With the continued growth and economic impact of the gig economy, there’s no doubt it has become a disruptor to traditional employment trends. When the term “gig economy” was coined in 2009 by journalist Tina Brown, she reported that this trend involved “workers pursuing ‘a bunch of free-floating projects, consultancies, and part-time bits and pieces’ while they transacted in a digital marketplace.” Fast-forward to the present day, and the gig economy is an employment sector to be reckoned with.
After Craigslist launched in 1996, and then UpWork in 1999, the gig economy started its rapid growth, allowing American workers to create extra lines of income through side hustles while adding flexibility to their schedules. In the mid-2000s, the gig economy started to balloon with Airbnb launching in 2005, realizing a $38 billion valuation just a short three years later. In 2010, Uber came on the scene, accepting 1 billion rides within its first five years.
However, the gig economy doesn't only revolve around travel, delivery, and logistics industries, such as Airbnb and Uber. Rather, platforms like Fiverr, Upwork, and Craigslist, and other remote job platforms and crowdsourcing marketplaces have surfaced over the years, providing gig workers with a place to find work. Because of this, the gig economy is typically defined as “digital platforms that allow freelancers to connect with potential clients for short-term jobs, contracted work, or asset-sharing.”
Today, 57.3 million people in the U.S. work in the gig economy in some capacity, with the projected gross volume expected to hit $455.2 billion by 2023. With the continued growth and economic impact of this sector, there’s no doubt that it has become a disruptor to traditional employment trends.
Now, let’s discuss the attraction, appeal, and staying power of the gig economy and why employers must adapt to the gig economy, adopting many of its benefits as well as hiring its workers, as this employment sector will continue growing.
With all the technological advances and new financial dynamics in the world, it’s unlikely that we’ll return to the top-down labor model people followed in the past. Moving forward, many employers must attract gig workers through a “contingent workforce” model. In this model, “[g]ig workers are independent contractors, online platform workers, contract firm workers, on-call, and temporary workers who enter into formal agreements with (on-demand) companies to provide services to them,” helping to create a contingent workforce.
Employers will need to redefine how they attract top talent, to remain competitive in recruitment of these gig workers. For example, “active social media networks are replacing traditional ways of recruiting and working and this new form of ‘blended collaboration’ and reciprocity among peers will surely defy the old hierarchical structures.”
For organizations and employers, adopting many gig economy principles will highly benefit them moving into the future. For example, the gig economy provides a significant amount of agility in business operations. With temporary workers, your business can scale up or down quickly to meet the changing demands of the market. Being able to react seamlessly can ultimately mean the difference between failure and success in this fast-paced business ecosystem, post-pandemic.
The gig economy also allows businesses to contract with experts for a specific project or occasional need. For example, instead of spending hard-earned capital and time developing unique skills in one or two employees, your business can contract with a freelancer or consultant for highly technical maintenance or compliance reviews that are only necessary once or twice a year.
With the world becoming more agile through technology as well as customer and employee expectations continually evolving, embracing gig workers allows your organization to adapt seamlessly to these fast-moving times. Let’s explore adaption further.
Contract workers are good for company bottom lines, can fill essential skill gaps on short notice, and many times, bring new ideas to the table that may not have been previously explored. For example, small and medium enterprises looking to expand their footprint on a smaller budget can turn to freelancers for specialized support instead of hiring a full-time employee, saving money overall. Companies that run on seasonal requirements or come up with sudden vacancies can benefit from onboarding workers on a need basis as opposed to walking through a full recruitment and training process.
Additionally, long-term employees often think homogeneously, siloed off from other ideas. A contract worker comes with fewer preconceived notions and an extensive and diverse experience that could translate into exciting new possibilities for the company. They come with all skill sets handy for the job and can handle multiple projects at once, making them adaptable and innovative while boosting the quality of work.
The principles of the gig economy as well as the hiring of gig workers had a high adoption rate before 2020, only to be accelerated by the pandemic. Some experts estimate that gig workers will comprise as much as 80 percent of the workforce by 2030.
However, where a changing work dynamic means that organizations must adapt to an evolving workforce’s demands, it doesn’t mean that companies should neglect their organizational requirements and processes. Human resources professionals must integrate gig workers into their current processes, policies, and procedures, allowing them to transform internally while meeting the changing needs of the marketplace. In this way, HR has gone from a support function to a strategic role in business.
For example, to embrace the flexible work culture, HR professionals should begin by sitting down with leadership and hiring managers, deconstructing job profiles within the company. Distinguishing separate roles that need full-time personnel from those that can be filled with on-demand skilled workers will simplify the process. This can also help budget efficiently while creating a path for growth, by identifying what type of worker is best for each job.
In addition to adopting inclusive policies for gig workers, employers must also understand any tax regulations, as most gig workers are categorized as independent contractors. Incorrect employee classification is a hot topic for both the Internal Revenue Service and the Department of Labor. So, you want to make sure you get expert help when incorporating gig workers into your payroll, accounting, and HR systems.
If you’re not sure where to start, you can develop short-term projects which, of course, facilitates the need for HR managers to participate in the process of talent acquisition for ongoing contracts with independent workers. With the pandemic advancing our collective comfort level with remote workers, the more tasks or projects you delegate to a gig worker, and the more you’ll know best how to integrate these workers into your organization. However, just like your full-time workforce, make sure you continue to track metrics, such as recruiting, marketing, and performance, so you can utilize gig workers beneficially and effectively.
As companies realize that people are the backbone of a company, from employees to consumers, universal attitudes and cultures have shifted. With another culture shift looming on the horizon, between post-pandemic work demands and younger generations rising in the workplace, HR teams need to have a plan to balance a regular and contingent workforce while maintaining optimum efficiency.
The global pandemic and lockdown sped up new job trends like remote and gig work on a scale larger than anyone anticipated. According to CNBC, the gig economy has seen a “rapid growth during the pandemic and a recent study from Upwork found that gig workers contributed $1.2 trillion to the U.S. economy during the pandemic, a 22% increase from 2019.”
Also, with Gen Z and millennial workers being affected more than any other generation by job instability during the pandemic, their demand for diversified sources of income is evident. According to a recent study by Entrepreneur, if “given a choice, 53 percent of Gen Z would rather work a gig job than a full-time job and 46 percent of Gen Z are already participating in the gig economy.” Post-COVID, employers must anticipate, expect, and plan for “uncommon career paths to be commonplace for the future of work,” especially as “gig work become more accessible and lucrative.”
Also, keep top of mind that continually defining your brand narrative is imperative--just like attracting clients, having a strong brand image will attract the best and brightest talent. Diversity and workplace ethics play into branding, as do pay and the professional treatment of contract workers. Remember that gig workers network: the better you treat them, the better for your brand.
Understanding this, human resources professionals' most pressing concern will be to align organizational needs with the way people want—and demand—to work. Organizations that are not providing an accommodative and flexible work culture are bound to be on the disadvantageous end.
If your company is looking for help to enhance your hiring practices as well as your employer brand after a year full of change, contact Recruitics!