Understanding the Gig Economy

By WebCE
May 8, 2019

The what, who, and why of an emerging workforce

Understanding the Gig Economy
Whether you call it a part-time job, a gig, or a side hustle, more and more people are looking for income sources outside of a full time career. Some people even make their entire living from multiple part-time jobs. While work structures are changing, it’s important to understand what the gig economy is, who participates in it, and why independent work is both good and bad .

What is the gig economy?

The gig economy is a workforce made up of those who choose independent contract work or part-time jobs as opposed to holding one full time job. In 2018, the Bureau of Labor Statistics reported more than 35% of the U.S. workforce are gig workers and that number is projected to reach 43% by 2020.

Popular jobs in the gig economy include Uber drivers, freelance artists, fitness coaches, and various types of independent contractors. Gig economy jobs can either be a combination of part-time gigs, or a part-time job held while also holding a full time career.

Who are the gig economy workers?

Gig economy workers range across all ages, genders, and education levels. There isn’t a demographic that is not participating in the gig economy. As the gig economy grows, the demographic will continue to shift and grow as well.

Within the gig economy, the breakdown of the independent workforce demographic varies. As related to gender, men are more likely than women to rely on independent work full-time and use apps to find jobs. Women are more likely to participate in multi-level marketing and use gig work to supplement their full time income. Younger workers are more likely to engage in independent work more than do older workers and tend to go for temp-agency work. Older workers are more likely to engage in skill-based, freelance work. Freelancers are also more likely to hold a graduate degree while temp-agency and on-call workers are less likely to have a high school diploma.

What are the pros and cons for gig economy workers?

Independent workers generally have more flexibility in their schedules. Especially for creatives, flexible schedules can allow discovery, growth, and time for self-promotion. The gig economy also provides workers with a variety of jobs. Instead of having daily tasks to complete, independent workers can complete a project and move on to a new project of their choosing. Highly skilled independent workers are in high demand because they can have a singular focus on one project at a time.

However, there are some downsides to working in the gig economy. Often, there are no benefits for workers provided by a company so individuals have to find their own healthcare and retirement plans. Some workers even experience isolation and a lack of connection because they don’t have an office with traditional coworkers. One of the biggest cons of gig economy work is the tax filing. Freelancers and independent workers must pay taxes based on what you’ve earned. Between the tax payment schedule, personal expenses, write-offs, and forms, tax filing can become convoluted.

Now more than ever, it’s important for tax professionals to understand the different facets of tax filing for clients who have become part of the gig economy. WebCE offers a new course called Gigs and Taxes that allows you to identify the employment status of a worker, recognize the difference between a business and a hobby, understand how to report income and expenses, and how to recognize the federal taxation reporting requirements. This course is great for accountants and tax professionals who will work with the growing market of independent workers.

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