers. It entitles them to be classified as employees with the usual labor protections, such as minimum wage laws, sick leave, and unemployment and workers' compensation benefits, which do not apply to independent contractors. Concerns over employee misclassification, especially in the gig economy, drove support for the bill, but it remains divisive.