The gig economy is changing the way we work and live. The vast majority of Americans now have multiple jobs, each with its own benefits and drawbacks. More than 40% of all workers in America are freelancers, independent contractors, or temporary contract workers. This number has doubled since 2005. And experts say this trend will only continue to grow as more people turn to gigs for supplemental income. But what does this mean for businesses? Is it bad news or good news? What should every business do about it? This article explores these questions and proposes some solutions you can implement today to be ready for tomorrow’s workforce.
The gig economy is a term used to describe the current workforce, which comprises a vast majority of freelancers, independent contractors, and temporary contract workers. This is a stark difference from what the workforce looked like just 10 years ago when more than two-thirds of Americans worked full-time for one employer.
According to new research, this current labour market is unlikely to change anytime soon. Not only are millennials leading the way in changing the way we work, but they’re also doing it at an unprecedented rate. Up to 50% of the US workforce will be freelancers, contractors, or temps within 10 years.
One reason for this shift in workplace dynamics is that companies are increasingly turning to independent workers and gig services to fill out their workforce. Gig-based employment models allow businesses to hire when they need additional help and pull back if business slows down. This is especially useful for companies with a high seasonality, like retail during the holidays or catering companies that need more staff at large events (and less at smaller ones). This makes the independent workforce an attractive option for businesses of any size.
Experts even say that it’s not just businesses benefiting from the change. Independent workers, who have a portfolio of clients rather than just one employer, can be more productive because they’re not limited to office hours. This means that freelancers and contractors can get their work done whenever and wherever it’s convenient for them.
This also gives independent workers more flexibility and control over their schedules and careers. If work is slow, they can take time off to do other things. They also have the freedom to make their own hours, travel as much as they like, and pursue whatever business ventures interest them.
Why every business should be paying attention to this trend
Even those companies who haven’t embraced the idea of a gig-based workforce may find themselves in a position where they have no choice but to hire independent workers. There are many reasons every business should be paying attention to this trend, including:
- Traditional employees get more expensive and harder to find
The number of people quitting their jobs is highest since the recession. This is partly because of the changing workplace dynamics, where people are no longer chained to one company for their entire careers. This makes it complicated and expensive for businesses to find and retain quality employees.
- The economy is on the upswing, and competition is increasing
As unemployment continues to fall, we can expect more people to start looking for work. For any business that wants to hire full-time employees, this means they’ll have to compete with every other company looking for the same talent.
- A strong economy continues to be driven by small businesses
According to the US, Small Business Administration found that small businesses accounted for 99% of all employer firms and 64% of net new jobs created between 1993 and 2016. This makes it even more important for larger companies to learn how to connect with the top talent freelancers offer today.
- It’s not just about hiring freelancers anymore
Traditional staffing agencies are no longer the only way businesses can effectively build out their workforce. The best independent workers are leveraging their network, using referrals and online marketplaces to find the job opportunities that interest them. Businesses can embrace this trend by leveraging the same tools to find great talent.
One example of a company that’s successfully embraced this change is Amazon. While Amazon has always relied on temp labor, it recently hired more contractors and freelancers. It’s estimated that 30-40% of its workforce is made up of independent workers, a number that’s expected to keep growing as Amazon continues to experiment with new ways to reduce costs.
How the future of the gig economy will change how businesses operate
As the gig economy matures, we’ll see more significant changes in how businesses operate. Some of these changes include:
- New challenges for HR
The traditional model of employees on payroll is simple. Still, it can be difficult to manage a constantly shifting workforce and changing their availability or location. Businesses will have to learn to be more flexible and responsive to keep up with this new workforce.
- The rise of the retail freelancer
Rather than hiring full-time staff, many retailers are turning to freelance workers for special events or one-off projects. This is an efficient way for retailers to boost their staffing during peak seasons or for special events without having to pay the high cost of a full-time employee.
- More flexibility and control for independent workers
This is already happening as more companies embrace the idea of hiring temporary or contract labour over full-time employees. Over time, we’ll see more businesses adopt flexible work schedules and compensation programs that give workers more control over their work.
- The end of the traditional office
As digital technology becomes cheaper and more accessible, we can expect to see a shift away from traditional offices. More companies will rely on technology like virtual meetings, video conferencing, and cloud storage to facilitate communication between employees—regardless of where they work from.
- New opportunities for businesses
The growing popularity of the gig economy is creating new opportunities for businesses to build stronger relationships with customers and the public. We’re already seeing some companies embrace their role as a service provider or labor intermediary, taking on everything from IT consulting to marketing services. Other innovative companies are breaking away from traditional business models altogether to pursue freelance opportunities.
- A change in the traditional model of freelancing
Suppose freelancers want to remain competitive and successful. In that case, they’ll need to evolve and embrace new technologies and strategies that help them compete for work and gain a following among clients. They’ll also have to be more flexible than ever, learning to navigate an increasingly complex marketplace.
What does this mean for businesses – good news or bad news, and what should every business do about it?
This switch to a more independent workforce means big business changes, both good and bad. The biggest challenge will be learning how to take advantage of a business model that’s constantly shifting and changing. This will mean embracing flexible work schedules, hiring contract workers instead of full-time employees, and exploring new technologies for communication. On the other hand, companies will have to manage a workforce with less commitment and more turnover, which can be difficult when you’re trying to build morale among your employees.
It also means new recruitment opportunities, finding workers experienced in temporary or contract jobs. Hiring an independent contractor is often much cheaper than hiring full-time employees. Businesses with highly skilled workers may find it easier to attract talent by offering flexible work schedules, especially in cities where the cost of living is skyrocketing. Companies will also have more freedom to ramp up or cut back on their workforce.
But like any new trend, there are both pros and cons to the gig economy. What are they?
One of the biggest advantages of the gig economy is cost savings. It’s cheaper for companies to hire contract workers because there are no long-term commitments or extra expenses for benefits. Hiring temporary staff can also be a lifesaver during peak seasons without the budget for another full-time employee.
However, businesses will also have to deal with a lot more turnover in their workforce, which can be frustrating if you’re trying to build rapport between employees. If the company is hiring for a long-term contract, they’ll have to deal with freelancers who are only working part-time for them, which could lead to some resentment. It can also be hard to attract talent by promising flexible work schedules when hiring freelancers.
Solutions you can implement today to be ready tomorrow’s workforce
Businesses are always looking for ways to save money, and the gig economy is no exception. Businesses can build better payment relationships with freelancers through an efficient and fast payment processor.
Services like Berkeley GigPay allows businesses to pay workers for their services through a secure online payment system. This system offers workers flexibility in how they receive their funds and can be fully branded to fit your company’s needs.
Best of all, businesses that use Berkeley GigPay can enjoy significant cost savings over traditional payment methods like check or wire transfer. Payments are processed quickly and easily, and there’s no need to worry about hidden fees or exchange rates.
Suppose you’re looking for a fast, easy, and cost-effective way to pay your freelancers. In that case, Berkeley GigPay is the solution you’ve been looking for.
The gig economy offers huge opportunities for businesses. But, this shift also comes with big challenges, like managing an increasingly transient workforce and figuring out how to attract skilled workers by promising flexible hours. How can companies adapt to this changing workforce, and what can workers do to keep up with the shifting job market?