What You Need to Know About the Gig Economy

The Gig market makes a variety of flexible, independent contractor labor available to businesses for both short term and ongoing business needs. It also provides individuals with an avenue to earn an income on their terms and around their own unique scheduling needs. Gig work is popular among college students, parents, retirees, and entrepreneurial individuals. Gen Z and Millennial workers in particular desire greater flexibility and autonomy in their work and often prefer gig work to traditional 9-to-5 employment.

For these and many more reasons, the gig market is set to outgrow the traditional labor market within the decade. It is estimated that by 2027, independent contractors will make up 60% of the workforce. If your business isn’t participating in the gig economy yet, it’s time to get started! Faveo can help you start finding contract labor today and make sure that your business enjoys all of the benefits of the gig economy.

How Using Contract Labor Can Help Your Business

Using contract labor provides several important benefits for businesses:

Flexibility

Hiring gig workers is ideal for businesses that experience seasonal fluctuations in demand. Businesses that perform event support, construction, or other services that involve a variety of short-term projects rather than steady on-going operations can also benefit from the ability to scale up or down quickly based on demand.

Lower Cost

Using gig labor can save businesses a lot of money. There are various costs associated with hiring a new employee such as payroll taxes, supplemental benefits, and the administrative costs of hiring and onboarding. It is estimated that onboarding a new employee can cost $400 on average in administrative expenses. This does not include the expenses and management time spent on recruiting and training, which can add up significantly.

Efficiency

Hiring a contractor can often be done more quickly than hiring a full-time staff member (and with Faveo, it certainly will be!). Gig workers are ideal for meeting short notice needs. Businesses benefit from hiring a freelancer with a specific skill set to meet their immediate need, rather than hiring for a broader full-time role and having to spend time onboarding and training someone.

Short-term labor is a great option for many businesses. New and growing businesses benefit from the ability to quickly scale up without having to invest in and commit to a large labor force. Using gig work can also save you hours of resume screening and human resources administration. Finding on-demand labor for your business shouldn’t be a hassle. Faveo makes hiring short-term help easy so you can operate with flexibility and efficiency.

Future of the Gig Economy

The gig economy has played a very important role throughout the covid-19 pandemic, with InstaCart Shoppers and food delivery drivers offering essential services to keep people safe. However, the gig economy has been rapidly growing far before the pandemic and will continue to grow exponentially after local economies have reopened. As of January 2021, the gig economy has an estimated value of $296.7 billion dollars. It is expected to see significant growth and to reach a value of $455.2 billion by 2023.

There is an overabundance of gig labor available at this time as some industries such as event staffing have largely shut down due to the pandemic. These workers will re-enter the gig market this year. During these uncertain times, utilizing temporary contract labor can help your business scale up as needed without the added risk of bringing on new employees and potentially having to lay them off if conditions change. Faveo can help you find the right contract labor to meet the needs of your business!.

Legal Updates

The growth in the gig market has spurred discussions on the lack of legal and financial protections that gig workers have compared to traditional employees. In 2020, we saw some changes on how gig workers are viewed legally in response to these concerns.

AB 5 (California)

The gig economy has faced some legal challenges in California.

AB 5 was passed in September 2019 to reclassify many gig workers in California as employees. It included the ABC test, which provided stringent guidelines that must be met in order for a worker to be classified as an independent contractor. AB 5 was later amended by AB2257, which provided exemptions for several industries, services, and contractors.

This past November, California voters passed Proposition 22 which allowed exemptions for app-based drivers. Most notably Uber, Lyft, Doordash, and InstaCart drivers were allowed to remain as independent contractors with some additional protections such as health subsidies.

Unemployment and Covid-19

Federally, gig workers were included in unemployment insurance eligibility when they previously have been excluded. The Pandemic Unemployment Assistance (PUA) program was created for gig workers and self-employed individuals. This is an unprecedented move which illustrates how significant the gig labor force has become in the United States. For many Americans, gig work is their primary occupation.

Others engage in gig work as a side income to supplement their traditional job. In the December 2020 stimulus package, the MEUC program was also created to address the needs of these mixed earners; people with W2 and 1099 income.