What is the Gig-Economy?
The Gig Economy is a term used to describe a share of the labor market made up of independent contractors. A study conducted by Intuit projects that the number of “on-demand jobs will grow from 3.9 million Americans today to 7.7 million by the year 2020, and an impressive 9.2 million by 2021”, so it’s not likely to phase out. That said, it’s not a fit for everyone. As the Gig Economy continues to grow, we’re developing a greater understanding of the motivations that draw people towards on-demand work.
A survey of 8,000 respondents across the U.S. & Europe, by the McKinsey Global Institute, recently placed independent workers into four segments.
1. Free Agents – A group made up of those whose preference is to have independent work make up their primary income. – 30% (49 million people)
2. Casual Earners – A group made up of workers who like to supplement their primary income with independent work. – 40% (64 million people)
3. Reluctants – A group made up of workers that would prefer a more stable source of primary income, but find independent work easier to find. – 14% (23 million people)
4. Financially Strapped – A group of workers that supplement their primary income with independent work to cover monthly expenses. – 16% (26 million people)
What does it mean for employers?
When hiring independent contractors, you may want to consider some of the following factors.
1. Your lines of communication will be primarily virtual, so consider using tools that will allow you to vet and engage with on-demand candidates virtually. Embrace technology and implement things such as scheduling tools and video interviewing among other things.
2. Remember, out of site can no longer mean out of mind. If you are going to commit to working with independent contractors, you must ensure that the appropriate procedures are in place for them and you to be successful. Have open lines of communication and be willing to manage and guide them as you would an on-site employee.
3. Be competitive. Savvy independent contractors will have numerous clients and therefore know their worth. If you’re unwilling to pay competitive rates and rely on on-site intangibles to entice good candidates, maybe an on-demand workforce is not for you. Underpaying could lead to inconsistencies in the work you receive.
Why is it so popular in the modern workforce?
No, it’s not because millennials are lazy and want to work less.
When evaluating the Gig Economy and the aforementioned categories in which independent contractors fall, there are some key benefits to on-demand work.
1. Exposed to a world of opportunity. A PEW research piece found that job hopping is more based on age than a generation and that millennials don’t change jobs any more than Generation X did. That said, what we do know is that young professionals value the autonomy to explore new opportunities and the Gig Economy provides a platform from which they can try new things with less of a risk.
2. The need to pay off student debt. A recent Time.com article reported that the class of 2016 graduated with an average of $37,172 in student debt, compared to $18,271 for the class of 2003. That being the case, many workers are forced to supplement their income in order to cover their student loan payments, among other things. The Gig Economy provides a more accessible and consistent way to do that.
For more on how you can update your candidate funnel to better attract on-demand workers, click here!