The Gig’s Up: Unmasking Pitfalls of the Gig Economy

Written by: Jessica Murphy

The rapid rise of the gig economy has reshaped the traditional employment landscape. According to a report by the  McKinsey Global Institute, up to 162 million people in Europe and the United States are engaged in some form of independent work. This shift towards flexible, project-based work has created a new breed of worker: the "gig worker." But what exactly is the gig economy, and what challenges does it present for workers, hiring managers, and our economy at large?

The Gig Economy: A Brief Overview
At its core, the gig economy is a labor market characterized by the prevalence of short-term contracts or freelance work, as opposed to more permanent jobs. It includes everything from rideshare and delivery drivers to freelance designers and contract consultants in various industries. Apps such as Uber, a ridesharing app that connects drivers with riders, provide a flexible work opportunity for individuals with a vehicle and DoorDash, an on-demand food delivery service that allows independent contractors ("Dashers") to earn money by delivering food orders from restaurants to customers. Apps do not stop with delivery or ride services though. Upwork connects freelancers with businesses in need of professional services, ranging from writing and graphic design to programming and marketing. Technology has facilitated this trend, with digital platforms connecting workers with short term jobs more efficiently than ever before.

The Worker's Perspective
The flexibility and freedom offered by the gig economy can make it an attractive prospect for many workers. However, this freedom often comes with a price. Many gig workers lack the security, benefits, and upward mobility associated with traditional employment. Unlike traditional employees, gig workers are typically considered independent contractors. This means they typically do not receive benefits like health insurance, retirement plans, and paid time off. According to the Bureau of Labor Statistics, a modest 16% of independent workers have access to employer-provided health insurance, compared to 53% of traditional workers.

Limited Upward Mobility
The gig workforce mostly also lacks clear pathways for career advancement. Since workers are hired on a project-by-project basis, there's often little opportunity for promotion or salary increases over time. This absence of upward mobility can lead to long-term income instability and hinder professional growth. It can also sap an employee’s drive; if there is nothing to work towards then you may find yourself not working as hard in the long run.

Health and Wellbeing
Gig work can also impact one’s health and wellbeing. A 2022 study found that gig workers reported more unstable mental and physical health compared to those in traditional employment. Lack of access to employer-provided health insurance exacerbates these issues, potentially leading to increased public health concerns and healthcare costs. While you might assume the mental well-being of workers who pick their own schedule may be better, the stress that comes with a fluctuating salary can create even more stress than being forced to work 9-5 hours. The ability to choose can also increase procrastination which may in turn lead to overworking just to make ends meet.

The Hiring Manager's Perspective
While the gig economy presents unique challenges for workers, it also creates challenges for hiring managers and organizations looking for qualified talent. Gig workers' preference for flexibility can make it difficult for organizations to attract and retain reliable talent for traditional ‘9-to-5' roles. This is a significant challenge given the increasing demand for specialized skills in today's labor market.

Perception Is Reality
While the gig economy offers the enticing promise of flexibility and self-employment, its impact on one's resume often invites scrutiny. Despite its rising popularity, gig work may not carry the same gravity as traditional employment to certain hiring managers; the hiring managers who often prioritize consistency, commitment to a role, and demonstrable career progression. This perceived absence of long-term dedication can be detrimental when looking for employment. Additionally, despite gig work's ability to hone customer service skills, it may limit opportunities to cultivate other professional competencies such as team collaboration, management, and the execution of large, long-term projects. Hiring managers who harbor traditional definitions of employment might hesitate to view gig work as 'real' employment.

Gig to the Point Already!
The gig economy is no panacea. For some, it might offer the flexibility they crave. For others seeking stability, benefits, and career growth, more traditional employment may be the way to go. As for the business side struggling to find talent, you might consider a blend of full-time employees and former gig worker prospects as a potential optimal route. As we navigate this new world of work, it is essential to look beyond the surface and make choices that support long-term career and business objectives. In the shifting sands of the gig economy, a thoughtful and strategic approach may provide better odds of leading to sustainable success.

Anderson|Biro Staffing is a full-service staffing firm focused on the office professional and light industrial space. We align professionals with each client's individual needs offering quality staffing solutions for temporary, temp-to-hire, direct-hire, onsite partnerships and payrolling services. Our candidates are screened for specific industry experience, outstanding track records, and values that complement your mission and culture. Our motto here is Powerful Teams...Practical Strategies® and clients appreciate our flexible, realistic approach to doing business and delivering effective results.