By definition, the gig economy is a labor market sustaining itself with short-term contracts and freelance work instead of permanent jobs.
The term “gig” tells you much of what you need to know about this employment ecosystem. Typically, it’s a word that people mostly apply to musicians playing a show at an entertainment venue.
However, with the advancements in technology and remote work, the gig economy has evolved into a multidimensional employment approach.
Part 1 of this blog digs into the gig economy’s background and current landscape while part 2 takes a deeper dive into some methods to help businesses thrive when hiring for the future.
The Gig Economy’s Roots Go Back to the 1920s
Jazz musicians were the first individuals to coin “gig” as a term in the 1920s.
The next pivotal step was the 1930s, where the Great Depression ran rampant. Location-based, secure jobs might have been in high demand, but there was virtually zero supply. In the face of droughts and free falling prices, farmers sold their land in droves, with steady work now a distant dream of years past.
Those unable to find work began moving from farm to farm.
Then came the 1940s and the launching of the first-ever temp agency. It would temporarily supply businesses with trained clerical staff (e.g., typists). Undoubtedly, this was a massive shift for the primitive gig economy.
Decades later, in the 1990s, 10% of the US workforce was contractors, temps, and on-call workers. The economy found itself on the brink of the digital age. There grew an increasing desire for flexible work patterns and non-permanent workers.
The Gig Economy Entering the Digital Era
During the new millennium’s onset, remote job platforms such as Craigslist and Upwork began to surface. The same can be said for crowdsourcing marketplaces. These developments provided an environment for gig workers in need of contracts and projects.
Another massive step in the gig economy’s evolution was when Airbnb launched in 2008. This innovation allowed anyone with a spare bedroom to make it available to paying customers.
Airbnb was clearly onto something as they reached an extraordinary $38 billion by 2018.
Once Uber arrived in 2010, the gig economy took its next historical step—contract driver recruitment.
Recent statistics show the ride-sharing platform having 2.6 million available drivers and 36 million users. Moreover, Uber supplies riders with 4 million rides each day.
The Current State of the Gig Economy
Across all current labor markets, the gig economy is a consistent disruptor changing how all industries define work.
Upwork compiled a 2019 report via BusinessWire called “Freelancing in America.” It presented the following eye-opening statistics about the gig economy:
- 35% of the US workforce, which amounts to 57 million people, freelanced in some way during 2019.
- Of those 57 million gig workers, 60% were doing so by choice.
- 28.5 million gig workers claimed they were long-term freelancers:
- This number was up substantially from 2014’s 18.5 million.
Gig work isn’t only making waves in the US. Globally, there’s expected to be 86.5 million freelancers come 2027.
Plus, the gig economy isn’t only referring to freelancers, also providing opportunities to the following workers:
- Independent contractors/professionals
- Temporary contract workers
- Free agents
Lastly, the gig economy also offers flexible employment opportunities for older generations. It’s not uncommon to see professionals in their 50s & 60s take up a variety of gig work to build up their nest eggs and support a multitude of organizations without being tethered to one employer.
There are too many advantages associated with gig workers for companies to ignore.
The benefits include reduced benefits cost and access to premium talent that’s otherwise unaffordable or geographically inaccessible.
Conversely, there are a number of drawbacks with the gig economy including no benefits for workers, feast or famine type of work environment, and added cost to the employer.
Be sure to stick around for Part 2 as we cover how businesses can thrive in the gig economy era.
About Kuhn Global Talent
Kuhn Global Talent is a global search firm, and has effectively completed hundreds of searches since 2011 and provided clients with extraordinary recruiting investment value. Jim’s global business knowledge and cross-cultural agility are particularly valued by U.S.-based companies building leadership teams in the US and other countries, and by non-U.S. companies desiring a cross-culturally sensitive search approach to confidential searches in their home countries and in their U.S.-based affiliates.