The gig economy is a system in which organizations engage individuals, often through digital platforms or intermediaries, for temporary or task-based work, rather than relying solely on full- and part-time employees. It’s quickly becoming a key component of the economy.
According to Statista, more than 70.4 million Americans are currently involved in freelance work. By 2027, freelancers, gig workers and crowd workers are expected to become the majority of the workforce. Organizations are increasingly turning to gig workers to meet labor demands as they navigate shrinking budgets and evolving workforce expectations. The rise of gig work presents a complex mix of opportunities and challenges for employers. Here are potential benefits of gig work for employers:
- Cost savings for some roles or tasks since employers are not required to provide benefits such as health insurance, paid leave or retirement contributions to independent contractors
- Scalability and flexibility due to project needs or seasonal shifts, without long-term commitments
- Access to specialized talent through gig platforms
While the gig economy offers flexibility and cost savings, it can also introduce the following challenges for employers:
- Weaker organizational ties due to gig workers’ independence
- Unique compliance considerations, as gig workers fall under “independent contractor” status
- Strain on full-time employees who are also doing gig work, as they may become less available for overtime, more fatigued and potentially less engaged
- Balancing dual roles as employer and client, which adds complexity to workforce planning
Employer Takeaway
The rising number of workers participating in gig work is an inevitable trend that labor experts predict will continue to grow. Employers should continue to monitor labor trends and consider what practices make the most sense for their organizations.
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