How to Thrive in a "Gig" Economy
With full time jobs declining, how can you benefit?
The workforce is changing. How many times a day do you hear that sentence? Since the market collapse in 2008, the way we approach business has continually evolved, with new opportunities and hurdles facing the market every day.
One of the biggest trends we see happening right now meets at the intersection of two influential factors: the entrance of millennials seeking more flexibility and variety, and the rise of technology and the doors it opens.
As a result of the growth of these variables, we are seeing an explosion of independent contractors, or "gig" workers.
As quoted in the Wall Street Journal, "Nearly 16% of the U.S. workforce in 2015 was composed of people in contingent work arrangements, including freelance graphic designers, occasional Uber drivers, and part-time management consultants, according to researchers at Harvard and Princeton universities."
More and more full-time jobs are being filled by freelance workers, leading to a new group emerging in the workforce that includes highly-skilled professionals chasing short-term contracts.
What does this mean for business? And more importantly, what does this rising gig economy mean for you?
The rise of "Me Inc."
The gig economy is not new. According to Forbes, the term was first coined following the market collapse in 2009, when unemployed professionals started working short-term positions for a little extra compensation.
However, since then the gig economy has formalized, moving from short gigs performed on the side to a full-time work option.
The Futurestep division of Korn Ferry, a global advisory firm, shared its 2017 predictions for talent acquisition. Number one on their list? The rise of the gig economy.
Futurestep claims, "Some reports estimate that by 2020 as much as 40 percent of the American workforce will be contingent workers, or independent contractors."
Those workers are doing everything from driving Uber, to listing their home on AirBnB, to performing more specialized tasks such as website creation and marketing consulting.
There are two main factors contributing to the rise of these independent contractors.
"From the workers' perspective, there is a demand for diversity and flexibility in their roles and the ability to showcase their unique skill sets. For some organizations, there's a shift in strategy from 'I need to hire a person' to 'I need to complete a task.'"
Both the workers and business owners have a huge stake in the growing gig economy, and it has repercussions for the way we hire and work today.
Contract workers are still employees
There's definitely an appeal on the workers' side to become an independent contractor. The gig economy allows workers to have flexibility, to work for multiple companies instead of just one, to not have to report to an office every day, and access more varied and interesting work.
But here's a wake up call for you: Independent contractors are still on the left side of the Cashflow Quadrant.
Remember, in the Cashflow Quadrant, employees and self-employed are the on the left side and business owners and investors are on the right side.
Gig workers fall somewhere between employee and self-employed. Some gig workers, who perform small tasks at an hourly rate, could still be classified as employees, even if they aren't working exclusively for one company. They still make wages that are dependent on the number of hours they work.
There's also a growing group of gig workers striking out on their own permanently, building entire careers by selling their specialized skills for short-term projects. Many of these workers might think they're business owners, running their own small business. They have a company name and website, and they work for themselves. But remember the difference between being a business owner and self-employed?
Being a business owner means you can step away from your business and it can run without you. You make money even while you're sleeping or on vacation. However, the self-employed still need to work for that payout. If they take a break, so does the money.
So before you jump head first into an independent contract, make sure you assess your financial and career goals. Find a way to use your side gig to your advantage, and let the money you earn work for you.
How you can benefit
How do you do that? How can you make the gig economy work for you? Simple. By letting it fund investments that will lead you to financial freedom.
One of the complaints I hear a lot is, "I don't have enough money to invest." For most people, every dollar they earn is budgeted, with very little left over. This is where the gig economy can work for you.
Picking up a side gig like driving Uber or putting your home on AirBnB is a great way to generate extra income that you can use specifically for investments. Instead of viewing your side gig as another job that will keep you trapped in the Rat Race, use it as an extra source of revenue that will help you invest in the asset of your choice.
Maybe you earn a little extra driving for Uber on the weekends and use that to buy commodities such as gold. Or perhaps you help build websites in your spare time, and the revenue you earn you put towards a real estate investment. Whatever your side gig, take your earnings and start applying them to your journey to financial freedom.
Where to get started
From Craigslist to Taskrabbit, to Upwork, and Fiverr, the list of online interfaces connecting freelance workers to those who need their skills is growing quickly.
Here are just a few potential side gigs you might want to try:
- Bookkeeping - Have a head for numbers? Help others balance their books and keep their finances in order.
- Web design - Use your talents to create websites for others and generate some extra revenue.
- Writing - Plenty of people need good writers to help them get their message across. If you're skilled with a pen, why not help others with freelance writing tasks.
- Running Errands - You'd be surprised the number of people who hire someone to run their errands. Whether it's grabbing groceries or mowing the lawn, you can earn some extra cash by performing tasks you do every day.
The possibilities for the gig economy are endless. If you have a little extra time, or a highly-valued skill, why not put it to use and earn a little extra cash for your investments? Take advantage of the rising gig economy and start your path to financial freedom today.