The COVID-19 pandemic spawned many changes and innovations in the business world, but none has been quite as dramatic as the rise of the gig economy. What changes might be in store in the year ahead?
“Gig economy” refers to the labor market of independent contractors performing smaller jobs known as gigs. Participants in the gig economy include freelance writers, seasonal workers, ride-share drivers, Airbnb hosts, and other types of temporary employees.
According to McKinsey research, 27% of the American workforce was involved in the gig economy in 2016. By 2022, that number had risen to 36%, with global growth expected to rise by another 17% in 2023. Upwork, one of the leading gig economy job boards in the world, estimates that there will be 86.5 million freelancers globally by 2027.
Most experts agree the gig economy is growing and expanding, but what does that mean for gig workers in 2023 and beyond? These are some of the most important trends to consider for current contractors and those who are considering entering the gig economy.
1. Worker classification changes
Independent contractors have taken on a more important role in the United States economy in recent years, which has made the White House take notice. In 2022, the U.S. Department of Labor proposed changing how workers are classified as employees or independent contractors.
Employees have more rights, protections, and benefit entitlements that independent contractors don’t. As such, employers sometimes misclassify employees as contractors to avoid paying employment taxes or benefits to people who are doing work that transcends what usually qualifies as contractor work.
Currently, contractors use the following factors to determine worker classification:
- How much control the worker has over their work
- The opportunity for profit or loss based on a worker’s managerial skill
- Worker and employer investments
- Permanence of the working relationship
- How integral a person’s work is to the employer’s business
- Degree of skill and initiative exhibited by the worker
If the proposed regulation passes in 2023, the Biden Administration will create stricter parameters for companies hiring independent contractors with the aim of reducing employee misclassification.
For gig workers, this could offer more opportunities for long-term positions that come with benefits that otherwise would not have been available. It may also, however, lead to employers hiring fewer contractors.
2. Better pay and benefits
Businesses are facing many challenges these days, from inflation to more expensive and independent labor. But as individuals take greater charge over their work-life and how they deliver their labor, we should see macro benefits for the gig economy (beyond those from the potential crackdown on misclassification).
The gig economy is fully mainstream, and most employers are comfortable bringing in contractors for certain kinds of work. No matter what you charge as a contractor, it’s very likely less than a company would have to spend on a full-time employee. But to ensure the best possible results, companies are willing to pay a premium for top-tier contractors (see below). As long as contractors advocate for themselves and insist on fair rates and flexibility, employers will be willing to play ball.
3. More platform-based work
Gig workers generally fall into two broad categories: platform workers and non-platform workers. Non-platform gig workers are casual wage and self-employed earners like freelance writers or farm workers finding their own work. Platform gig workers use apps or digital platforms to find work, like Grubhub or Uber drivers.
Technology is always growing and innovating, which means there will always be more or new apps to support platform-based work. Plus, since platform work isn’t always location-specific, there’s greater opportunity for remote contractors.
One way to get good gig work? Sign on with a top recruitment and staffing firm that’s in the business of filling those kinds of roles for its clientele.
4. More opportunities for high-skilled talent
Once upon a time, highly skilled people found high-paying full-time jobs and just stayed there. Seems like a long time ago already, doesn’t it?
These days, companies are far more comfortable at bringing in gig talent to fulfill specialized project-based work, especially in software engineering and other technical fields. This trend will continue in 2023, giving highly skilled people more gig opportunities and greater control over their labor. If you can fill a specific niche, you may command significant sums from a multitude of clients.
Of course, you worked hard to gain the skills and earn the certifications you needed to climb the career ladder. So that’s all the more reason to demand greater fruits for your efforts. In addition to holding down a full-time job, highly skilled workers can supplement their income in meaningful ways by taking advantage of these niche opportunities as side hustles.
There’s no going back on the gig economy
The gig economy is growing fast, and there’s no real end in sight. Experts predict millions of people will add billions of dollars in value to the global gig workforce over the next few years, and that growth is already unstoppable.
Whether you’re already in the gig economy or you’re considering starting a side hustle, now is a perfect time to take full advantage of what’s become an integral part of the mainstream working world.
