Headline: It might make you want to Gig
Date: 2/15/2021
Body : I recently started my own LLC as a side gig, so I was very interested to read this article in the Penny Hoarder 4 Major Trends Every Gig Worker Should Expect in the 2021 Economy (thepennyhoarder.com)
Most of it is about California, and Prop #22, but it raises a good set of questions. Most important: What is the Gig Economy and can it help me?
What Is the Gig Economy?
Everybody probably has an intuitive idea of what the gig economy is. The gig economy is the Uber or Lyft drivers you can summon almost at will, or the delivery drivers who deliver food and meals to us. Or, there are the people who will watch your pets for a weekend. Gig workers are all around us and they are here to stay.
The workers like the arrangement because it is so flexible. The companies that coordinate their activities appreciate that they are not employees; They are instead independent contractors. If they were classified as employees, the firm could assign them shifts and duties, and be specific on how they carry out those duties. In recompense, the firm is then required to extend to them benefits, which can be very expensive. As independent contractors, the individual worker determines when they work, how long they work, and even which jobs or fares they pick up. Additionally, they can decide to only do the gigs that speak to them on a personal level. In a study reported in the Harvard Business Review, one subject summed this up by saying, “ I can be the most I’ve ever been myself in any job.”
Others like the arrangement of a gig because of variety. If they were the corporate employee of yesteryear, they could probably count on doing the same thing, day in, day out. But, as a gig worker, they will often have to take on a variety of tasks, and some people really value that highly. Moreover, in a gig setup, people are more often working with a variety of different customers and vendors. Many people appreciate these networking opportunities.
Some people suggest that this isn’t fair, as the independent contractor does not get the insurance and other benefits offered by an employer. As a result, many of these working age professionals have had to take on multiple roles in multiple companies to support the lifestyle that their families were accustomed to.
Is it a big deal?
In a word, yes. Experts suggest that almost 33% of American adults are already involved in some sort of gig activity. And it is growing. Per BLS data, in 2005 only 2-4% of workers were involved in the gig economy. In the U.S., the gig economy was already developing, but the pandemic kicked it into overdrive. Many people were laid off or had their hours reduced drastically, and had little choice but to work from home, at least a little. Technologies such as Zoom, and other conferencing software made this change more feasible. Given these technological capacities, it is not that surprising that McKinsey did a study of these workers and found that many of them were knowledge workers.
Criticisms of the Gig Economy
There are some criticisms of the Gig economy:
- It is much harder to develop a worker to be truly successful within the company since the fluidity of the labor force does not often lead to long-term relationships with customers or vendors.
- Depending upon the type of gig work, the time and place of work can be a major detriment to the worker.
- Because people have to focus so much on getting that next gig, there can be psychological damage to these workers. Even a prolific author was quoted as saying, “You become your work. If you write a good book…it’s really great, and when you don’t achieve it, you have to accept…that failure might define who you are to yourself.” This level of psychological stress can be damaging to health.
Can the psychological stress be countered?
It can be countered to an extent, but to do so, one must form purposeful connections. Once found in the corporate environment, people have to manufacture these for themselves now:
- Place–> The successful gig worker in a knowledge field has to often change at least a piece of their home environment; Supplies must be close at hand and distractions must be mediated. In the HBR article, one software engineer compared his home workspace as a fighter cockpit.
- Routines–> The routines of getting up in the morning, responding to e-mail, drink a cup of coffee, make some calls, have lunch, write a document in the afternoon. Whatever the rhythm of the office, people need to re-create at least a piece of that in the home environment.
- Purpose–>Income and activity levels can vary all over the place for gig workers. What allows them to feel some level of peace is that, in choosing the gigs they respond to, they are defining their selves more definitely. This sense of purpose is a powerful antidote to the doubts that can precipitate out of an unpredictable income stream.
- Person–> People who need, people. Are the luckiest… OK, I’ll stop. But, social isolation can be terrible for the psyche, and the body can respond very badly too. People don’t seem to respond well to the finding real peers and commiserating with them. It would seem that the most successful gig workers look at their already-existing network and communicate with friends who are in related fields.
OK, I’m hooked. How do I get started in the Gig Economy?
The gig economy is really about finding your own niche. Perhaps you really like writing. In that case, you might be able to help people write their own resumes’. Perhaps you really like dogs. Maybe you can become a dog walker, either working for a company (there are several online companies) or you can do this for neighbors. Whatever is your “thing” find a way to do it, and make money from it. Whatever you do, be sure to stand out in that field and over-deliver. When you keep a dog at your house, text the owners sometimes with a picture of their pup doing something cute. If you shovel driveways and walks, maybe you can shovel a small picture into the snow left over. Whatever you can do to personalize your brand (in a pro-social manner, of course) the better your business will be.
Over time, people will have heard from friends and neighbors about your excellent professional service, and referrals from others will encourage new customers to try your service. Then, you can really begin to enjoy the fruits of your labor.
Whatever it is that you decide to do, and however you decide to differentiate yourself, know that this could take significant time. For myself, I have a full-time job, I figured that copywriting would be a part-time gig, to do when I had several spare hours. What I didn’t budget for (time or money) was that it takes significant amounts of both to start even a side business. Just getting my LLC license was tricky. The application got rejected once because the signature didn’t exactly match the “registered agent” on Line #4. I had written my first, middle and last names, but, I signed the form using only my middle initial. Be prepared to run into regulatory walls that might seem exceedingly dumb.
The Verdict.
Gig work can be used to allow for extra income on a very flexible basis. But, you have to remember that the gig economy is a little like the Old West. There are very few restrictions on it and some people can get impressively rich. But, if not careful, one can easily be duped into doing a large variety of excellent work for pay that is not commensurate with your professionalism. I say, give it a “yellow light” and proceed, with caution.
REFERENCES
Gig Economy Definition (investopedia.com)
The 4 Things You Need to Thrive in the Gig Economy (hbr.org)
Working in a gig economy : Career Outlook: U.S. Bureau of Labor Statistics (bls.gov)
22 Of The Best Deals From The Massive Wayfair Presidents’ Day Sale (forbes.com)
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.