As the workforce landscape evolves, individuals are increasingly reevaluating the conventional career trajectory and standard office hours. A significant trend is emerging as people begin to question the practicality of depending solely on a single income stream. Welcome to the gig economy, a vibrant and expanding sector that provides skilled workers with the flexibility, autonomy, and diversity they seek.
According to Statista, the projected gross volume of the gig economy in the U.S. has seen a consistent upward trend over the past six years, more than doubling from $204 billion in 2018 to an impressive $455.2 billion in 2023.
Rafael Espinal, the executive director of Freelancers Union, a national nonprofit established in 1995 to support independent workers through education, advocacy, and resources, identifies three key factors propelling this growth: the pandemic, the phenomenon known as the “Great Resignation,” and a surge in app-based job opportunities. Following the pandemic, Freelancers Union’s membership nearly doubled, skyrocketing from approximately 400,000 members over its first 25 years to nearly 750,000 in just four years.
Espinal notes, “The pandemic resulted in millions losing their jobs, prompting many to reconsider how they wish to generate income, leading to a rise in individuals exploring freelance opportunities” or reevaluating their work preferences and locations.
With a significant number of individuals choosing to augment their traditional employment or transition entirely to freelancing, what lies ahead for the gig economy?
The gig is up
Last year, approximately 4 million “independent professionals” were reported in the top 30 U.S. markets, according to the 2024 Freelance Economic Impact Report conducted by Fiverr, the online platform that connects businesses with freelancers.
“Independent professionals” refers to individuals earning income outside conventional employment, without hiring others, and offering creative, technical, or professional services. The annual Fiverr surveys indicate these workers express considerable job satisfaction. Several fundamental aspects motivate individuals to join the gig economy.
One significant advantage is the enhanced flexibility regarding location and scheduling. Freelancers are not confined to a single client or office; they have the liberty to choose their clients, work environment, timings, and fees. The Fiverr report noted, “Women, in particular, regard flexibility as a crucial benefit of freelancing.”
Freelancers can also adjust their workload based on personal needs or economic conditions; they can increase their rates in response to inflation or living costs. A survey conducted by Fiverr found that 38% of participants raised their rates in 2023, 43% reported increased earnings the previous year, and 55% anticipate higher incomes in 2024.
Diversification is another crucial factor. Many freelancers find peace of mind in not being reliant on a single employer. The previous year’s Fiverr report revealed that 84% of respondents felt that multiple income streams enhanced their security. Freelancers Union emphasizes the importance of skill diversification, advising, “Independent workers should equip themselves with various skills to diversify their income sources,” according to Espinal.
Shifts in the gig economy
Espinal identifies a notable trend in the gig economy towards the burgeoning realms of content creation and marketing, filling gaps in areas like copywriting, newsletters, and social media management. There is also a notable demographic shift, with many freelancers transitioning to more rural and suburban locales, moving away from traditional expensive metropolitan centers like New York, Los Angeles, and San Francisco.
A significant proportion of independent workers surveyed by Fiverr indicated they plan to increase their freelance hours in the upcoming year, especially among younger demographics; 56% of Gen Z and 54% of millennials expect to dedicate more time to freelancing in 2024.
Freelancers encounter similar trends and challenges impacting the broader workforce, such as potential job displacement by AI technology. Yet, they also face distinct hurdles.
Espinal highlights, “The independent workforce is fragmented.” He notes that working autonomously can expose individuals to risks, including exploitation and harassment by clients. To address these realities, Freelancers Union provides resources such as community support, comprehensive guides (including a new contract builder), and educational initiatives.
Freelancers often grapple with the issue of delayed or non-payment, frequently due to the absence of a formal contract. “My primary suggestion for freelancers is to learn how to read and write contracts,” advises Espinal, emphasizing that around 75% of freelancers report working without contracts, leaving them vulnerable. “To ensure timely payment and enhance your chances of receiving compensation after completing a task, it’s essential to have a robust contract in place.”
Freelancers face the future
Currently, a significant focus for Freelancers Union is the Freelance Isn’t Free Act, which has been enacted in New York City and a few other locales to legally mandate contracts between freelancers and their clients.
Access to essential benefits, such as affordable healthcare, paid leave, and retirement plans, remains a pressing issue. “As an organization,” Espinal states, “we advocate for a broader federal dialogue on how to create a truly affordable or free healthcare system, akin to the Medicare for All concept.”
“It is crucial to have a candid discussion about the implications for our nation, ensuring that every worker—be they traditional employees, independent micro-businesses, or freelancers—has access to essential care and necessities for living a dignified life.”
Espinal further adds, “Numerous full-time workers ought to be recognized as full-time employees entitled to comprehensive benefits, yet they are misclassified as independent contractors to help companies avoid tax and benefit responsibilities.”
This misclassification issue is at the heart of the ongoing debate in California regarding a Silicon Valley-supported proposition that would categorize workers for companies like Uber, Lyft, DoorDash, and Instacart as “independent contractors” instead of employees entitled to benefits.
Pitfalls of the gig economy
The California Gig Workers’ Union emphasizes on their platform, “By labeling us workers as independent contractors, these companies exempt themselves from providing essential worker protections. They also impose significant costs—such as vehicle payments, fuel, maintenance, and insurance—on us,” despite dictating the working conditions, including fees. A proposition allowing app-based transportation and delivery firms to treat their drivers as independent contractors was approved by California voters in November 2020. However, Proposition 22 was deemed unconstitutional in August 2021, and by June 2023, the issue reached the California Supreme Court. In July 2024, the court confirmed the exemption, permitting gig workers to be classified as independent contractors rather than employees.
Espinal succinctly states, “It is evident that government entities have predominantly focused their attention on the Wall Street economy or the physical storefront economy, neglecting the support of micro businesses, solopreneurs, and independent contractors.”
Given the increasing numbers of gig workers and their contributions to the broader economy, this demographic deserves substantially more attention.
