How to Win in the Gig Economy

Everywhere you go, it appears that individuals are hustling. While shopping at your preferred grocery store, you will notice people engrossed in their smartphones, going through the grocery lists of others they have been contracted to collect. Even during a casual evening out for drinks, you may use an Uber ride to return home, only to find out that your driver has taken on a side job to supplement their income. It is not that uncommon and is happening everywhere around us.

That encompasses the gig economy, and it is evident that age barriers do not confine it because Millennials, Baby Boomers, and Gen Xers have all embraced the freelance lifestyle. Amidst this whirlwind of activity, it is essential to raise two fundamental questions:

1. Is the gig economy a deceptive distraction, diverting individuals from pursuing full-time employment with tangible advantages such as paid vacations, sick leave, and affordable healthcare coverage?

2. Alternatively, does it represent an opportunity to nurture a way of life characterized by flexibility and freedom, which are attributes often lacking in conventional 9 to 5 jobs?

However, if the prospect of being your boss, setting your work hours, and having the freedom to take time off for travel or other pursuits whenever you desire seems too enticing, there are several crucial considerations to bear in mind. We will cover them in detail here and give you a headstart so you have all the tools to win in the gig economy.

What Is the Gig Economy?
The gig economy represents an open marketplace where individuals generate revenue by undertaking on-demand, brief-term assignments, tasks, or employment opportunities. Individuals engaged in the gig economy frequently secure work opportunities through online platforms or mobile applications. It is important to note that gig economy participants are not considered employees since they operate as self-employed independent contractors, often providing services to various clients.

Although this work style has existed for a considerable period, its terminology has evolved. The phrase 'Gig" traces its roots to the realm of the performing arts, where comedians, musicians, and entertainers receive compensation for individual performances, commonly called 'gigs'. The gig economy concept encompasses many gig workers across nearly every sector.

Several gig economy occupations have gained popularity recently, while others have persisted since the inception of trade. We have compared various categories of gig workers below, which include:

● Freelancers: Individuals who render services for numerous clients.
● Consultants: Professionals who offer guidance to clients.
● Independent Contractors: Workers who resemble conventional employees but function independently.
● Temps: Temporary independent contract laborers.
● Seasonal Workers: Individuals who deliver temporary services as independent contractors.

The Drawbacks of Gig Work
Individuals engaged in the gig economy, whether at platforms like Lyft, Uber, Handy, TaskRabbit, or elsewhere, often patch multiple projects or side hustles to boost their income. Some individuals enter this way of life following unsuccessful or prolonged job searches, while others intentionally balance freelance work alongside their traditional 9 to 5 job.

While fortunate gig workers may stumble upon lucrative opportunities, certain critical issues still need to be addressed. These primarily revolve around the hidden expenses associated with covering benefits such as retirement plans, health insurance, and job-related costs out of their own pockets. They also face the disadvantage of being ineligible for unemployment benefits if terminated.

Moreover, they often possess fewer avenues for recourse when confronted with workplace harassment or discrimination than full-time employees do. The New Yorker recently observed, "Freelance workers are the most vulnerable." They need more substantial institutional support and typically operate with minimal supervision. Furthermore, they are temporary and readily replaceable within the gig economy's dynamic landscape.

Managing multiple jobs, which occasionally involves pulling all-nighters followed by periods of job scarcity, can also be exceedingly stressful. This aspect of gig work has drawn criticism within the context of the contemporary freelance labor model. Some observers have noticed that, while it represents a somewhat novel approach to earning a living, it often evokes apprehension regarding its long-term prospects for those who may eventually outgrow it.

Gig workers are also often left pondering their next step after their current positions conclude, especially if the startup they are affiliated with encounters financial difficulties or if they contemplate transitioning their skills into different career paths. For those with transferable skills, transitioning into full-time employment is possible, although the extent of opportunities varies based on one's experience and particular skill set.

Strategies for Winning in the Gig Economy
Even though the gig economy can be extremely lucrative for many individuals, achieving success is only some people's cup of tea. A well-thought-out strategy is essential to thrive and win in the gig economy, and we have covered several of them here for you. Here are the strategies you must employ if you want to win in the gig economy:

1. Diversify Your Gigs
One effective approach is diversifying your gigs. While many individuals concentrate on one or two side hustles, there is potential to offer the same type of service to multiple businesses. For instance, freelance writers can simultaneously provide their writing services to numerous clients.

2. Be Vigilant in Searching for Opportunities
The most prosperous participants of the gig economy are continually seeking new prospects. Engaging in the gig economy is undeniably hard work, and even long-term clients can shift to hiring in-house talent. However, you will need to put in extra effort to secure fresh gigs to replace those that may be lost.

3. Always Be Wary of Scams
You must be on the lookout for common frauds, such as multi-level marketing schemes requiring upfront product purchases or fraudulent work-from-home offers to request personal information or money.

4. Keep Track of all Current and Future Expenses
Calculate the out-of-pocket expenses associated with your gig. For instance, gig workers employed by ride-hail apps or involved in peer-to-peer car sharing often use their vehicles. In such cases, it is crucial to consider expenses like maintenance, fuel, and potential passenger-related damages. If your costs exceed your expected earnings, it may only be worthwhile if you have a concrete plan to turn a profit in the end.

5. Do not neglect Your Tax Obligations.
Think about your long-term financial situation and the tax obligations. Freelancers should consider the impact on their long-term finances, including retirement savings, and the necessity of paying estimated taxes. If you earn a substantial income from freelancing without significant deductions, setting aside funds for tax payments is vital to prevent substantial tax bills come tax season.

6. Save Money for the Future
Also, emphasize the significance of saving for the future. Unlike employees at larger companies who often benefit from automatic enrollment in retirement plans with matching contributions, freelancers must proactively save for retirement. This can be challenging, especially if you need help to make ends meet. However, establishing a dedicated fund for taxes and long-term savings is a wise step toward securing your financial future.

Final Thoughts
The gig economy offers a unique avenue for individuals to earn income, but success within this dynamic landscape demands careful planning and due diligence. Ultimately, thriving in the gig economy is about more than just earning money; it is about building a sustainable and prosperous path for the future.