What is the Gig Economy?

By now you've probably heard of various services that act as taxis, but instead of flagging down the yellow vehicle, you open a smartphone application and request a pickup.

These ride-sharing services best exemplify what is known as the gig economy. Millennials certainly know about the various startups that offer unique ways to hail a ride or spend a night in another person's apartment. However, it's becoming more evident that even baby boomers and individuals nearing retirement are finding work in the gig economy.

Since it is relatively accessible to enter, this type of work has some benefits, as well as drawbacks, that everyone should know about, especially if they're looking for a new job or a way to supplement income.

What is the Gig Economy?

In prior years, you probably thought work consisted of heading to an office in the morning and leaving eight hours later. You'd have a lunch break in addition to a salary, healthcare benefits, vacation days and holidays.

None of those exist in the gig economy, which has risen to prominence due to the rapid advancement of technology, which has made it easier for ideas to come to fruition.

The gig economy can encompass many types of service, with the most popular being ride-sharing. When you are a driver, you set your own hours and days you work. If you prefer to drive during the day, you can do so, or you might prefer earning extra money during nights on the weekends, when others are out and about. Some services even exist that allow you to rent out your apartment or house to complete strangers.

When it comes to working in the gig economy, you will notice some stark differences when compared to a typical job. There are no benefits, salary or paid days off. Even so, the flexibility has allowed drivers to earn a decent amount of money per trip. According to SherpaShare, drivers in New York City made an average of $29.34 when working for a ride-sharing service, while drivers made an average of $11.53 in Los Angeles [1].

The Perks

Working the gig economy represents a good way to supplement your yearly income. For example, if you have a salaried job but still want some extra spending money, driving on the weekends is an option. For millennials, ride-sharing services can be an alternative to waiting tables or bartending, professions that some may find tiring and hectic.

The fact that you set your own hours is also a bonus. You can either treat the gig economy as a full time or part time job, because the more you work, the higher the weekly earnings.

While marketed toward younger generations, the gig economy actually represents an appealing opportunity for baby boomers who are nearing retirement, or who have already retired. Driving - or renting out a spare bedroom - can provide that cash for a vacation or money that can be put into a retirement account.

Furthermore, you can technically be retired but still earn income, as highlighted by Forbes contributor Chris Farrell [2]. If you're retired, you can drive for a few hours in the day and still enjoy everything the post-work life has to offer. You're still able to spend time with family and maintain a social life.

The Downsides

Before you sign up to work in the gig economy, remember it isn't for everyone. Stark differences exist between these jobs and salaried positions. For starters, there is no set income, meaning you can earn a high total in January, but experience a dip two months later. Furthermore, you will not have paid time off, an employer sponsored 401(k), pay into Medicare or Social Security and have no access to workers' compensation.

Retired individuals have turned to the shared economy because of the supplemental income it offers. For them, it makes sense that this money can double as spendable money until they are old enough to access their retirement accounts.

If you're younger, be sure to thoroughly explore every option to ensure that working in the gig is the right move for you.

Moving forward, however, the gig economy is providing opportunities to find work, and that money can be used as extra spending cash or to set aside in a savings account.

Sources:

[1]. What Uber, Lyft Drivers Earn per Trip

[2]. Gig Economy: Better For Boomers Than Millennials