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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] [2]
The gig economy is composed of corporate entities, workers and consumers. [3] 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". [4] According to the Fair Work Ombudsman, the digital platforms or marketplaces connect individual service providers directly to customers for a fee. [5] 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". [6] The term "gig" comes from the slang term for individual appearances by performing artists like musicians and comedians. [7] Instead of being paid a regular salary, gig workers are paid for individual gigs performed. [6]
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. [3] 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. [3] The consumers enjoy the benefit of better choices and convenience. [3]
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. [8] 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. [9]
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. [4] [10] 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. [11] In a 2021 Pew Research Center [12] survey, they found that with adults who perform gig platform work within the last year, 58% of the people said that the money was essential or important in order to meet their basic needs. Additionally, 31% have said that it was their main source of income during that period. In the same survey they found that 16% of us adults had earned money at one point through gig platform work. However, this participation varied across different demographics: 30% of adults that were 18 to 29 years old reported earning from gig platform jobs, compared to only 18% of those who were aged from 30 to 49. Hispanic adults were also 18% more likely than white adults to say they had ever earned money this way. As of 2017, 55 million Americans contributed services to the gig economy. [13] As of 2018, 150 million people were active in the gig economy in North America and Western Europe, according the Harvard Business Review . [14]
The gig economy has grown significantly in recent years, and it is currently valued at approximately $582.2 billion. This number is projected to reach $2178.4 billion by 2034. [15] Recent surveys found that significantly more people are engaging in gig-based work. The Federal Reserve’s article, Report on the Economic Well-Being of U.S. Households in 2024 - May 2025, found that 9% of US adults earned income through short-term tasks while 4% completed tasks through online platforms such as DoorDash or Uber. [16] The Federal Reserve also found that of those surveyed, only 21% of those engaged in gig-based work reported it as their primary source of income. Although most who participate in gig-based work have other forms of income, 31% reported that without gig work, they would be unable to have financial security and pay for their expenses. [16] The Federal Reserve found that of those surveyed, approximately 20% of Americans participated in gig work. However, 30% of students and 26% of parents participate in gig-based work which is higher than the national average due to its flexibility. [17]
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. [18] 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. [19] According to Forbes the gig economy is a $1 trillion sector of the United States economy. [13]
Regardless of the definition used, the gig economy is growing. CNBC reported that during the 2010s, the gig economy grew by 15%. [20] Forbes describes the growth as "slow and steady". [13]
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). [21] Other leading companies include Lyft, OnlyFans (content-subscription service), [22] DoorDash, and Instacart. [23]
AI and the Gig Economy
Artificial intelligence (AI) is playing a major role in shaping the gig economy by influencing how platforms manage workers and assign jobs. Many gig companies now use AI-powered systems to decide which workers get tasks, how much they get paid, and how their performance is rated. A 2022 Nature Communications study found that this kind of “algorithmic management” affects gig workers’ independence because the systems are often unclear about how decisions are made.[ [24] ] A 2023 report from the Oxford Internet Institute also showed that AI-driven scheduling and monitoring can make work more stressful and unpredictable, creating what researchers call “algorithmic precarity.”[ [25] ]
AI has also created new gig jobs but with mixed results. Many companies now rely on freelancers to label data, evaluate content, or help train AI systems. However, a 2023 report from MIT Sloan Review found that these workers are often paid low wages and lack legal protections because most of the work is outsourced globally.[ [26] ] At the same time, generative AI tools are changing traditional freelance fields like writing, marketing, and design by allowing clients to use AI instead of hiring people. A 2024 study in Computers in Human Behavior shows that this competition with AI is lowering pay rates and raising concerns about job security for creative gig workers.[ [27] ] Overall, AI brings both opportunities and new challenges to the gig economy, especially around fairness, stability, and worker protection.
Labor-Market Effects
The gig economy has allowed the labor market to expand not previously possible. It opens the door to more flexible work environments with adaptable schedules. Research from the Brookings Institution shows that many gig workers face income volatility and don't have access to the benefits that many other employed people do when relying on a job in the gig economy as their main income source. [28] Studies by the International Labour Organization and Pew Research Center similarly find that although the gig economy can provide income for those who work within it, they lack job security, any kind of benefits, and consistent wages. [29] [30] Further, theoretical models show how gig-work contracts and weak bargaining power can perpetuate precarity and self-exploitation. [31]
Taxation and Public Finance
The rise of this specific kind of “platform labor” has made it difficult for taxation and fiscal policy to adapt. Due to the fact that gig earnings are irregular and usually not subject to the same type of employee withholdings as a typical job, tax compliance rates are lower and governments often face gaps in revenue collection. This clearly creates an area of conflict between government agencies and gig workers. The Organisation for Economic Co-operation and Development (OECD) highlights these issues in its reports on gig-economy taxation and recommends standardized reporting requirements for digital platforms to improve transparency and enforcement. [32] [33] The recommendations within the article aim to ensure that income is reported accurately and can be taxed accordingly which would ultimately entice policymakers to ensure the protection of these workers when they are seen as giving their fair share. In addition, some academic work points to a broader need for transparency and accountability in tax compliance among gig workers. [34]
Measurement and Policy Responses
Another difficulty related to gig work is accurately measuring how large the industry is due to the fact that standard labor force surveys will often misclassify workers who participate in online platforms and undercount the true total. Brookings researchers note that this measurement challenge can make it more difficult to quantify the true impact of the gig economy and make assessments of wage growth and labor market conditions much more clouded than other fields. [35] Recent working papers using tax records suggest that prior estimates may substantially undercount platform workers because some gig earnings go unreported or fall below reporting thresholds. [36] To address both measurement and protection issues, international organizations like the OECD and ILO have published statistical handbooks and guidelines to improve the collection of data on platform employment. [37] In policy discourse, experts advocate for portable benefits models, clear definitions of platform workers, and protections that balance flexibility with economic security. [38]
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