The Number of People Working in the Gig Economy
Independent work is by no means a new phenomenon, but precise and accurate gig economy data has always been somewhat hard to pin down. According to the 2016 McKinsey Global Institute’s report, it “does not fit neatly into official labor statistics,” making it hard to truly understand its influence in the workforce. Estimates of the size of the gig economy depend heavily on how it’s defined, too.
To get a better understanding of the number of people working in the gig economy, McKinsey along with other agencies have conducted online surveys of the national workforce that indicate between 25 and 30 percent of workers had engaged in non-traditional or gig work on a supplementary or primary basis in the preceding month. And Duffin (2019) estimates that the current number of freelancers in the U.S. is 57.3 million and is projected to increase to 90.1 million people by 2028. According to these estimates, independent workers will make up 50.9 percent of the total U.S. workforce.
That means that in fewer than 10 years, an American worker will be just as likely to be a freelancer working in the gig economy as a traditional employee. Let that sink in for a minute.
Why Businesses are Gravitating Toward the Gig Economy
If recent gig economy data and projections are any indication, businesses are keen to take advantage of this shift in ways that will fuel their own success. According to a report by EY, there are a number of reasons companies prefer to use independent contractors for certain roles. It allows them to contract expertise they might not have in-house, to control costs and to respond to seasonal workforce demand, for starters.
Gallup adds that companies prefer independent workers when they’re looking for individuals who are more flexible, agile and accommodating. It also allows them to get help with project-based work and to have experts on demand. Most importantly, it helps them avoid bad hires, an error that can have costly consequences for a company.
The McKinsey Global Institute (2016) supports these ideas, stating: “If properly managed, this shift can allow companies to become more agile, efficient, and productive; it can also allow them to add new capabilities and undertake projects that would not otherwise be feasible.”
Why People Love the Gig Economy
According to Eric Duffin’s Gig Economy in the U.S. – Statistics and Facts report, there are multiple reasons that ignite the desire to work in the gig economy—with the frontrunner being the flexibility it provides. The freedom to pick when and where to work is a big draw for most workers, the gig economy data shows.
Another main driver is supplemental income. Many people use gigging as a second source of earnings, using that money toward loans or general living expenses. More Americans are taking up a side hustle to supplement their income, such as driving for Uber or starting a passion business. In 2019, these occasional independents rose in ranks 6.3 percent to 15 million. That number is up more than 40 percent since 2016.
Those looking to lead a more independent lifestyle and be their own boss appreciate that they can work on their terms. Skill building is another benefit and grabbing a gig opportunity without committing to a long-term job can be a huge advantage for these independent people.
Other reasons workers prefer independent employment include having a sense of accomplishment, an enthusiasm for service and even an interest in helping others. So—it’s not all about money, freedom, and lifestyle—altruistic motivations factor in, too. And while lack of stability might scare some workers off, more than half of full-time independent workers say they feel more financially secure as independents than in traditional jobs, a record high. Seven in 10 full-time independents say they plan to continue their current path.
Gig Economy Trends for 2021 and Beyond
Without a doubt, this year and all its challenges add urgency to the task of understanding the employment landscape now and in the years to come.
According to a recent report by MBO Partners, The Future of Work has become top-of-mind for business leaders, both in terms of where work is performed (remote vs full time in-office, or somewhere in between); and who performs the work (the right mix of full-time and flexible talent sources).
This combination of forces has made workforce optimization the number-one boardroom issue for executives in 2020.
Gartner explores a number of post-COVID trends that companies should be aware of and plan for, including an increase in remote working, expansion of contingent workers and in increase in organization complexity. Organizations should also redefine roles, evaluate gig worker impact and update their policies to include freelancers, according to TechR Series.
As companies begin to look back on 2020, Gartner states that, “A consensus is emerging that workforce change is the big change to a big thing—that signals true disruption of the employment model. For the last decade, it’s been clear that America is on a path from fixed to flexible employment. A boardroom push to plan and create systems for engaging with external talent is sure to radically grow with the pandemic—as fixed work becomes increasingly hard for companies to effectively sustain.”