U.S. Gig Economy Is Here to Stay

Survey responses from 1,000-plus subjects very much confirmed that gig work is here to stay. 59 million Americans— 36% of the workforce—are classified as gig workers.

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As gig work gains a stronger foothold in the U.S., it is seeping into several aspects of lifestyle and work culture. Those who have opted to work in the gig economy are experiencing a new relationship to their schedule, income, workplace or absence thereof, mindset and relationship to those who pay them. Many of these changes are determined by each individual’s need or desire for flexibility in how and where they choose to make their living. 

Accelerating the trend toward self-employment, the COVID landscape normalized work from home (WFH), something many gig workers didn’t need to adapt to, as they were already doing it. Now, in a post-COVID economic landscape, traditional employment models appear increasingly outdated and are edging toward a new norm, possibly helping accelerate the already sizeable transition toward gig economy work. 

As a life insurance company doing business in the U.S., we wanted to better understand America’s tectonic shift toward gig work. To that end, we conducted a study that provides a comprehensive assessment of today’s gig economy and what it means to work in it. Our research looks at data on both the pros and cons of this growing trend. By surveying a broad spectrum of gig workers, we developed a finely delineated view of where the gig economy is currently, which can then be used to determine how this model of working could evolve to become its best. Our study aims to understand the model’s flaws, gig workers’ motivations and whether gig work can become a sustainable and financially secure path in the long run.

Recently, we’ve seen that even as employers have been offering fewer and fewer benefits, including lower healthcare allotments and dwindling defined contribution retirement plans, salaried workers were already suffering from an erosion of the safety net that traditional salaried work is supposed to provide. We know from our own survey findings and existing research that gig workers enjoy even fewer standard benefits than those in “regular” jobs. Therefore, one immediate goal for gig workers would be to put in place a financial infrastructure that is at least equivalent to the admittedly depleted safety net that conventional work provides. But perhaps we can do even better, given the tendency of this group of workers to be self-reliant, creative and highly resourceful. 

Survey responses from our 1,000-plus subjects very much confirmed that gig work is here to stay, and in big numbers. Currently, 59 million Americans— 36% of the workforce—are classified as gig workers. This number is forecast to experience considerable growth over the next several years, with one estimate at 85.6 million by 2027. Perhaps due to a cultural value system that strongly encourages self-reliance and independence, gig work appears to be a particularly American phenomenon. By comparison, data shows that only 4.2 million people, or 6.2% of the U.K.’s population, are self-employed.  

See also: Embedded Insurance and the Gig Economy

The gig economy’s most vocal critics believe that the model is exploitative of workers—at best, a fallback for those unable to find more steady employment. However, our study found that Americans were not pushed into gig work out of necessity: the majority of participants made a conscious decision to become self-employed. For most of our respondents, gig work wasn’t a stop-gap measure while they searched for more traditional employment—69% of those surveyed saw themselves participating in the gig economy for the foreseeable future. Job satisfaction was also remarkably high, as only 9% of respondents voiced an immediate desire to take up, or return to, the traditional job market. 

While gig work has existed since the inception of work itself, it’s no coincidence that the pandemic has been a rocket launcher for the gig economy—economic downturns often spark creative and non-conventional ways of earning income, and this, combined with physical COVID lockdowns, created the perfect conditions for this model to flourish. Tina Brown, who coined the phrase “gig economy,” points to the Great Recession of 2008-2009 as a watershed moment. She notes that many white-collar workers resorted to “a bunch of free-floating projects, consultancies and part-time bits and pieces while they transacted in a digital marketplace.” Ironically, many of these uprooted workers look back on this period of volatility with nostalgia—they were, for the first time, able to take control of their schedules and their payment structures, in the process making more money than they would or could in a traditional employment setting. 

The modern incarnation of the gig economy has had its fair share of growing pains. However, our research findings show a model positioned for long-term success, a result of a necessary weeding out of unsustainable business models. Between 2014 and 2022, there were 432 venture capital-backed startups that went belly up. Just a sampling of notorious failed start-ups includes Homejoy, Tutorspree, Helloparking, Rivet & Sway and Dinnr, all of which fizzled out due to poor market research, customers using only an introductory promotional offer or better-funded competitors. These blunders served as fodder for skeptics of the gig economy, who claimed the use of buzzwords such as “flexibility” and “independence” were a deceitful attempt to rebrand exploitation. 

Our study dived deeper into the mindset of the respondents, aiming to pinpoint why gig workers chose this alternative mode of employment. The term “gig worker” is a broad term that encompasses Americans from every generation, location, ethnicity and income bracket. Not surprisingly, respondents’ motivations were diverse. While 19% of those surveyed chose gig work out of disdain for work in a corporate setting, 35% realized they could make more money this way—a figure that jumps to 54% when accounting only for those earning $100,000 or more annually. However, all seemed to find common ground in the notion of flexibility. A majority of modern American gig workers take pride in molding their work life to match their personal aspirations. Whether freelancers grind for every possible dollar or maximize time spent with their families, they do so by choice. 

Job satisfaction isn’t everything, of course, and our research sheds light on many of the issues plaguing today’s gig workers. Financial security ranks at the top of their list of concerns. While independent contractors might enjoy not having an employer to rigidly dictate their schedule, they also feel insecure not having an employer who provides them with benefits. We heard that 62% of respondents claimed not having health insurance provided for them was a key drawback, while 67% noted that a lack of health insurance was an area in which their freelancing experience could be improved.

While the lack of adequate healthcare coverage is a broadly systemic problem, the emergence of the gig economy as such a fundamental proportion of the working environment may itself indicate that change is coming. Legislators and gig workers themselves are already adapting to remedy the issue. The American Rescue Plan passed in 2021 resulted in the vast majority of gig workers (93%) now having subsidized health care plans. In one case, 37% of independent drivers on Stride, a benefits platform, were paying as little as $1 per month for medical coverage in March 2021, double the amount of workers thus covered a year earlier. Government is beginning to understand the nuances of the gig economy, and as a result, some gig workers are being treated with the same dignity and access to benefits as traditional employees. 

See also: Implications of Ruling on Gig Workers

Gig working platforms are also evolving to provide more comprehensive benefits to their workers, quelling the backlash while creating a more loyal workforce. Business ethics and profitability are increasingly entwined, and the more successful gig work organizations recognize the correlation. By giving freelancers increased benefits, workers have a higher opinion of their employers, leading to less turnover. 

The debate over gig work has become a sensationalized shouting match, drowning out the voices of real gig workers—hard-working Americans who want to be defined by results, rather than by hours clocked in. By examining the gig economy in a holistic way, we hope to solidify gig work as a cornerstone of the American economy—providing modern American workers with the independence, compensation and security they deserve.

John Godfrey

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John Godfrey

John Godfrey is director of Levelling-up at Legal & General Group,

Having joined Legal & General in 2006, he served as head of policy for Prime Minister Theresa May, where from 2016-2017 he and his team were responsible for advice on a broad range of U.K. domestic and Brexit-related issues.  

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