While the “gig economy” surfaced several years ago, it’s becoming increasingly relevant in today’s post-pandemic world. A Gartner analysis showed that organizations will continue to expand their use of contingent workers to maintain more flexibility in workforce management post-COVID-19. Here’s a look at how this gig economy evolution is likely to pan out as it deepens in roots in the U.S. and around the world, so you can ensure you’re prepared to make the most of it for your business.
Value Over Time
While the gig economy was already gaining steam, the emergence of COVID-19 accelerated its stronghold. The pandemic revealed weaknesses within businesses, and made employers more conscious about their hiring choices. Major revenue losses caused leaders to rethink the necessity of specific roles within their companies, and consider the idea of hiring employees as contractors or part-time workers instead. The collective mindset shifted and many businesses came to realize that, with limited time and money, they should only hire the necessary top talent and consider paying employees for their value instead of their time.
While companies may previously have been dubious about engaging with freelancers, they’ve increasingly changed their tune as they’ve witnessed the success other organizations have achieved through such a model. Some leading enterprises, like Airbnb and Lyft, have paved the path for this type of workforce to be seen as both credible and rewarding. Today, many of the largest digital companies in the country actively use contract workers, including more than 30% of Fortune 500 corporations. It looks as though this type of business model is here to stay, and will likely only continue to grow in size and significance.
Growth on the Horizon
Some estimates reveal that gig workers represented around 35% of the U.S. workforce in 2020, up from between 14% and 20% in 2014. This translates to roughly 57 million Americans currently engaging in some type of gig work, either part-time or full-time, which contributes more than $1 trillion to the U.S. economy annually. These figures are only expected to grow, with some predicting that freelance workers will make up more than half of the U.S. workforce as soon as 2023.
Flexibility is the main driver of the gig economy. Given this, organizations should consider restructuring how work is done for maximum workplace efficiency. Gig workers gain flexibility both in terms of working hours and the types of jobs that they are willing to take on. Before the pandemic, around 70% of gig workers shared that they participated in the gig economy out of choice and because it provided more flexibility, and sometimes more income, than a full-time job. COVID-19 likely forced many full-time employees to reluctantly join the gig economy out of necessity, as they were laid off from their jobs, had salaries cut, or were otherwise forced to make ends meet in new ways.
Now is the time for organizations to reevaluate the role gig workers play within their own walls and create a plan to retain them in the future. Their growing ranks may provide workforce agility and cost efficiency, but employers will have to consider how to utilize and retain gig workers to help their organization accelerate recovery and grow as the economy continues to improve over time.