What Is the Gig Economy? And How Does It Work?

Money
Updated: 1st Aug 2021
Written by Bradon Matthews
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August 1, 2021
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For decades work has been simple. You go out, get a job, get paid hourly or with a salary, and you perform the same duties every day.

The digital age has brought about a lot of change, though, and that change has extended into the broader economy. Nowadays, people work as freelancers or independent contractors and make money online.

This shift has given rise to the term “gig economy.”

But what is the gig economy? What is a gig? And what comes along with being a gig worker?

Let’s jump into these questions to give you a better idea of the modern economic landscape.

What Is the Gig Economy?

Simply put, the gig economy is an economy in which workers operate independently. Whether it is a side hustle or a full-time job, the gig economy has redefined the American workforce for the better.

A traditional economy comes with fixed, long-term jobs. The gig economy features many temporary, flexible jobs. Workers engage in these jobs under contract rather than as formal employees.

Gig work tends to be on-demand. It’s also largely undertaken online, at least to some degree. There are a host of platforms that connect gig workers with potential businesses and or clients.

Gig work has expanded into almost every industry because of the flexibility it offers both workers and contractors.

How the Gig Economy Works

The key element in the rise of the gig economy is the internet. With the internet came a huge boost in connectivity, allowing workers from all geographic locations to connect with contractors across the globe.

This development opened an enormous amount of potential work to the gig worker. Where a gig worker before the internet would have had to physically find enough work near them to make a living, gig workers on the internet can simply browse freelance sites for online jobs.

The same goes for the contractors. Contracting out work would have been much more difficult prior to the internet. Instead, companies would simply hire in-house workers for everything.

Now companies don’t have to do so. They can find people to perform jobs when they need them, allowing them to avoid paying for the time they don’t need.

Additionally, the rise in popularity of apps that rely on gig work makes it easier than ever to moonlight or pick up a side hustle.

All of this contributes to the shifting relationship between workers and their jobs. The gig economy operates by enabling workers to control their own hours and bid on their own projects, while contractors are free to provide those projects when they need them.

What Are Some Examples of Gig Work?

There are many different kinds of gigs. The digital age has brought gig work to nearly every industry.

Some of the most common examples of gig work are money making apps like Uber, DoorDash, and Instacart. These apps allow anyone who meets the qualifications to sign up as an independent contractor.

The apps provide potential gigs by connecting normal people in need of a service to the independent contractors on the platform.

The worker accepts whatever jobs they want and gets paid accordingly. The app takes fees for serving to connect them to the opportunities.

Other popular kinds of gig work revolve around digital marketing. Many companies hire freelancers for things like content writing, social media management, and website coding.

Freelancers and contractors can connect directly or through websites that essentially function as job boards for gig work.

What is a Gig Worker?

A gig worker is anyone who works independently rather than under a company. Some gig workers only do gig work, whereas others do gig work on the side to supplement their income from traditional jobs.

Gig workers technically work for themselves. This provides a high level of flexibility but can also come with its own unique set of drawbacks.

That said, there are zero barriers to entry, and the gig economy is a great place for side hustlers, full-time freelancers, and college students to make money.

The Pros and Cons of the Gig Economy and Gig Work

Like everything, gig work has fantastic elements and some that are less than ideal. Here are a few of the pros and cons of gig work.

Pros:

  • Schedule flexibility
  • Explore new fields
  • Choose your projects
  • Set your own rates
  • Work from anywhere

Cons:

  • Lack of stable income
  • Lack of benefits
  • Must manage your own schedule
  • Can be highly competitive

Where to Find Gig Work and Jobs

If you’re interested in getting into gig work, you’re in luck. Various online platforms make it easy to connect with contractors, regardless of your field of interest or skill level.

If you have a laptop and an internet connection, you can get started right away. Here are a few of the most popular options on the internet.

#1. Fiverr

Fiverr is an online platform that connects gig workers to gigs. Fiverr hosts an extremely wide range of gigs, meaning you can turn almost any skill into a potential income stream.

Fiverr works by allowing the gig worker to create postings offering up their services. The worker fills out their profile which showcases their relevant skills.

From there, the gig worker creates posts that explain the types of gigs they’d like to do. These range from traditional gig work, such as coding or writing, to more niche things like helping people with online dating profiles.

Potential contractors can search Fiverr to find and contract people that fit their needs.

What’s particularly nice about Fiverr is that it allows the gig worker to put outposts and then passively wait for work to roll in.

Most other platforms require the gig worker to bid on job postings that the contractors put out.

The downside of this approach is that it’s very competitive. Your post will probably be viewed alongside several others, and you don’t have the same ability to wow a potential client with a cover letter.

Still, Fiverr is a great tool to have in your arsenal when trying to build up your freelance clients. From helping content creators on YouTube to bourgeoning businesses, Fiverr is a great platform to land high-paying gig jobs.

#2. Flexjobs

Flexjobs is an online job board that features a huge number of remote jobs. Though they focus primarily on telecommuting, they do feature some jobs that include flexible workspaces such as shared offices.

While Flexjobs isn’t exclusively a gig work site, it does feature a large number of gigs.

Flexjobs prides itself on its security and lack of scams. Unlike many other online freelancing platforms, Flexjobs investigates each and every job posting to ensure it isn’t fallacious.

This is hugely beneficial to the gig worker, as scams are fairly prevalent in gig work.

In addition to their commitment to security, Flexjobs features several resources to help you learn new skills and find gigs for yourself.

These resources include online courses and videos that explain how to apply to jobs and how to master valuable skills so you can use them to make money on the platform.

Flexjobs requires a monthly fee of $14.95 a month to gain access to the site. Once that’s taken care of, you create your online profile featuring your skills and examples of your work.

From there, you can search through the job boards looking for gigs that interest you. If anything catches your eye, you apply, and if the poster likes your application, you are connected and can work together.

#3. Upwork

Upwork is like Flexjobs in a lot of ways.

Like Flexjobs, Upwork is a freelance job board where clients looking to hire gig workers for projects can post their details.

Gig workers fill out a profile with their skills, work examples, and employment history.

Contractors make job postings with brief explanations of the project and their budget. Gig workers then submit a cover letter and examples of their work, along with their suggested rates.

If the poster agrees with the proposal, the two are connected via a contract. These contracts can include milestones or hourly wages.

It is free to create an Upwork profile. Upwork makes money by charging a percentage of your pay. Typically, this amount will be 20%, though it can go down if you make over $500 on any given project.

Upwork is wonderful because of its simplicity and ease of use. Many gig workers start out on Upwork.

6 Tips for Future Gig Workers

If you’re thinking about hopping into the gig economy, you’ll want to know a few things. Here are 6 tips to help you get started.

#1. Research All Opportunities

Gig working opportunities are everywhere. You can get gigs via platforms or by reaching out directly to companies in need of your services.

Take the time to find new opportunities by researching. Connecting directly to people who need your skills can be harder to do, but they often pay better and are more exciting.

Additionally, always do your research before starting to work for someone. As we’ve said, scams are common. Make sure you’ll get your pay at the end of it all.

#2. Tap Into Your Strengths

One of the beautiful things about the gig economy is that you can use your unique skills to make money. Don’t be afraid to step into your strengths.

There is almost certainly someone out there in need of the skills you possess. Owning them will allow you to wow the right clients and ensure you land jobs you are great at and enjoy doing.

#3. Be Ready to Step Out of Your Comfort Zone

At the same time, gig work opens a wealth of new opportunities. Don’t be afraid to learn new skills to augment your pitches.

There are a ton of high-demand skills you can learn online. There are plenty of gigs that might require you to learn about a new subject.

Embracing a growth mindset will open you up to more potential gigs and boost your earnings.

#4. Budget Properly

Because gig workers get paid directly, they are responsible for their own taxes. Keep this in mind and budget for income taxes.

You don’t want to take an unexpected hit when it comes time to file your taxes. Prepare now and avoid panicking once the money starts rolling in.

>> Learn More: What Is the 50/30/20 Budget Rule?

#5. Watch Out for Scams

As we’ve said, scams are prevalent. Do your research before engaging in a job, especially if it sounds too good to be true. A bit of wariness is warranted and will keep you from losing time or money.

#6. Know Your Job Expenses

As a gig worker, you are responsible for everything you need to do your job.

Some gig workers may need raw materials to finish their projects. Others might need new laptops or software.

Be aware of what it costs to engage in and finish projects so you can factor that into your rates.

Bottom Line: What Is the Gig Economy?

The gig economy is fiercely independent. Gig workers set their own hours and work on what they want to work on.

There are pros and cons to consider when engaging in gig work, but for many, it proves to be exciting and freeing when compared to traditional jobs.

If you’re interested in gig work, make sure you have a solid plan and know what you’re entering into. If you’re willing to learn the ropes, it can be a great way to build a new career or earn some extra income on the side.

Bradon Matthews
Bradon Matthews
Bradon is a philosophy student-turned content writer. He enjoys analyzing market information and trends to help you make sense of the complex and ever-changing world of finance. Through this, he hopes to provide practical advice so you can feel more confident managing your money.