If you're keeping tabs on American economy and jobs chatter, you may have heard we're in the thick of a new approach to working: the gig economy, an umbrella term for people picking up jobs here and there via online platforms and apps.
"There’s some pretty compelling research indicating that the percentage of players involved in the gig economy will more than double over the next four years—a jump from 3.2 million on-demand employees to a workforce of 7.6 million strong," says Matt Rissell, CEO of TSheets, a employee time tracking software company in Eagle, Idaho.
"Barriers that once stood in the way for freelancers and the on-demand business model itself—collaboration, connectivity and taking payments on the go—have disappeared in a very real way," Rissell continues. "And tech-savvy millennials who care less about stability and compensation and more about freedom, flexibility and creating a more meaningful relationship with work are abandoning the 9-to-5 model in favor of the opportunity to be their own bosses."
Though there is some dispute over whether the gig economy's boom has been overstated—according to Pew Research Center, the number of self-employed Americans has declined—the way we work does appear to be changing. Companies like freelancer recruiting site Upwork, small jobs outsourcer TaskRabbit and housecleaning app Handy have created marketplaces for the self-employed or those looking for a little extra cash.
How the Gig Economy May Affect Small-Business Owners
For small-business owners, the gig economy may present a unique opportunity for growth—attracting motivated self-employed, permalance or contract workers who are just looking for supplemental income and not full-time jobs.
"As a small-business owner and a millennial, I specifically molded my business plan for millennials by creating a gig model," says Thomas Shields, president and CEO of IV Guru, a therapeutic transfusion company based in South Florida. "Many millennials aren't looking for a new career—they're looking for supplemental income that's convenient to them. Unfortunately, we haven't seen the increases in wages within the healthcare field as much as we would have liked; therefore, many nurses and paramedics that I recruit utilize IV Guru as a supplemental income generator."
"The business model basically gives you access to a huge talent pool that can complete any project or task you need, on the double," Rissell says. "In general, price is negotiable and based on tasks completed, and vetting and even interviewing potential candidates from around the world takes a few clicks. Businesses that are strapped for bandwidth or don’t have the resources to hire a full-time employee to complete key tasks ... can make it happen. Most companies need a base of in-house employees, especially for jobs that require specialized company knowledge or ongoing, on-the-job training. But almost every business can take advantage of the gig economy by speeding up production times, finishing backburner or specialized projects and getting an edge on the competition by working faster and smarter with gig employees."
That said, there may be some pitfalls to using "gig employees" in your business. One of the biggest ones: the legal battles and woes that can come from misclassifying these workers. Right now, there are only two classifications for workers: employees and independent workers. Independent workers are exempt from certain wages, benefits and protections; the Department of Labor calls the misclassification of employees "one of the most serious problems facing affected workers, employers and the entire economy" and is working with the IRS to help ensure workers get their rightful protections.
"The consequences for misclassifying employees in the gig economy can result in steep back taxes, legal penalties and interest based on when the misclassification took place," Rissell says, "so it’s an additional exercise in vigilance to make sure workers who are originally brought on as contractors are classified correctly based on job duties and hours, as time goes on."
Read more articles about hiring and HR.