After a year filled with uncertainty, many have experienced changes to their current job, made career pivots, or transitioned to a completely different industry. Due to changes associated with the pandemic, others transition to the gig economy for various reasons. These include reasons such as lay offs or the need for a more flexible schedule to take on childcare duties. If you are transitioning to the gig economy, there are a few things to consider and be aware of before securing a position.
What is the gig economy?
The gig economy is a type of job market composed of independent workers that take on flexible or temporary positions in exchange for payment. A gig economy worker is often characterized as a non-traditional worker that provides on-demand services. Some jobs that can be considered gig-economy positions include ridesharing, transcription, dog walking, and various freelancing opportunities. It is estimated that 36% of US workers are part of the gig economy either fully or partially in some capacity. This number is projected to increase based on demand and shifting needs of the modern worker.
If this will be your first time working a non-traditional job, it’s important to understand that there are pros and cons associated with this transition. Understanding the differences between the traditional workforce and finding ways to better prepare for some of the unique challenges that you may face as a gig economy worker can help you in this next chapter.
Autonomy and flexibility are key
One of the major benefits of working in a gig economy position is the independence allowed. In most cases, you have the ability to make your own schedule and even choose the jobs that best suit you. For example, if you are a freelance virtual assistant, you can decide which projects to take on based on various factors. Furthermore, you have the opportunity to continue to work a traditional job and also take on various “gig” contracts before committing to full-time independent work.
Pay structures can differ
Rather than earning a consistent salary from a given employer, gig economy workers are paid based on the contract or project agreed upon. Many industries are moving towards a gig economy or contract-type model, therefore the pay can significantly range. As more industries look to outsource work to independent contractors, skilled gig workers are in higher demand. In fact, some reports are showing that gig workers have the ability to out-earn traditional workers. For tax purposes, you will be considered a 1099-MISC worker rather than a W2 employee so remember to account for the fact that you will still need to pay taxes on your income as a gig worker. Additionally, consider the type of industry you are in and if you will face inconsistency in pay based on seasonality and need. Understanding the potential volatility associated with your position can help you project and budget as needed.
You will need to secure your own benefits
While freedom and flexibility are positive factors associated with working in the gig economy, one of the downsides is that in most cases, you will not be offered benefits. Working a traditional 9-5 job usually comes with the opportunity to enroll in an employer-sponsored health or life insurance policy or to take advantage of a 401K plan with a company match. However, if you are transitioning into a fully independent position, you might not have access to these benefits so it becomes your responsibility to determine the coverages you would need to obtain on your own.
For example, if your employer provided a life insurance plan that is non-transferable when you leave, consider looking into private coverage to protect your family members from unexpected circumstances. Since your income might be difficult to project as you are first starting out, a term life insurance policy could be a good option because it is more affordable than other permanent types of life insurance.
Additionally, before transitioning away from a traditional job, take into consideration the benefits that you currently have and determine if they are completely necessary. While gym memberships and employee assistance programs are all great options to have as an employee, they might not be completely necessary to obtain when first starting out. Keep in mind the most important benefits and insurance coverages and their costs, then account for these when preparing for your gig economy position.
Account for sick time and vacation time
As previously mentioned, there are certain benefits that are often overlooked in the traditional workforce. Sick time and vacation time are standard benefits to have but as an independent worker making your own schedule, this can add a layer of complication. As a gig economy employee, remember to make time for sick days and vacations and account for this missed time when budgeting. Furthermore, try to account for doctor and dental visits to ensure you are maintaining optimal health. While you might be tempted to work around the clock, it’s important to set aside time for yourself, even if it’s just a day trip or a quick getaway with family or friends. This can give you a chance to reset and reboot and be your best self in your new position.
Where to find gig economy work:
If you are still in the early phases of looking for a job in the gig economy, you may be overwhelmed with the different options that are available. Depending on the type of position you are looking for, there are numerous apps and databases to assist you in your search. If you are considering working for a specific company, look into the Glassdoor reviews to get a general idea of what the day-to-day might be like. If you are unsure of where to start, take some time to research different websites and apps that have a variety of positions available.
Transitioning to a new job can be an exciting yet stressful time. When looking for a gig economy job, you might have more considerations than if you were looking for a traditional position. Becoming a gig worker ultimately provides you with the freedom to choose your work or projects and the flexibility to make your own hours. But with this newfound autonomy, you might find yourself taking on more responsibilities. With careful planning and consideration, however, you can have a more seamless transition as you enter into this new phase.